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A Client Needs-Centred Approach to Financial Inclusion Measurement

Much progress has been made towards measuring the success of financial inclusion. Since the Alliance for Financial Inclusion’s Financial Inclusion Data (FID) Working Group was created, it has established a core set of financial inclusion indicators to standardize how access and usage of financial services are measured. As well as creating a common framework for measuring and using data to inform policymaking, FID also provides a forum for AFI member institutions / countries to share learnings on target-setting, survey
methodology, analysis and innovative usage of data.

However, meeting financial inclusion targets has not always led to expected outcomes. For example, the 2017 World Bank Findex survey revealed that growth in account uptake has not led to regular usage, with many accounts left largely unused. Why is this the
case and what can be done to ensure active usage of financial services to achieve better consumer outcomes? Understanding people’s financial needs and how they meet those needs can help to inform these questions. To better understand how and why customers use different types of financial services, a pilot study was launched by FID in partnership with insight2impact (i2i) to test a financial inclusion measurement framework based on consumers’ financial needs (or FinNeeds). The pilot incorporated both demand-side surveys on financial needs in AFI member institutions / countries and transactional data from financial institutions. It also leveraged a new financial inclusion measurement approach whereby it linked demand-side data and transaction data for a sub-set of consumers to provide new insights on individuals’ financial lives inside and outside the formal financial sector.

The resultant indicators on financial needs are intended to complement existing financial inclusion measurement on access and uptake. The findings and insights highlight important policy and market imperatives on what is needed for the formal financial sector to better serve people’s financial needs. As such, this report aims to contribute to AFI’s goal of “bringing smart policies to life”.

This report outlines the key findings from the pilot studies in five AFI member institutions in five countries including Nigeria and Mexico, as well as highlights from smaller or partial pilots in Zimbabwe, Kenya and the Philippines. The next section outlines the customercentric approach to financial needs. The third section details the methodology used in each AFI member institution / country, while the fourth section outlines the main insights and indicators that emerged from the pilot study, followed by some final conclusions and learning points.

AFI is the world’s leading organisation on financial inclusion policy and regulation. A member-owned network, we promote and develop evidence-based policy solutions that improve the loves of the poor through the power of financial inclusion.

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