Responsible Finance Forum

Bridging the Gap: The Business Case for Financial Capability

Anamitra Deb and Mike Kubzansky
Source:  Citi Foundation

Between 500 million and 800 million of the world’s poor now hav eaccess to finance—yet our research suggests that only 110 million to 130 million of that number have received any sort of financial capability training.

In other words, only 25% of these many millions have been taught how to use their new found access to the world of formal finance wisely and to their advantage. That leaves 75%—a staggering 370 million to 690 million individuals—out in the dark,forced to make decisions about their borrowing,their savings and their entire financial future with little help and little instruction.

This is the financial capability gap—a chasm that exists between those who have been empowered to responsibly engage with a formal financial system that is utterly new to them, and those who have not. And yet, these hundreds of millions do not even take into account the 2.7 billion people who according to CGAP are unbanked today. And if the current trend of financial capability lagging access to finance continues, then this gap is certain to get bigger.