Increasing Inclusion

Increasing Inclusion

In 2017, about 1.7 billion adults (31% of the world’s adult population) in the world did not have access to financial services (World Bank Group, 2018). This is alarming and calls for immediate action. A growing number of governments, foundations, and international institutions have shown their commitment to the advancement of financial inclusion, prioritizing this issue in their agendas. For example, the Bill & Melinda Gates Foundation has launched several initiatives to extend the access to financial services for the unbanked and underbanked, while the United Nations and its member states have indicated financial inclusion as a pivotal enabler for many of the UN’s 2030 Sustainable Development Goals.

Jin (2017) obtained results on the impact of financial inclusion on wealth creation, reducing poverty, and improving social protection for citizens.

Using financial innovation makes it possible to create new products and services, develop effective data processing and storage models, help expand customer reach, reduce cost, and improve financial services provision.

In Ukraine, the strategic objectives of the financial sector digital development are outlined in the Concept of the Development of the Digital Economy and Society of Ukraine for 2018–2020 (Verkhovna Rada of Ukraine, 2018). Urgent issues of financial inclusion based on ensuring the balance between solving local problems, promoting innovation, risk management and consumer protection in Ukraine were discussed at the Second Financial Inclusion Forum (The National Bank of Ukraine, 2019).

Digital financial inclusion: evidence from Ukraine

The article examines the influence of the current stage of economy digitalization on the financial inclusion in Ukraine. The purpose is to assess the level of financial inclusion in the country, to determine the dominant influence of price and non-price barriers to access to financial services for the Ukrainian population when compared to other world countries and to define which part of the adult population is able to join the formal financial services system through the use of innovative channels and financial service systems. Based on the methodological approaches proposed by the World Bank and the G20 Financial Inclusion Indicators, the authors analyze the real traditional and digital access opportunities of the general public to financial services in Ukraine compared to other countries across the world. Particular emphasis is placed on overcoming existing non-price barriers that impede formal financial inclusion of the Ukrainian population. The research findings stress the need to adhere to the basic principles of digital financial inclusion in order to regulate activities of financial institutions and their agents in the digital provision of financial services, strengthen regulatory control over the use of innovative financial products and service systems, and protect the rights of consumers of financial services in Ukraine.

Financial inclusion is assessed on the basis of quantitative and qualitative indicators:

  1. the access is determined by the availability of service infrastructure (financial institutions, their branches and offices, technical facilities, agent network, means for remote access to services: Internet, mobile communication, etc.);
  2. the quality of financial services for consumers is evaluated in terms of price affordability, uninterrupted service, effective consumer protection system, etc.;
  3. the usage is considered with regard to understanding the essence of the service by the consumer, the population’s financial literacy, the positive impact of the service on quality of life, etc.

The main reasons for the limited access of a large number of consumers to financial services in Ukraine are:

  1. compulsive removal (financial isolation) resulting from hostilities, terrorism, and natural disasters;
  2. forced removal due to lack of trust in financial institutions, their remoteness, high tariffs, etc.;
  3. voluntary refusal due to lack of income or demand for financial products and services;
  4. unequal access of citizens to financial services in some regions of the country;
  5. low interest or limited ability of non-banking financial institutions to provide certain types of financial services using digital service channels;
  6. inadequate legislative and regulatory control for the provision of certain types of services and the use of individual channels and innovative tools;
  7. low public awareness of the use of innovative products and services.

Can blockchain accelerate financial inclusion globally?

Financial products and services drive the world’s development and reduce poverty. However, more than 1.7 billion individuals globally currently lack the most basic financial services and therefore cannot adequately invest in their health, education, and entrepreneurship. Recent progress has been driven by a new generation of financial services accessed via mobile phone and the internet. Decentralized digital currencies—empowered by their underlying blockchain technology—have caused quite a stir in the tech and financial community, and its potential for empowering financial inclusion is being tested globally.

Blockchain could have the potential to facilitate remittances for migrants seeking to transfer small amounts of money overseas; blockchain could provide a decentralized global bank account relieving financially excluded individuals from having to set one up with formal financial institutions; and blockchain could provide the basis for a richer set of financial services.

The reasons for the unbanked and underbanked not having an account:

  • Geographical access to financial institutions is limited
  • Insufficient funds to operate an account
  • Financial services are too expensive relative to income
  • Lack of necessary personal documentation (ID, passport, etc.) to formally open an account
  • Family member already has an account
  • Religious reasons
  • Lack of trust toward financial institutions

The case for blockchain

  1. Blockchain addresses the high fees issue
  2. Blockchain facilitates the account opening process
  3. Blockchain reinforces trust

Key challenges in blockchain infrastructure


In light of the importance of financial inclusion and the complex nature of the obstacles described, collective action from private sectors and government is required to provide innovative solutions within a sustainable and supportive ecosystem. Blockchain is not the sole answer, but it can be a game changer by accelerating and boosting financial inclusion.