Singapore ranks number one globally for financial inclusivity, according to the inaugural Global Financial Inclusion Index, published by investment management and insurance company Principal Financial Group and UK-based think tank the Centre for Economics and Business Research.
According to the World Bank, financial inclusion is defined as individuals and businesses having access to useful and affordable financial products and services that meet their needs delivered in a responsible and sustainable way. The UN identifies financial inclusion as an enabler for economic growth as well as a key component in several of its 2030 Sustainable Development Goals.
The index examined 42 markets globally, ranking them for financial inclusivity based on three pillars – government support, financial system support and employer support – and looking at the extent to which each of these pillars enables a market’s population to achieve financial inclusivity.
Government support rates, among other things, the existence and coverage of deposit schemes and the scope of consumer protection, while financial system support looks at use of real-time payments, fintech developments and access to credit and bank accounts. Employer support examines employee pension contributions and employee insurance programmes.
Singapore topped the index largely due to strong scores in the government and financial system support pillars, ranking first and third respectively. It fared less well in the employer support pillar, where it finished 14th.
Its high score in the government support pillar was largely due to its streamlined corporate tax system, while it also had a strong showing in the education and employment indicators. It performed less well for the availability of government-provided financial education and deposit protection scheme indicators.
Its high ranking in financial system support was largely due to the relative ease of access to credit, a high percentage of the population having access to bank accounts and the strength of its fintech sector. It scored less well for enabling SME growth.
In employer support, it ranked sixth for employee pension contributions but lower for the rest of the pillar’s indicators.
Hong Kong ranked fourth overall in the financial inclusivity index and was the only market to rank in the top 10 across all three pillars.
This story first appeared on our sister publication, ESG Clarity.