Financial Inclusion Advances in Latin America Due to Pandemic

The Covid-19 pandemic drove an increase in the use of digital payments and of the number of adults with bank accounts in the region, according to a World Bank report

Latin America and the Caribbean saw one of the greatest advances in financial inclusion in the developing world, and where the proportion of adults with a bank account rose 18% compared with 2017 figures.
June 30, 2022 | 02:15 PM

Bloomberg Línea — Financial inclusion expanded during the Covid-19 pandemic, as social distancing and quarantine measures were imposed by governments around the world to curb the spread of the virus.

The pandemic drove an increase in the use of digital payments, to the point that two-thirds of adults worldwide now make or receive a transaction by this means, according to the Global Findex report published this week by the World Bank.

Latin America and the Caribbean was one of the regions that saw one of the biggest expansions in financial inclusion in the developing world: the share of adults who have a bank account rose 18 percentage points compared to the 2017 report, the most recent.

More specifically, 73% of adults had a bank account in 2021 and, in addition, 40% paid a merchant via a digital transaction, while 14% of adults did this for the first time during the pandemic.

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“The digital revolution has catalyzed increases in access to and use of financial services around the world, transforming the ways in which people make and receive payments, borrow and save,” World Bank President David Malpass said in a press release.

The countries in the region where the largest percentage of adults have an account are Venezuela, Jamaica and Brazil. In the Venezuelan case, the report highlights that it stands out mostly for the accounts from which remittances are sent, or sent to, or to receive payments from the government.

Jamaica, for its part, has promoted digital payments to the point that it is working on a plan for its central bank to issue a digital currency (CBDC). Bank of Jamaica governor Richard Byles told Bloomberg’s New Economy Gateway Latin America conference in May that the movement of cash is “extremely costly” because of distribution or security costs.


Byles added that Jamaica plans a whole program to digitize the economy, which includes virtual payment of services and taxes, with the aim of making doing business easier.

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In Brazil, Latin America’s largest economy, the report noted that 18% of adults made their first digital payments for goods and services following the outbreak of the pandemic.

“By investing in public digital infrastructure and technologies for payments and identification systems, and updating regulations to foster innovation and protect consumers, governments can build on the progress reported in Findex and expand access to financial services for all who need them,” Bill Gates, co-chair of the Bill & Melinda Gates Foundation, said, and who helped fund the study, according to the press release.

The World Bank also highlighted that Covid-19 drove digital adoption by 15% of Latin American adults, who made their first utility bill payment directly from their account for the first time. The figure is more than double the average for developing countries.


It also highlighted that 24% of adults in Latin America received a public sector salary, government transfer or pension payment into a bank account. Specifically, Argentina, Bolivia, Brazil, Costa Rica and Venezuela stood out, where more than 10% of adults opened their first account in a financial institution to receive such payments.

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There are also other cases such as Colombia, Ecuador, Honduras and Peru, where about 15% of adults paid a utility bill from their account for the first time during the pandemic, without resorting to cash, while 40% of adults made digital payments in stores using a card, a cell phone or the Internet.

Still some way to go

Despite the progress however, there are still obstacles to greater financial inclusion in Latin America and the Caribbean. According to the World Bank report, six out of 10 of those who remain unbanked say that financial services are too expensive, while 32% responded that financial institutions are too far away when citing reasons for not having an account.


According to the multilateral lender, there are 81 million adults who, while banked, still pay for their utilities only in cash. In total, 150 million banked adults made cash-only payments to merchants in 2021, including more than 50 million adults in Brazil and 16 million adults in Colombia.

This “indicates that there are opportunities for greater use of digital payments by banked adults”, the report states.

It is worth noting that globally, by 2021, 76% of adults had an account with a financial institution, while the proportion is 71% in developing economies.

The report included data from Argentina, Bolivia, Brazil, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Peru and Venezuela.

Mexico was not included due to restrictions against Covid-19 still being in place in 2021.