Policy Level Response to Financial Exclusion in Developed Economies: Lessons for Developing Countries

This study commissioned by the Department for International Development (DFID) provides a brief overview of the policy-level response to financial exclusion in a number of developed economies. It also draws lessons that can be applied in those countries that have less developed banking systems.

The study presents detailed case studies of Australia, Belgium, Canada, France, Great Britain and the United States and provides:

• A brief overview of the banking sector (including regulatory mechanisms and levels of concentration of the banking sector);
• An overview of the main characteristics of banking exclusion (levels of exclusion, characteristics of the unbanked and their geographical concentration);
• Details of policy responses to banking exclusion that have been implemented by regulatory authorities, government departments and the banks themselves and the impact that these have had on service provision and widened access.

Finally, the study lists lessons to be learnt from these experiences:

• There is a need for low-cost no-frills accounts; simple basic banking solutions for low-income people;
• Technological developments can contain costs and allow wider geographical access;
• There is a need to promote the use of banking services and to increase access to them;
• Levels of banking exclusion tend to be lower where not-for-profit organizations, such as post offices, play a role in delivering banking services;
• There is a need to achieve universal access to banking.