NZ has slipped down the ‘financial inclusion’ rankings in the second edition of the Principal Financial Group global review of the relatively new concept.
According to the Principal report, NZ fell four places to land at 16th out of 42 countries assessed under multiple metrics covering government, financial system and employer support factors.
Overall, however, the study found financial inclusion showed “some improvement” globally.
Dan Houston, Principal chief, says in the report that better performance was “particularly noticeable in Southeast Asia and Latin America, both regions making enormous progress in digital financial infrastructure”.
While NZ rated top for protection of borrowers and lenders – and reasonably highly for factors such as access to credit and financial literacy – the country was marked down for poor employer support and ‘connectivity’ issues where it ranked joint last with Israel and Ireland for real-time payments.
The Principal review also found Kiwi access to fintech companies was below average at 25th on the table (23rd in the 2022 report).
In the report, Seema Shah, Principal Asset Management chief global strategist, says countries with “digitally-enabled financial systems” face better growth prospects.
“Improving online connectivity and the development and adoption of digital infrastructure – especially within financial services are helpful data points when assessing markets’ growth potential,” Shah says. “These are important components of a financially inclusive society and are also apparent in many of the markets we identify as attractive from an investment standpoint.”
Financial inclusion has emerged as an investment consideration after listing as one of the 17 Sustainable Development Goals laid down by the UN in 2015.
The World Bank defines the concept as “individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way”.
Singapore tops the Principal financial inclusion index for the second time followed by Hong Kong and Switzerland, which both improved year-on-year.
The least inclusive nations remain the same as in the inaugural report with Argentina last, just below Ghana and Nigeria.