Surveys
Singapore Stands Tall As World’s Most Financially “Inclusive” Nation – Study
Countries that also host major wealth hubs appear to be highly ranked in a global measure of financial inclusion.
An annual global measure of what are the most financially
“inclusive” jurisdictions puts the Asian city-state and wealth
management hub of Singapore in top spot, followed by Hong Kong,
Switzerland, the US, and Sweden. Denmark, the UK, Norway,
Australia, and Thailand make up the sixth, seventh, eighth, ninth
and 10th spots, respectively.
The figures came from Principal Financial Group and the Centre
for Economics and Business Research. It launched its Global
Financial Inclusion Index in 2022.
The organizations created in an index that is designed to track
financial inclusivity across the world. Progress in financial
inclusion is strongly and positively correlated to progress in
other metrics of social and economic development, such as lower
levels of corruption and greater economic freedom, resilience,
and productivity, the groups said.
According to the World Bank, the term is defined as “individuals
and businesses having 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.”
Explaining Singapore’s top position, the report said the
jurisdiction is ranked first, second and third in the government,
employer and financial system support pillar, respectively. It
singled out Singapore’s progress in employer support where it
rose 12 places from 14th in 2022.
While inclusive according to such tests, Singapore is not
necessarily an easy jurisdiction to live in, if judged by prices.
The city-state is the most
expensive place to be a wealthy individual, according to
figures earlier this year from Julius Baer.
The index results show that financial inclusion is increasing
around the world, the authors of the report said.
Such figures may help shape wealth managers’ decisions on where
to deploy staff and resources if they perceive opportunities to
improve services or take advantage of high levels of existing
financial inclusion. Such data can also drive decisions of where
affluent professionals, for example, would most want to live.
“The data shows financial inclusion, at a global level, is
improving. This is noteworthy - and encouraging - considering the
various economic challenges many countries encountered in the
past year. Greater financial inclusion is occurring despite
economies navigating through a period of supply-side shocks,
heightened inflation, and consequent adjustments in interest
rates.”, Kay Neufeld, director, and head of forecasting, CEBR,
said.
The largest advancements in inclusion were in Latin America,
Southeast Asia, and Southern Europe. Western and Northern Europe
were broadly flat. Of the 42 markets covered in the Index, the UK
has risen from 14th to seventh. Singapore remained in the top
spot. The US fell to fourth spot.
Europe’s major economies are failing to make progress in
financial inclusion, with scores and rankings broadly either
declining or remaining flat. Germany fell seven places to 22nd
and France fell two places to 25th, with Spain (29th) and Italy
(37th) stable year-on-year. The bottom 10 countries are dominated
by Latin America and sub-Saharan Africa, despite evidence of
improvement in both regions. The bottom six countries have
remained identical year over year (Argentina, Ghana, Nigeria,
Colombia, Peru, and Italy).
The relatively high ranking of the UK comes at a time of
continued soul-searching in the political, business and media
world about the country’s financial performance after Brexit.
“The actions of the UK’s financial system to protect the
financial well-being of the population - which saw its financial
system support ranking improve by six places - was, in large
part, a direct response to a self-inflicted wound from the
government. The ‘mini budget’ under former Prime Minister Liz
Truss and former Chancellor Kwasi Kwarteng, created economic
chaos and a potential pensions crisis,” Seema Shah, chief global
strategist at Principal Asset Management, said.
“The banks’ ability to maintain access to credit and provide
stability to smaller businesses is reflected in the UK data and
its rise in the overall ranking. But this is more a case of
fixing a problem of its own creation rather than meaningful
progress in financial inclusion,” Shah added.