Methodology

The Index was created by Principal and the Centre for Economics and Business Research (Cebr) to measure the degree to which people in regions around the world have access to useful and affordable financial products and services that meet their needs.

Using publicly available data combined with global consumer and business owner surveying, the Index evaluates the degree to which governments, employers, and financial systems promote financial inclusion in 41 markets.

As a leader in global financial services, Principal is committed to helping more individuals, businesses, and communities become more financially secure. When we launched our first Global Financial Inclusion Index in 2022, our aim was to gain greater insight into the levers that enable and inhibit financial inclusion in different markets around the world. The drive to explore this theme is rooted in our belief that financial inclusion sits at the heart of financial security and global economic progress.

While we’ve made great strides in improving financial security for more people, recent economic headwinds have also revealed a fragile economic footing for the financially insecure, resulting in increased poverty rates and a widening wealth and income gap.

To progress toward greater financial security, it’s important to first measure and understand financial inclusion. It’s why we’ve partnered with Cebr to develop the Global Financial Inclusion Index to monitor the dynamics of financial inclusion across the globe through both downturns and periods of prosperity. By using data-driven insights like those found in the Index, we can help identify the structural gaps and clear opportunities to improve financial inclusion globally—ultimately building a more productive and protected workforce and society.

The insights gained from the Global Financial Inclusion Index will help inform how Principal considers future products, services, and investments, our philanthropic efforts, and the organizations and companies we collaborate with to advance financial security.

Long term, the Index will enable Principal and others to take a more nuanced and informed approach to the ongoing dialogue around financial inclusion as a core component of financial security. Use of data-driven insights will provide clearer understanding of the barriers to financial security and allow all of us to produce alternative pathways that broaden access to financial solutions and support.

The definition of financial inclusion used in the report and the accompanying content is based on the World Bank, which defines financial inclusion 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.”

While this is a helpful starting point, the broad-based and complex nature of financial inclusivity implies that there is no single, catch-all metric that can be employed to observe the state of financial inclusion globally. As such, the Index analyzes financial inclusion around three clearly defined pillars: the support provided to people by the government, the financial system, and employers.

The Global Financial Inclusion Index methodology, developed by Cebr, combines various data sources into one unified measure of financial inclusion at the individual market level. Structurally, the Index is split into three pillars—government, financial system, and employer support—which in turn consist of a varying number of indicators.

Indicators consist of single or multiple variables derived from a combination of publicly available quantitative data sources and survey-based data. To arrive at the indicator score, subsequent pillar score, and headline index ranking, we combine the various data points. Scores for each market are generated based on its performance as measured by a particular indicator. Each indicator follows the same set of steps, allowing assignment of a value to each market.

As in previous iterations of the report, we have placed a relative greater weighting on the government support and financial system support pillars, as they are derived from a broader range of data sources (including the proprietary business survey conducted for the purposes of building this Index as well as authoritative third-party data sources), while the employer support pillar exclusively relies on the business survey results, ascertaining what support and benefits employers provide as a business.

While the survey data is an important part of the data inputs required for the Index, it’s important to acknowledge that the information based on robust secondary data sources should be attributed a greater weight, as it’s more likely to reflect an objective assessment of the respective measures. Therefore, we have assigned a lower weight to survey-based indicators within pillars.

This approach provides a unique market score for each metric, which allows us to present separate figures for each indicator and pillar as well as an overall market score.

The indicators constituting the 2023 Index have been retained in their entirety for the 2024 iteration.

However, certain adjustments have been made to the source data of a select few indicators, mainly to mitigate a lack of new data or to account for revised data for specific indicators, alongside further methodological refinements.

The initial stage of the 2024 Index analysis involved recalibrating the 2023 Index to incorporate revised historical data, particularly from the World Bank. As part of the World Bank’s routine data updates, historical data is frequently revised. To ensure precise year-over-year comparisons, we adjusted the 2023 Index to include the most current and relevant data for the designated time periods.

This recalibration process led to minor retrospective adjustments in the 2023 results, affecting both scores and rankings. Notably, the only change in overall rankings was the interchange of positions between Thailand (now eighth) and Australia (now ninth).

Due to a lack of updated data, the scores and rankings for certain indicators (borrowers’ and lenders’ protection rights and access to bank accounts) remain unchanged from last year and will be updated when the latest publicly available data is released.

Adjustments have been made to the source data for the presence and quality of fintechs indicator to mitigate a lack of new data. The 2024 Index also incorporates new indicators: vulnerable employment, equal access to education, and finances in retirement—all of which have been included under the government support pillar.

A note on data for Israel

Given the recent and ongoing conflict in the Middle East, Israel has not been included in this year’s Index, meaning the 2024 edition of the Global Financial Inclusion Index is a study of 41 rather than 42 markets.

The pre-conflict data for Israel used for many indicators are no longer reflective of the current conditions in the market, which have significantly changed since the onset of the conflict.

Removing data for Israel this year ensures the accuracy and relevance of the Index, as including Israel with outdated data would undermine the Index’s reliability. This step maintains confidence in our assessments of other markets while providing a more accurate and responsible approach to Israel’s inclusion in the future.

We have noted in the text instances where rises or falls of one place are not meaningful because they are a result of Israel’s removal from the 2024 data, rather than showing an improvement or decline in a market, pillar or indicator’s performance.

Whereas the Index rankings evaluate a market’s level of financial inclusion in relation to other markets in the Index, the research also incorporates another important metric: regional and global scores on an absolute basis, with scores interpreted on a 0 to 100 scale.

As the global and regional scores do not employ rankings, year-over-year comparisons need to be made with absolute scores. To ensure accurate and meaningful comparisons, we conduct a separate modelling exercise to ensure the absolute scores of the 2023 and 2024 iterations of the indices are directly comparable.

The market-specific scores derived as part of this exercise were consolidated into regional scores using population weights, representing distinct geographical areas—namely the Americas, Europe, Asia Pacific, the Middle East, and Africa. Subsequently, a global score was derived by applying population weights to these regional scores.

Scores and rankings are only representative of the state of financial inclusion across all 41 markets in the Index, and not across all economies in the world.

The Index is built around three clearly defined pillars.

The government support pillar evaluates the degree to which governments promote financial inclusion. It examines:

• the state of public pensions and retirement offerings
• the existence and coverage of deposit protection schemes
• the scope of consumer championing regulations
• employment levels (adjusted to account for informal employment)
• the awareness and uptake of government-mandated pension/savings and retirement schemes
• education levels
• the complexity of corporate taxation systems (used as a proxy for the complexity of income taxation systems due to lack of reliable data for the former)
• the availability and scope of government-provided financial education
• relative levels of financial literacy across societies
• the levels of online connectivity in each market
• the state of finances in retirement (new indicator)
• equal access to education (new indicator)
• levels of vulnerable employment (new indicator)

The financial system support pillar examines the availability and uptake of various types of financial products and services that are central to financial inclusion. It scores markets on:

• volume of real-time payments (weighted by population)
• relative levels of access to credit
• borrowers’ and lenders’ protection rights
• access to bank accounts
• access to capital
• presence and quality of financial technology companies (fintechs)
• how well the financial system in each market enables the growth and success of small and medium sized enterprises
• the overall effectiveness of the financial system as an enabler of general business confidence

The employer support pillar examines the efficacy of business support for employee financial well-being and inclusion across various dimensions such as:

• provision of guidance and support around financial issues by employers
• employee pension contributions
• employee insurance programs
• employer pay initiatives (delivery, flexibility) to promote financial inclusion

A significant portion of the scores is derived from publicly available data, with most indicators based on multiple sources and quantitative data. Where publicly available data does not exist, data has been gathered from comprehensive surveys of senior business managers.

The employer support pillar and a small number of indicators within the government and financial system support pillars are based on business survey data. They are:

Government support

• Consumer championing regulation
• Awareness and uptake of government-mandated pensions/savings and retirement schemes
• Availability of government-provided financial education

Financial system support

• Enabler of small and medium enterprise (SME) growth and success
• Enabler of general business confidence

Employer support

• Provision of guidance and support around financial issues
• Employee pension contributions
• Employer insurance schemes
• Employer pay initiatives

To provide a complete and holistic picture of global financial inclusion, it’s important also to consider the view of individuals across the 41 markets and analyze the extent to which populations recognize and feel that their governments, financial systems, and employers support their financial well-being.

The Index is supplemented with a comprehensive consumer survey of 500 people from each of the 41 markets to assess how people rate the access they have to financial support, products, tools, and services, and to analyze to what extent populations’ understanding of these initiatives reflect the programs, provisions, and performance of these institutions.

The consumer sentiment survey is a separate, complementary study and is not part of the Index methodology.

What is the sample size for the B2B (business-to-business) survey?

• The employer support pillar is informed by an employer survey conducted by Opinium, which surveyed senior managers working in companies of two or more employees. The survey was conducted in March 2024 among 9,050 business respondents in total with a minimum of 50 respondents in each market, which is considered indicative and statistically relevant.

What is the sample size for the B2C (business-to-consumer) survey?

• 21,500 people, including 500 household financial decision makers per market which is considered indicative and statistically relevant. No weightings have been applied. The U.S. is the exception where the survey targeted 1,000 household financial decision makers in the U.S. and weighting was employed to ensure it was demographically representative of the population.

All surveys were conducted online.