As 2024 draws to a close, the financial inclusion sector appears to be at a crossroads, increasingly prioritizing financial health and well-being, exploring integrations with climate resilience and environmental sustainability, leveraging digital public infrastructure, and shifting focus toward broader outcomes like resilience, equity, and alignment with global development goals. These evolving paths collectively signal a move away from simply expanding products to achieving meaningful outcomes.
This shift has been years in the making, but 2024 stands out as the year when the sector saw a significant shift. Tangible pivots and emerging trajectories have begun reshaping efforts to articulate a clearer theory of change and push from incremental to transformative impact. As Portfolios of the Poor revealed the complexity of financial lives for low-income people — shifting our focus from microcredit to a comprehensive suite of financial services like payments, savings, and insurance — we now find ourselves at a new crossroads. This time, it is not the products themselves, but the outcomes they generate, that are being revisited.
Tangible pivots and emerging trajectories have begun reshaping efforts to articulate a clearer theory of change and push from incremental to transformative impact.
One major example of this evolution is the strategic repositioning of the Office of the UNSGSA, which has moved its focus from financial inclusion to financial health. This pivot reflects a growing recognition that improving the outcomes of financial inclusion, rather than merely expanding access, should be our ultimate goal. Similarly, CGAP’s Financial Inclusion 2.0 has been a landmark initiative, emphasizing the need to maximize the impact of financial services by integrating resilience, equity, and broader development goals such as climate change mitigation and gender inclusion. These initiatives underline the sector’s movement toward more meaningful and impactful outcomes as well as a willingness to dedicate more resources towards understanding evidence how impact occurs, such as through the newly launched CGAP Impact Pathfinder.
Building on these transformative initiatives, many organizations have partially or fully embedded the climate change agenda. ADA, for instance, a leading Luxembourgish development organization, has emerged as a frontier thinker in integrating finance and environmental sustainability. Responsible finance, as ADA illustrates, began with a set of exclusion criteria — defining what was not ethical or responsible, such as investments in harmful industries. Over time, this evolved into more proactive approaches of impact finance, where the focus shifted to funding initiatives that deliver measurable social benefits. More recently, ADA has embraced sustainable finance, integrating environmental objectives directly into financial strategies. ADA’s work reflects the evolving regulatory landscape in the European Union, which distinguishes between “grey” (traditional finance), “light green” (finance incorporating some environmental considerations), and “deep green” (fully sustainable finance) approaches. This nuanced framework has guided ADA’s efforts to build inclusive financial ecosystems that not only address social and environmental challenges but also align with rigorous sustainability standards. To this end, several capacity building initiatives that aim to assist the financial sector with this transformation, including the launch of IFC’s Clima Lab that works with banks in Europe to make this transition.
Financial Inclusion: A Means to an End
The various market shifts converge towards a crucial realization: finance needs to be in support of a larger goal. Or, as Paul Krugman bluntly put it during the 2007/08 Financial Crisis, finance needs to be boring again. Financial services in other words should not be a vertical we seek to expand at all costs but rather an enabling layer — a support function that helps other goals, sectors, and initiatives achieve their outcomes.
This dynamic became clear in CFI’s first-ever project in the blue economy. This year, we partnered with Rare, a pioneering environmental organization, to explore how inclusive finance could support sustainable fisheries. In one scenario, fishermen accessed credit to buy larger nets. Financial inclusion rose, but sustainability plummeted as overfishing increased. In another, savings and credit were channeled to build alternative income streams for fishing communities. This reduced pressure on fisheries and conserved mangroves. Financial inclusion went up — and so did sustainability.
The lesson is clear: financial inclusion is not an end in itself. Its value lies in how well it aligns with ultimate goals.
The lesson is clear: financial inclusion is not an end in itself. Its value lies in how well it aligns with ultimate goals, whether that’s sustainable fisheries, access to healthcare, quality education or new economic opportunities. Finance should act as a supporting layer that empowers these outcomes for clients, rather than the centerpiece of our efforts.
Breaking Free from Findex Metrics? Not Quite
Findex has been the energy fueling financial inclusion sector for almost two decades. It focuses our efforts and provides a unique research methodology that rigorously and regularly gives us crucial insight on levels of financial inclusion around the world.
The Findex database has evolved to provide valuable insights into account ownership and metrics on frequency of use as well as other key aspects of financial access. Its achievements are remarkable. However, as a community, we need to ask ourselves whether more of any financial inclusion metric — like account ownership — is inherently better. This assumption can be misleading, as it overlooks the importance of aligning financial access with meaningful outcomes and broader development goals.
But let’s imagine a world where involuntary financial exclusion is zero. Would that mean we’ve achieved our sector’s ultimate goal? Not necessarily. The assumption that “more is better” — whether it’s account ownership or any other metric — is overly simplistic. Instead of chasing a single flagship metric, what if we measured progress through development outcomes like improved education, better healthcare access, expanded economic opportunities, and enhanced sustainability? In this way, finance would take its rightful place as a horizontal enabler — a support function that helps achieve these broader goals. Isn’t that what finance is ultimately meant to do?
2025 and Beyond
As we close 2024, it’s clear that the financial inclusion sector is at an inflection point. We must be bold enough to move beyond traditional metrics and frameworks. To do this, we need to reimagine our tools, redefine success, and measure what truly matters. This includes better assessing the contribution that financial inclusion plays in people’s lives. As a field, at this crossroads, we need to align on the definitions that better capture our shift in focus. We will need to delve deeper into financial outcomes and financial health definitions and indicators.
We need to reimagine our tools, redefine success, and measure what truly matters. This includes better assessing the contribution that financial inclusion plays in people’s lives.
To get us started, we should consider the portion of attribution that can be placed on financial services. Financial services alone, without consideration of contextual factors, such as macroeconomic stability, climate resilience, and consumer protection guardrails, to name a few, help contribute to client’s well-being. Access to finance, especially credit, can have both positive and negative impact on consumers’ lives.
In the ever-more-changing and highly complex financial lives of clients, we currently have more data on the people that we serve than ever before. When it comes to access to credit, clients have access to a variety of sizes and loan terms. For many, there is also a swiftness and ease of access. While this has resulted in greater flexibility, which benefits many, the complexity is something that we’re not currently well versed in evaluating for potential risks.
What does over-indebtedness mean in today’s world? In some countries, we define over indebtedness through the number of loans a client has in their personal portfolio. In others, we aim to look at the percentage of income a household uses to service debt, on a monthly basis. However, what happens when some of those loans are much shorter term? How do we assess a client’s liquidity when some of their lenders are not regulated, and perhaps do not report to credit bureaus? With over-indebtedness on the rise in some markets and persisting in others, we have yet to put in place the necessary guardrails to allow markets to provide services such as credit counseling and personal bankruptcy options for those clients for whom access to credit has had a negative impact.
At the Center for Financial Inclusion (CFI), we will continue to play our part to contribute to this juncture the financial industry journey is already taking. Our new strategy, set to launch in 2025, aims to tackle these challenges head-on. By focusing on how financial inclusion can drive meaningful outcomes — from resilience, economic opportunities, and sustainability — we are rethinking the very role of finance in achieving development goals. This renewed strategy represents our commitment to ensuring that finance truly serves as a tool for impactful change.
The journey ahead will not be about expanding financial inclusion at any cost but about ensuring finance delivers the outcomes our world desperately needs.
2025 offers a chance to deepen this shift. The journey ahead will not be about expanding financial inclusion at any cost but about ensuring finance delivers the outcomes our world desperately needs. Let’s make it the year that we embrace finance as the enabling layer it was always meant to be.
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