World Bank calls for financial services expansion in emerging markets

World Bank calls for financial services expansion in emerging markets

The cost of financial transactions in the developing world could be reduced by as much as 80% through a reform of inefficient payment and securities systems, according to the World Bank.

The recommendations follow the release of a report, Financial Infrastructure: Building Access through Transparent and Stable Financial Systems, that analyses the various systems used to process credit reports, payments, workers' remittances and collateral registries.
The report, written by the International Finance Corporation (IFC), a division of the World Bank that promotes private sector investment in developing countries, also predicts that access to financial services could be extended to cover half of the population of these emerging markets.
According to 2008 figures credit bureaus cover 390 million people and support $800 billion worth of credit while remittances cover 700 million people at a value of $328 billion. A focus on building and reforming credit reporting, collateral registries and payment and securities systems could see these figures grow sizeably and the full potential of transaction banking in emerging markets could be realised, concludes the report.
"Properly functioning financial infrastructure is critical for efficient and increased access to financial services," says Peer Stein, IFC manager for access to finance advisory services. "And this report shows not only where we could be in terms of access to finance, but it provides a roadmap for achieving these gains at a global, country, and institutional level."
The report's release coincides with the annual user conference of banking co-operative Swift, this year held in Hong Kong, where the high cost of processing payments and other transactions in the developing world has been one of the more prominent issues.
At a press conference on the opening day of the show, Swift chairman Yawar Shah and CEO Lazaro Campos raised the prospect of transposing the Swift networking infrastructure for use in domestic national markets - with emerging economies such as China cited as key targets.

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