Financial inclusion can be a catalyst for economic development and a source of economic empowerment, especially through digital means, which lower costs and facilitate access. However, in developing and emerging countries, not even half of the population uses digital payment services—the simplest digital financial service (DFS) and a door to further inclusion. And in some countries, less than 25 percent use these digital payments.

Most countries have enacted ambitious and all-encompassing national financial inclusion strategies and other significant efforts. While some have achieved substantial progress, many others continue to fall short of expectations. Policymakers often lack the necessary analytical tools for identifying the most pressing constraints to digital financial inclusion—these impediments are where they should be focusing their efforts and where solutions should be prioritized.

CGD developed a methodology to fill this gap and offer policymakers this much needed tool. Applied in five initial case studies (in Ethiopia, India, Indonesia, Mexico, and Pakistan), this deductive approach, based on the study of the fees and costs to access the service and other indicators, helps analysts to discard potential irrelevant constraints and find those whose relaxation could unleash the potential of digital financial inclusion.  

Policymakers, researchers, and other stakeholders can use the materials from this country-specific diagnostics framework to disentangle the root causes of low financial inclusion and develop efficient and effective policy solutions.