Malaysia moves up to 18th in 2023 Global Financial Inclusion Index

PETALING JAYA: Malaysia is the 18th most financially inclusive market out of 42 markets analysed globally, according to the 2023 Global Financial Inclusion Index. This year’s ranking is an improvement of two places over 2022’s 20th spot.

Malaysia improved in two of the three pillars of financial inclusion, ranking 22nd (up two places from 24th) for government support, 17th for financial system support (up six places from 23rd), and maintaining its fifth place ranking for employer support.

Significant improvements in Malaysia’s digital economy also contributed to its improved overall financial inclusion position, improved rankings for the ‘volume of real-time transactions’ (up 13 places to 14th) and ‘online connectivity’ (up three places to 24th) indicators.

“It’s encouraging to see Malaysia not only rise in the rankings, but to also see an increase in the number of people who feel financially included in this country,” said Principal Malaysia country head and CEO Munirah Khairuddin in a statement today.

“The continued focus on digitisation and other initiatives that eliminate barriers to people’s ability to save and invest will further improve financial inclusion across the country,” she added.

The annual research was conducted by global financial company Principal Financial Group in partnership with independent consultancy, the Centre for Economics and Business Research. The index ranks 42 markets on three pillars of financial inclusion – government, financial system, and employer support – using data points across public and survey-based sources. These pillars represent the key stakeholders responsible for promoting financial inclusion across the population. According to the World Bank, financial inclusion 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”.

As in 2022, Singapore is rated as the most financially inclusive market, ranking first, second, and third in the government, employer, and financial system support pillars, respectively. Hong Kong is ranked second and Switzerland third. Last year’s second-place market, the US, dropped to fourth place.

The bottom 10 countries are located in 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).

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.