The cost of banking, travel distance and amount of paper work involved in opening an account has prevented three quarters of the world’s poor population from having a bank account.
According to the data released by the World Bank on Thursday, about 75 percent of adults earning less than $2 a day, or more than 2.5 billion people remain unbanked.
A 2011 survey of about 150,000 people in 148 countries carried out by the World Bank showed that more than half of the population in developing countries did not have a bank account, compared with only 10 percent in rich countries.
Even among those who do had a formal bank account, only 43 percent used it to save.
Women constitute an even larger proportion of the unbanked. For instance 37 percent of women in developing countries have an account while 46 percent of men do.
Asli Demirguc-Kunt, director of development policy and chief economist of the Finance and Private Sector Network, said lacking a bank account made it harder for this population to build up reserves, use credit, insurance and other complex formal financial tools.
World Bank Group President Robert Zoellick said he believed that providing financial services to the 2.5 billion of unbanked world population could boost economic growth and opportunities for the world's poor.
“Harnessing the power of financial services can really help people to pay for schooling, save for a home, or start a small business that can provide jobs for others,” he said.
Zoellick said this was because the more poor people banked today, the more they banked on their future.
The problem of being “unbanked” is also linked to income inequality.
According to the data collected by Gallup, Inc. for the World Bank’s Global Financial Inclusion Database, the richest 20 percent of adults in developing countries are more than twice as likely to have a formal account as the poorest 20 percent.
According to this survey, barriers to opening a bank account included not only poverty but the cost of opening and maintaining an account or the banks being too far away.
Money transfers through mobile phones have become increasingly popular amongst these groups as it often did not require users to travel or set up an account with a bank.
This form of banking has expanded to 16 percent of the market in Sub-Saharan Africa, the survey revealed. In Kenya for instance, 68 percent of adults use a mobile phone for money transactions.
Some of South Africa’s big banks have also scaled up the services offered through their mobile banking, enabling people without bank accounts to receive money.
First National Bank launched its Sending Money mobile application in 2009 and Nedbank teamed up with Vodacom to launch its mobile phone person-to-person money transfer service M-PESA in South Africa in 2010.