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You Can't Manage What You Can't Measure
Peter Drucker famously applied the adage you can't manage what you can't measure to widgets at General Motors. Researchers, fintech entrepreneurs, elected leaders, and others who are trying to ensure economic mobility for all would do well to remember this advice. To be able to interpret or conclude that real improvements are occurring due to financial innovation, it is important to understand the metrics used for assessing economic mobility.
One important resource for data on financial inclusion is the Group of Twenty (G20) Global Partnership for Financial Inclusion (GPFI). This group has produced a number of excellent documents on financial inclusion. I want to bring special attention to the G20 Financial Inclusion Indicators and the interactive dashboard.
These indicators grew out of the original Basic Set of Financial Inclusion Indicators, which was created in 2012. Updated this past April, the indicators are meant to measure achievements and disparities in the use of digital financial services along with the technology or environment that is needed to enable use of these services. The dashboard interprets recent data collected for certain indicators. You can download country-level raw data based on variables that you customize. Also on the G20 site is an interactive data visualizer that will let you see how the United States compares to other countries by each indicator.
There are three dimensions to the measurement: (1) access to financial services, (2) use of financial services, and (3) quality of products and service delivery. Here are some indicator categories related specifically to payments:
- Retail cashless transactions
- Adults using digital payments
- Mobile phone or Internet-based payments
- Payments using a bank card
- Debit card ownership
- Proximity to physical points of service (i.e. branches, ATMs, access to internet)
- Enterprises that send or receive digital payments
- Received wages or government transfers into an account
The GPFI encourages individual countries to supplement the G20 Indicators with country-specific metrics. Following are several additional sources contributing to measurements of financial inclusion for the United States:
- U.S. Financial Health Pulse by the Financial Health Network: Measures financial health using the Center for Financial Services Innovation Financial Health Score measurement methodology, consumer surveys, and transactional records.
- The Opportunity Atlas by the U.S. Census Bureau and Opportunity Insights: Maps the neighborhoods in the United States that offer children the best chance to rise out of poverty.
- Small City Economic Dynamism Index by the Federal Reserve Bank of Atlanta: Provides a snapshot of the economic trajectory and current conditions of 816 small and midsized cities across the United States. It includes 13 indicators of economic dynamism for metropolitan and micropolitan areas with populations above 12,000 and below 500,000.
- Payment Volume Charts Treasury-Disbursed Agencies> by Bureau of the Fiscal Service:: Offers downloadable reports that compare monthly and cumulative electronic funds transfer payment volumes for different time periods.
- Model Safe Accounts by the Federal Deposit Insurance Corporation: Offers an overview and report of a pilot program designed to evaluate the feasibility of financial institutions offering safe, low-cost transactional and savings accounts that are responsive to the needs of underserved consumers.
Keeping data at the forefront of the discussion on financial inclusion will better inform strategies, help organizations and entrepreneurs build better products and services, and help policymakers and many others monitor the effect of initiatives.
By Jessica Washington, AAP, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed