KUALA LUMPUR: Malaysia has been ranked among the top 20 markets for financial inclusion out of 41 markets analysed globally, according to the 2024 Global Financial Inclusion Index.

Principal Financial Group conducted the index in partnership with the Centre for Economics and Business Research.

In a joint statement today, they said that financial inclusion has improved globally for the second consecutive year, with all regions seeing advancements.

“As global economic challenges made it harder for businesses and households to access lending this year, the public and the private sectors stepped up to help societies weather declining financial conditions; 32 out of 41 markets (78 per cent) saw their scores for financial inclusion increase year-over-year,” according to the statement.

Malaysia rose one place in the rankings to 28th for levels of education and four places to 26th for financial literacy levels while the country remained flat in the rankings at 16th for its financial system’s support.

However, it saw improvements in digitised finance, making notable improvements in its scores for the volume of real-time financial transactions and in the presence and quality of its fintech companies. It also has improved its score for online connectivity.

Principal Asset Management Malaysia chief executive officer Munirah Khairuddin said Malaysia, alongside India, has been a relative economic beneficiary of China’s contraction.

“In recent years it has benefited from taking on some of China’s labour capacity and, in addition, higher commodity prices have buoyed its export market.

“What has remained consistent, and we see as a secular trend, is the continued advancement in the financial system based on ongoing investment into digitisation. In this area, markets in Southeast Asia are standout world leaders,” she said.

Advancement in the financial system pillar continues to be a key driver for improvements in financial inclusion globally with financial system support improved globally by 5.9 points — this is slightly less than in 2023 when it rose by 8.1 points.

Meanwhile, markets, where fintech growth is accelerating, are more likely to have a greater savings culture and around three-quarters (74 per cent) of markets where data is available have gross domestic savings as a percentage of gross domestic product (GDP) above the global median.

“This suggests that the higher household savings rates in economies with rapidly developing fintech sectors are evidence of greater household resilience during downturns and the foundation of growth through investments,” the statement added.

The Global Financial Inclusion 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. – Bernama