Countries that also host major wealth hubs appear to be highly ranked in a global measure of financial inclusion. The US ranks in the top four of this particular index.

An annual global measure of what are the most financially “inclusive” jurisdictions puts the Asian city-state and wealth management hub of Singapore in top spot, followed by Hong Kong, Switzerland, the US, and Sweden. Denmark, the UK, Norway, Australia, and Thailand make up the sixth, seventh, eighth, ninth and 10th spots, respectively. 

The figures came from Principal Financial Group and the Centre for Economics and Business Research. It launched its Global Financial Inclusion Index in 2022.

The organizations created in an index that is designed to track financial inclusivity across the world. 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, the groups said. 

According to the World Bank, the term 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.”

Explaining Singapore’s top position, the report said the jurisdiction is ranked first, second and third in the government, employer and financial system support pillar, respectively. It singled out Singapore’s progress in employer support where it rose 12 places from 14th in 2022. 

While inclusive according to such tests, Singapore is not necessarily an easy jurisdiction to live in, if judged by prices. The city-state is the most expensive place to be a wealthy individual, according to figures earlier this year from Julius Baer.

The index results show that financial inclusion is increasing around the world, the authors of the report said. 

Such figures may help shape wealth managers’ decisions on where to deploy staff and resources if they perceive opportunities to improve services or take advantage of high levels of existing financial inclusion. Such data can also drive decisions of where affluent professionals, for example, would most want to live.

 “The data shows financial inclusion, at a global level, is improving. This is noteworthy - and encouraging - considering the various economic challenges many countries encountered in the past year. Greater financial inclusion is occurring despite economies navigating through a period of supply-side shocks, heightened inflation, and consequent adjustments in interest rates.”, Kay Neufeld, director, and head of forecasting, CEBR, said.

The largest advancements in inclusion were in Latin America, Southeast Asia, and Southern Europe. Western and Northern Europe were broadly flat. Of the 42 markets covered in the Index, the UK has risen from 14th to seventh. Singapore remained in the top spot. The US fell to fourth spot.

Europe’s major economies are failing to make progress in financial inclusion, with scores and rankings broadly either declining or remaining flat. Germany fell seven places to 22nd and France fell two places to 25th, with Spain (29th) and Italy (37th) stable year-on-year. The bottom 10 countries are dominated by 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).

The relatively high ranking of the UK comes at a time of continued soul-searching in the political, business and media world about the country’s financial performance after Brexit.

“The actions of the UK’s financial system to protect the financial well-being of the population - which saw its financial system support ranking improve by six places - was, in large part, a direct response to a self-inflicted wound from the government. The ‘mini budget’ under former Prime Minister Liz Truss and former Chancellor Kwasi Kwarteng, created economic chaos and a potential pensions crisis,” Seema Shah, chief global strategist at Principal Asset Management, said. 

“The banks’ ability to maintain access to credit and provide stability to smaller businesses is reflected in the UK data and its rise in the overall ranking. But this is more a case of fixing a problem of its own creation rather than meaningful progress in financial inclusion,” Shah added.