The number of people with access to financial services is growing all the time. This is happening in Brazil and around the world. Advances in information technology and social distancing from the pandemic have contributed to this growth. In the Brazilian case, PIX has become a case study by establishing itself as a means of payment and a bridge between informal workers and financial institutions. Now is the time to discuss the quality of inclusion. After all, financial inclusion goes beyond an app, login and password.

Throughout 2024, Brazil held the rotating presidency of the G20, the forum for debate on global economic development that brings together 19 countries and the regional blocs of the European Union and the African Union. Financial inclusion was part of the forum's discussions, with a technical group specially appointed to deal with the issue, given its global relevance. This technical group is part of the so-called Finance Track, led by the economic ministers and central bank presidents of the member countries. Below we highlight some insights into financial inclusion from the discussions raised by the G20, under the Brazilian presidency, throughout 2024:

1. The "last mile" of inclusion: how to keep including?

Although financial inclusion has advanced in the last decade, the "last mile" still needs to be covered. A document from the Global Partnership for Financial Inclusion (GPFI), produced under the guidance of the Brazilian presidency of the G20, mapped the profile of consumers who are still financially excluded and listed some policies to include this public, estimated at 1.5 billion adults, according to the latest Global Findex data from 2021.

The document highlights some facilitators for the financial inclusion of the remnants. The first facilitator would be expanding the reach of information technology, including access to the internet and cell phones, especially in remote and rural areas. This would require coordinated action between the financial sector and the communications sector. The document also mentions the development of digital infrastructures for public use to enable payments and data sharing protocols.

The Brazilian experience shows that the country has begun the journey of the last mile. The creation of PIX and the modernization and, more recently, Open Finance, are examples of public infrastructures that facilitate financial inclusion. The modernization of the Cadastro Positivo has, in turn, enabled cooperation between the financial industry and other sectors, including telecommunications, making millions of consumers visible for credit. However, another challenge arises: transforming visibility into conscious use of credit and, therefore, into well-being.

2. Change of focus: beyond inclusion, quality.

The quality of inclusion was the priority of Brazil's G20 presidency. As the head of the Central Bank's Department for Promoting Financial Citizenship pointed outAccording to Luis Mansur, until then discussions were centered on expanding access to and use of financial services, given the size of the inclusion gap. With the progress made in recent years, it would be time to shift the focus to the quality of inclusion and financial well-being. This is because the use of financial services by the newly included population could be accompanied by another tragedy: over-indebtedness.

If credit is a means of increasing well-being and boosting economic development, over-indebtedness resulting from the misuse of credit reduces well-being and, ultimately, can lead to economic crises. Hence the importance of an approach that aims to expand access to financial services and, at the same time, train new users so that they are aware of these services and make conscious use of credit without compromising their future.

3. Financial well-being: how to define it and how to measure it?

Since well-being is the main objective of inclusion, the world needs a more precise definition of what well-being is and, above all, metrics that allow for the exchange of experience and dialog between countries. Over the last year, this has been another issue that the G20's financial inclusion working group has been working on. The result was a preliminary definition of financial well-being based on the definitions proposed by various organizations and countries. One of the experiences that served as a reference was the Brazilian Financial Health Index, the product of a partnership between the Central Bank of Brazil and FEBRABAN, which was supported by the credit bureau sector.

The preliminary definition proposed by the document describes financial well-being as a "state in which individuals are able to smoothly manage their financial needs and obligations, cope with negative shocks, pursue aspirations, goals and capture opportunities, and feel satisfied and confident about their financial lives, bearing in mind country-specific circumstances."

Based on the definition of well-being, the next step would be to build an indicator to measure financial well-being. In order to be consistent with the definition proposed in the document, the well-being metric should consider objective and subjective aspects. The objective aspects include income and access to credit, and can be measured through field surveys or existing databases. The subjective aspects relate to how individuals assess their financial condition, and are necessarily obtained through field research.

In short, the global agenda tends to focus more efforts on the quality of inclusion, without forgetting that there is still a contingent to be included in the financial system. These efforts include regulatory measures, which require, for example, transparency from financial institutions about the cost and characteristics of their products, and the expansion of financial and digital education. Now under the presidency of South Africa, it will be important for the Group of Twenty to continue developing metrics of financial well-being, favoring the exchange of experience between countries and global development.