Competition for Financial Inclusion: A Conceptual Framework

Persistent gaps in financial inclusion are not only reflected in the 1.3 billion people who remain unbanked, but also the millions who have accounts but experience distant, costly, or poorly suited services. This is because because markets remain concentrated, customers have few reliable alternatives, and new entrants face persistent structural and regulatory barriers. While digital finance lowers entry barriers and accelerates innovation, it also creates new risks.

Competition therefore needs to move to the center of the regulatory agendas of financial authorities, rather than as an afterthought. Financial sector authorities already shape market structure and dynamics through licensing requirements, infrastructure governance, interoperability rules, and supervisory standards, giving them the tools to act ex ante to keep markets competitive and inclusive.

This paper addresses two key knowledge gaps:

• It provides a comprehensive synthesis of global evidence on how competition drives financial inclusion, identifying pathways of competition dynamics that lead to inclusive consumer and market outcomes.
• It also develops a conceptual framework that helps financial authorities diagnose where competition breaks down, understand which regulatory tools/ approaches matter most, and identify how these interventions can lead to more inclusive outcomes, all within their existing mandates and without undermining stability, integrity, or consumer protection.

Ultimately, the insights in this paper point to the importance of financial authorities applying an intentional competition lens and offer an analytical framework to help deliver more inclusive and resilient financial systems.