Category: Industry Insights

The World Bank estimates that 1.4 billion adults globally remain unbanked without access to an account at a financial institution or through a mobile money provider. Alongside that figure sits another: in 2025, over 30 million savings group members collectively saved more than $11.5 billion. Group members see income grow an average of 275% within five years, are 50–60% less likely to face food shortages than non-members, and are up to 85% more likely to have savings available during emergencies. CARE International, which pioneered the VSLA model, reports a return of $18.85 for every $1 invested.

The more important question, however, is not how much savings groups have mobilized. It is how much of that activity is actually captured within the formal financial system. There is no widely agreed-upon estimate, and that absence is telling.

This is the visibility gap. People are actively saving, borrowing, and managing money. The economic behavior is consistent and demonstrably valuable. But much of it does not translate into access to broader financial opportunities because the financial system cannot see it.

Savings Groups Emerged to Fill a Structural Failure

For many underserved populations, particularly women, formal financial institutions have historically been inaccessible or misaligned with lived realities. Financial products often require collateral, stable income, or levels of financial literacy that exclude large segments of the population. Even where services exist, they rarely reflect the irregular cash flows and community-based financial practices that define everyday life.

In response, savings-led models such as Village Savings and Loan Associations (VSLAs), pioneered by CARE International in 1991, introduced a different approach. These models prioritize savings over debt, enabling members to build assets gradually, access small loans from pooled funds, and manage financial shocks collectively. As the broader role of savings groups in the financial ecosystem makes clear, these are not informal workarounds — they are deliberate, structured responses to market failure.

Over time, a growing body of research, including work from the World Bank and CGAP, has confirmed that savings groups improve financial resilience, support income-generating activities, and strengthen household-level economic stability. Members diversify livelihoods, invest in microenterprises, and smooth consumption across seasonal cycles.

The model works, and it works at scale. The challenge lies not in demonstrating its value, but in connecting it to a financial system not designed to recognize it.

The Challenge Begins at the Point of Transition

As members grow their businesses and expand their economic activities, their financial needs begin to outgrow the capacity of the group. At this stage, access to formal financial services becomes both relevant and necessary. However, this transition rarely happens smoothly.

Savings groups typically operate without standardized records, formal registration, or verifiable financial histories. Their activities are structured internally, but not in ways that are legible to banks, microfinance institutions, or insurers. This creates a disconnect between demonstrated financial behavior and recognized financial identity. Understanding this global access gap is essential to understanding why the transition point remains so difficult to navigate at scale.

What exists is a form of economic activity that is consistent and valuable but largely invisible.

Digitization as the Bridge Between Two Worlds

Digitization has increasingly been positioned as the bridge between informal and formal finance, and in many ways, it is already reshaping how savings groups operate.

By translating manual processes into digital formats, savings and loan activities can be recorded, stored, and analyzed over time. This improves transparency within groups, reduces calculation errors, and creates a persistent record of financial activity that does not disappear at the end of a cycle. More importantly, it introduces the possibility of a digital financial footprint that can be interpreted beyond the group itself. The case for why digitization matters for savings groups rests not only on operational efficiency, but on this downstream potential.

In practice, this often takes the form of digital ledger systems that mirror existing group workflows rather than replace them. Tools such as DreamSave, developed by DreamStart Labs, follow this approach — allowing groups to record savings contributions, track loans, manage meetings, and perform calculations within a single platform. The design reflects the realities of the users, including offline functionality and minimal device requirements, recognizing that many groups operate in low-connectivity environments and may only have access to a shared smartphone. By October 2025, DreamSave had recorded over 25 million transactions totalling more than $25 million across more than 40,000 groups and 800,000 members in 37 countries — figures that have continued to grow since.

Yet even at that scale, the reach of digitization efforts remains limited relative to the size of the problem. With 1.4 billion adults still outside the formal financial system, what has been achieved represents a meaningful but modest share of the population that savings-led models could ultimately serve. This context matters, because it shifts the central question from whether digital tools exist to whether they are being used consistently enough to generate the data that financial inclusion depends on.

As groups continue to use such tools over multiple cycles, their financial activities begin to form structured datasets. Patterns around savings consistency, loan repayment behavior, and group stability become visible. In contexts where traditional credit histories do not exist, this type of longitudinal group data begins to serve as a proxy for financial reliability.

The Presence of Digital Tools Does Not Automatically Resolve the Visibility Gap

One of the most consistent findings across digitization efforts is that onboarding does not guarantee sustained usage. Groups may adopt digital platforms initially, but without continued integration into their routines, usage declines over time. This results in fragmented or incomplete data, which limits the ability of financial institutions to rely on it for decision-making.

Evidence across the sector consistently shows that digital financial services only translate into meaningful inclusion when they are actively and consistently used — not simply accessed. This distinction is critical in the context of savings groups, where the value of digitization is directly tied to the continuity of records across cycles.

Implementing best practices for digitizing savings groups therefore extends well beyond tool design. The way digital platforms are introduced — whether as core components of group methodology or as optional add-ons — significantly influences whether they become embedded in everyday practice. NGOs, facilitators, and community-based organizations responsible for training and supporting savings groups play a decisive role here, often more so than the technology itself.

The conversation is therefore shifting, rightly, from access to adoption.

Financial Linkages: The Next Stage of Inclusion

This shift becomes even more important when considering financial linkages — the mechanisms through which savings groups connect to formal financial service providers such as microfinance institutions, banks, and insurers. These providers can offer products that go beyond the capacity of the group, including larger loans, insurance products, and other financial services that support business growth and long-term stability.

For these linkages to function, financial institutions need reliable data to assess risk. Sustained digital adoption is what generates that data.

DreamLink is designed as a bridge between savings groups and formal financial providers, using aggregated group-level data generated through DreamSave to inform eligibility assessments. Rather than relying on traditional collateral or individual credit scores — neither of which most savings group members possess — financial institutions can evaluate how groups perform collectively over time: how consistently they save, how reliably they repay loans, and how stable their financial behavior is across cycles.

These developments point to a broader shift in how creditworthiness is understood in low-income and informal contexts, moving from individual collateral to collective financial behavior. But they also reinforce a key dependency.

Without consistent and reliable data, financial linkages cannot scale. Without sustained usage of digital tools, that data cannot be generated. The chain is tight: digitization enables data, usage sustains data, and data enables access.

Where this chain most commonly breaks is not at the level of the technology itself. Digital tools designed for savings groups have demonstrated, across multiple contexts, that they can function effectively in low-resource environments — recording transactions accurately, operating offline, and integrating into existing group structures without significant disruption. The gap between onboarding and sustained usage is better understood as a foundational challenge: one rooted in the behavioral, organizational, and educational conditions that exist within groups before a digital tool is ever introduced.

This is where the role of NGOs, implementing partners, and organizations responsible for group formation and financial literacy training becomes critical — and where, arguably, more intentional strategy is needed. The transition from onboarding to active usage does not happen automatically. It requires that digital adoption be embedded within the training and methodology frameworks through which groups are established and supported. When financial education, group facilitation, and digital tool usage are treated as integrated rather than separate components of a group’s development, the conditions for sustained engagement are meaningfully stronger.

What the sector therefore requires is not better technology alone, but an ecosystem-level strategy that coordinates across technology providers, implementing organizations, and funders to address the behavioral and institutional conditions that determine whether digitization translates into the consistent data trail that financial inclusion ultimately depends on.

The Scale of What Remains

Digitization is a necessary step in bridging the gap between informal and formal financial systems, but it is not sufficient on its own. Without sustained usage, the data required to support financial linkages does not materialize at the level needed for scale. Without purposeful linkage infrastructure, even good data remains unused.

As a result, a substantial portion of the $11.5 billion mobilized by savings groups remains outside the reach of the formal financial system. Because it lacks visibility.

Closing that gap requires technology that works in the field, adoption strategies embedded in group methodology, and financial institutions willing to recognize collective behavior as a legitimate basis for credit. All three conditions must be met simultaneously. And with 1.4 billion people still outside the formal financial system, the urgency of meeting them has never been more apparent.

Financial services are often taken for granted in many parts of the world. Opening a bank account, saving money securely, or accessing a loan for a small business are routine financial activities for millions of people.

For a significant portion of the global population, however, these basic financial tools remain out of reach.

According to the World Bank’s Global Findex database, approximately 1.4 billion adults worldwide remain unbanked, meaning they do not have access to a formal financial account. Without access to financial services, individuals face greater difficulty saving securely, managing risks, or investing in economic opportunities.

Financial inclusion refers to the ability of individuals and businesses to access useful and affordable financial products and services. These services include payments, savings, credit, and insurance delivered in a responsible and sustainable way.

Access to these tools plays an important role in economic mobility. When individuals are able to safely store money, borrow responsibly, and invest in their livelihoods, they are better positioned to withstand economic shocks and improve long-term financial stability.

Yet barriers to financial access remain widespread.

In many rural and low-income communities, physical banking infrastructure is limited or entirely absent. A bank branch may be located several hours away, making routine financial transactions costly and time-consuming.

Cost is another major obstacle. Account maintenance fees, minimum balance requirements, and transaction charges can place formal financial services beyond the reach of low-income households.

Documentation requirements can also prevent many individuals from opening formal financial accounts. Financial institutions typically require government-issued identification to comply with Know Your Customer (KYC) regulations designed to prevent fraud, money laundering, and other financial crimes.

While these safeguards are important for maintaining the integrity of the financial system, they can unintentionally exclude large segments of the population who lack formal identification.

According to the World Bank’s Identification for Development (ID4D) initiative, an estimated 850 million people worldwide do not have an official proof of identity, and many more possess identification that is not recognized by financial institutions. Without valid identification, opening a bank account or accessing formal financial services becomes extremely difficult.

This challenge is particularly pronounced in rural and low-income communities where birth registration systems may be incomplete and access to government documentation services is limited. In some regions, individuals may need to travel long distances to government offices to obtain identification, often involving additional costs and administrative hurdles.

Women are disproportionately affected by this barrier. In many countries, women are less likely than men to possess formal identification due to legal restrictions, social norms, or lower access to documentation processes. As a result, identification requirements can reinforce existing gender gaps in financial access.

For millions of people, the issue is not a lack of willingness to participate in the financial system. It is simply that the documentation required to enter the system is beyond their reach.

Trust also plays an important role. In communities where formal financial systems have historically been inaccessible or unreliable, individuals may be hesitant to engage with institutions they do not fully understand.

These barriers contribute to persistent gaps in financial access across regions and demographic groups.

Women are disproportionately affected. Globally, 56% of the unbanked population are women, representing approximately 740 million individuals. Geography also shapes financial exclusion. Many unbanked individuals live in rural areas where financial institutions have limited presence and digital infrastructure may be inconsistent.

Despite these challenges, communities around the world have developed their own financial systems to manage money and support one another.

One of the most widespread and enduring of these systems is the community savings group.

Savings groups are self-managed financial collectives in which members regularly contribute small amounts of money to a shared fund. Members can borrow from this pool to cover household expenses, invest in small businesses, or respond to emergencies. Loans are typically repaid with small amounts of interest, allowing the collective fund to grow over time.

These systems operate through trust, transparency, and collective governance. Groups establish rules around contributions, lending terms, and repayment schedules, and members often meet regularly to manage their finances together.

While the concept may seem simple, savings groups have deep historical roots.

Informal savings and lending systems have existed for centuries across many parts of the world. Variations of these models can be found in West African esusu groups, Ethiopian iqub, Kenyan chamas, Indonesian arisan, and Caribbean susu systems, among many others. These community-based financial systems emerged long before modern banking institutions reached rural and underserved communities.

In many cases, they developed out of necessity. When formal financial services were unavailable or inaccessible, communities created their own mechanisms to pool resources, manage risk, and support economic activity.

Modern development programs later adapted these traditional systems into more structured savings group models. One of the most widely known models, Village Savings and Loan Associations (VSLAs), was developed in the early 1990s through development programs in Niger. The model introduced standardized practices for savings cycles, loan management, and recordkeeping while preserving the community-driven nature of the groups.

Today, savings groups have become one of the most effective grassroots financial inclusion tools worldwide. Estimates suggest that savings groups serve more than 20 million people globally, the majority of whom are women.

Savings groups help individuals build financial discipline, accumulate savings, and access small loans that support household needs or income-generating activities.

For many members, they represent the first and most accessible financial service available.

However, while savings groups have proven effective for decades, they have traditionally operated using manual tools such as handwritten ledgers and paper records.

These systems work, but they also introduce limitations. Paper records can be lost or damaged, calculations can become complex over time, and financial activity within the groups often remains invisible to the broader financial system.

As conversations around financial inclusion continue to evolve, increasing attention is being placed on how community-based financial systems can be strengthened and supported as part of broader financial ecosystems.

Savings groups already play an important role in expanding financial access in communities where formal banking infrastructure is limited or absent. Supporting these systems is an important part of closing the global financial inclusion gap.

For a deeper look at why these groups are critical to the broader financial system, read our article on [the role of community savings groups in the financial ecosystem].

At DreamStart Labs, this mission sits at the core of our work. We focus on supporting organizations and communities working with savings groups by helping strengthen the systems that enable people to save, access financial resources, and participate more fully in economic life.

By working alongside partners across regions where savings groups are active, DreamStart Labs contributes to efforts aimed at expanding financial inclusion and strengthening the community-based financial systems that millions of people rely on every day.

For many individuals, savings groups represent the first step toward financial participation. Supporting these systems helps create pathways toward greater economic stability, opportunity, and resilience.

Understanding how these community-led financial systems operate—and why they continue to thrive—is an important part of building a more inclusive financial future.

In recent years, global risk reports have increasingly highlighted misinformation as one of the major risks shaping societies and economies. When widely repeated narratives fail to reflect reality, they can influence how institutions, policymakers, and development programs understand complex systems.

Savings groups are one area where misconceptions still persist.

They are often described as informal or temporary financial arrangements—small groups of people saving modest amounts of money together in the absence of formal financial institutions. While this description captures part of the picture, it overlooks something far more significant.

When viewed collectively, savings groups form one of the largest decentralized financial systems in the world.

Across Africa, Asia, and Latin America, it is estimated that more than 20 million savings groups serve over 300 million people. These groups mobilize billions of dollars in savings every year and circulate capital within communities that are often excluded from traditional financial systems.

Rather than existing on the margins of the financial ecosystem, savings groups play a central role in enabling economic participation. Understanding this role requires looking beyond individual groups and considering the broader financial dynamics they create.

Savings Groups as Economic Infrastructure

Savings groups operate at the intersection of household finance and local economic activity.

Members contribute small amounts regularly, building a collective fund that can be used to support loans within the group. These loans often finance activities that directly contribute to local economies—small businesses, agricultural inputs, market trading, and household investments.

Because the capital circulating within savings groups originates from members themselves, the financial value generated through lending and repayment remains within the community.

Interest earned on loans increases the size of the collective fund rather than flowing to external lenders. Over time, this allows communities to build their own pools of financial capital.

Across thousands of communities, these contributions accumulate into a significant economic force.

In many regions, savings groups collectively mobilize millions of dollars in savings each year, providing financial resources that might otherwise remain inaccessible to households and small entrepreneurs.

The Capital Savings Groups Mobilize

When discussions about savings groups focus only on their community structure, an important dimension is often overlooked: the scale of financial resources these groups collectively manage.

Across the world, savings groups mobilize billions of dollars in savings every year.

Research from organizations working in financial inclusion estimates that community savings groups collectively manage tens of billions of dollars in member savings globally. These funds circulate continuously through contributions, loans, repayments, and interest generated within the groups.

Although individual contributions are often small, the cumulative impact becomes significant when multiplied across millions of groups. In Sub-Saharan Africa alone, programs supporting Village Savings and Loan Associations have collectively mobilized over one billion dollars in savings annually, demonstrating the scale at which community-based financial systems operate.

Members often use loans from these funds to purchase agricultural inputs, invest in market trading, expand small businesses, or manage household financial needs during difficult periods.

Because the capital originates from members themselves, these funds remain embedded within local economies. Interest earned on loans increases the group’s total savings rather than leaving the community. Over time, this allows communities to build their own financial reserves while reducing reliance on external lenders.

This circulation of locally generated capital is one reason savings groups are increasingly recognized as an important component of financial inclusion strategies.

They allow communities not only to access financial tools, but also to generate and retain financial resources locally, strengthening economic resilience over time.

A Gateway to the Formal Financial System

Savings groups also serve an important role as bridges between community finance and the broader financial system.

For many individuals, participating in a savings group is the first time they engage in structured financial activities such as tracking savings contributions, managing loans, and participating in collective financial decision-making.

These experiences help members build financial confidence and discipline.

As groups grow and mature, they often begin interacting with the broader financial system. Some groups open bank accounts to safeguard their funds more securely, while others establish relationships with microfinance institutions or cooperatives that provide additional financial services.

These linkages allow savings groups to maintain their community-driven structure while gaining access to additional financial tools.

Organizations working to strengthen financial inclusion increasingly focus on supporting these connections between community finance and formal institutions.

At DreamStart Labs, we work alongside partners supporting savings groups across multiple regions, helping strengthen the systems that enable these community-based financial networks to operate effectively.

Today, our technology supports more than 35,000 savings groups serving over 750,000 members, helping organizations better understand and support the communities they work with.

Understanding Their Place in the Financial Ecosystem

Savings groups demonstrate that financial systems do not always begin with institutions. In many cases, they begin with communities.

By pooling resources, sharing knowledge, and managing financial risks collectively, communities have created systems that allow individuals to participate in economic activity even in environments where formal financial infrastructure is limited.

When viewed at scale, these groups form an important layer within the broader financial ecosystem—one that connects household finance, community resilience, and wider financial inclusion efforts.

Understanding this role helps reveal why savings groups continue to expand across the world. And as these systems grow, new opportunities are emerging to strengthen the way they operate and connect with the wider financial system.

A closer look at why digitization is becoming increasingly important for savings groups provides the next step in understanding how these community-based financial systems are evolving.

Savings groups have always evolved to meet the needs of the communities they serve. From traditional rotating savings systems to more structured models such as Village Savings and Loan Associations, communities have continuously adapted the way they manage collective finances.

Digitization represents another stage in that evolution. Digital tools can help groups record transactions more accurately, simplify complex calculations, and create financial histories that strengthen their ability to engage with the broader financial ecosystem. But introducing digital tools into savings groups is rarely as simple as installing an app.

Experience across savings group programs has shown that successful digitization depends less on technology itself and more on how adoption is introduced and supported. Digitization is not a one-time rollout. It is a behavior change process that unfolds gradually as groups gain confidence in using new tools. Understanding this process is essential for organizations seeking to introduce digital tools effectively.

Understanding the Barriers to Digital Adoption

Savings groups operate within real-world conditions that can shape how quickly digital tools are adopted.

In many rural communities, reliable internet connectivity may be limited or inconsistent. Smartphones may be shared within households or used primarily for basic communication. Electricity for charging devices may not always be available. These infrastructure constraints are often the first challenge programs encounter. But technical barriers are only one part of the picture.

Adoption is also influenced by social and behavioral factors. Members who have relied on paper ledgers for years may initially feel more comfortable with familiar systems. In some communities, concerns may arise about whether digital records could expose financial information or attract unwanted attention.

Trust, which is the foundation of savings groups, must also extend to the digital tools that groups use. For this reason, successful digitization efforts focus not only on introducing technology but also on helping groups build confidence in the systems they are using. Programs that approach digitization as a gradual transition rather than a sudden replacement of existing systems tend to see stronger adoption over time.

Planning Digitization Before It Begins

One of the most important lessons from savings group digitization programs is that preparation matters. Digitization works best when organizations assess readiness before introducing digital tools to groups.

This includes evaluating whether field teams have the capacity to train and support groups, ensuring that groups have access to appropriate devices, and establishing clear guidelines for how meetings will be conducted using digital tools.

In some cases, existing groups may need to reconcile their paper records before transitioning to digital systems. Newly formed groups, on the other hand, may begin operating digitally from the start.

Planning also involves defining practical routines that allow groups to operate successfully in their local environment. In areas with limited connectivity, for example, groups may need to identify reliable locations where data can be backed up regularly.

Clear expectations about device ownership, data costs, and charging solutions can also help prevent disruptions later. When these elements are addressed early, digitization becomes easier for groups to adopt and sustain.

Supporting Field Agents and Facilitators

Field agents play a critical role in the success of savings group digitization. These facilitators often serve as the bridge between technology and community adoption. Their role is not only to train groups on how to use digital tools but also to build confidence in the process.

Effective training ensures that field agents can guide groups through common scenarios, such as registering a new group, recording meeting transactions, and resolving basic technical challenges.

Equally important is helping facilitators understand their role in building group independence.

Field agents are most effective when they support groups during the early stages of adoption—particularly during the first two to four meetings conducted digitally. During this period, groups develop familiarity with the tools and begin building routines around digital record-keeping.

Over time, field agents gradually step back as groups gain confidence and operate more independently. This balance between support and independence is key to long-term adoption.

Turning Digitization Into a Routine

For savings groups, the first few meetings conducted digitally are often the most important. Groups that begin using digital tools immediately after training tend to retain knowledge more effectively. Long delays between training and first use can lead to uncertainty or loss of confidence.

Programs that support groups during their early meetings help establish the habit of using digital tools consistently.

Some groups may initially maintain both paper and digital records while they transition to the new system. While this dual approach can provide reassurance during the early stages, it is most effective when programs define a clear point at which groups fully transition to digital records.

Another important practice is establishing a technology fund within the group. Small weekly contributions toward device maintenance, mobile data, and charging costs help ensure that digital tools remain sustainable after the initial rollout. When groups plan for these practical needs, they are more likely to continue using digital tools consistently.

Monitoring Adoption and Supporting Groups Over Time

Digitization does not end once groups begin recording meetings digitally. Programs that achieve long-term success typically establish regular monitoring routines to understand how groups are progressing.

Monitoring allows organizations to identify early warning signs that adoption may be slowing. For example, groups that record one or two meetings digitally and then stop may need additional support or refresher training.

Other signals—such as infrequent data backups, incorrect transaction entries, or prolonged reliance on paper ledgers—can indicate that groups are struggling with specific aspects of the transition.

Responding quickly to these signals helps programs maintain momentum and build confidence among groups. Structured monitoring also helps organizations identify strong groups that can serve as examples for others.

Learning From Digitization in Practice

At DreamStart Labs, we have worked alongside partners supporting savings group digitization across Africa, Asia, and Latin America.

Through DreamSave, groups can record savings, loans, and share transactions digitally while maintaining the meeting structures and governance practices that define savings groups.

At the same time, DreamInsights provides organizations supporting savings groups with tools to monitor program performance, review group activity, and identify where additional support may be needed.

Across our network, DreamSave currently supports more than 35,000 savings groups serving over 750,000 members. These experiences continue to reinforce an important lesson: successful digitization depends not only on the technology itself but on the systems and support structures that help groups adopt it confidently.

Looking Ahead

Savings groups have always been shaped by the communities that use them.

As these systems continue to grow and evolve, digital tools offer new opportunities to strengthen transparency, improve recordkeeping, and expand connections with the broader financial ecosystem.

When introduced thoughtfully, digitization can help savings groups continue doing what they have always done best—providing communities with accessible, trusted financial systems built on cooperation and shared responsibility.