Category: Industry Insights

How the idea of the “bankable” customer was formed

Financial institutions need information. Before modern credit bureaus and automated scoring systems, that information could come from personal relationships, reputation, occupation, assets, guarantors and community standing. Research on early eighteenth-century London, for example, shows that personal networks and trusted relationships remained important to banking and credit decisions even as commercial banking expanded.

Over time, formal finance developed more standardized mechanisms for turning these judgments into institutional processes. Collateral could substitute for personal knowledge of a borrower. Income documentation could substitute for familiarity with a customer’s business. Credit histories could substitute for a lender’s personal knowledge of someone’s repayment behavior. Risk models could turn large volumes of information into decisions that could be applied across thousands or millions of customers.

These innovations made financial systems more scalable. They also created new boundaries around who was easily legible to those systems.

A borrower without conventional collateral could be difficult to finance. A business without formal accounts could be difficult to assess. A worker without a stable salary could appear riskier than someone with regular payroll income, even when both had the capacity to repay. And someone living far from a branch could face a different barrier altogether: the financial institution might exist, but access to it did not.

These barriers were reinforced by law and social institutions. Research on nineteenth-century Yucatán found that marital property regimes and the unequal legal position of husbands and wives shaped women’s participation in local credit markets.

This reveals that the rules used to determine financial risk can reflect the economic, legal and social structures of the societies in which those rules are created. And when those structures are unequal, the consequences can be unequal too.

When the financial system cannot see the customer

A financial institution can only assess what it can observe.

For decades, formal financial systems have relied heavily on information such as documented income, collateral, identity, previous borrowing and repayment records. People who lack these forms of evidence can therefore face a paradox: they may have years of experience managing money, running a business or repaying informal loans, yet have little formal evidence with which to demonstrate that experience to a bank.

The problem becomes particularly acute for women and people operating small businesses in informal economies, who are more likely to lack the collateral, credit history and documentation that conventional lenders ask for.

This exclusion can then reproduce itself. Without access to formal financial services, a person may not build a formal credit history. Without a credit history, accessing formal credit can become harder. Without credit, a business may struggle to invest and grow. Without growth, there may be less documented income or business history to present to a lender.

Exclusion can therefore become cumulative. And this is why financial inclusion is not simply about giving people access to a bank account. It is about changing the conditions under which financial participation becomes possible, visible and useful.

That is the problem the financial inclusion movement emerged to address.

Financial Exclusion Created the Need for Financial Inclusion

Financial inclusion emerged from a recognition that the existence of a financial system does not mean that the system is equally accessible to everyone.

The idea gained prominence through the micro-credit movement of the 1970s and became a much broader development agenda in the following decades. What began with an emphasis on extending small amounts of credit to low-income borrowers evolved into a recognition that households and businesses need a wider range of financial services to manage their economic lives: safe places to save, reliable ways to make and receive payments, credit to invest, insurance to manage risk and mechanisms that allow them to build financial resilience. By the early 2000s, financial inclusion had become an established part of the global development agenda.

That evolution was important because access to credit alone could not solve the problem. A person who cannot save securely remains vulnerable even if they can borrow. A household with an account but no affordable way to insure against a health emergency can remain financially fragile. And a customer who technically has access to a financial product but cannot understand its terms, afford its fees or seek redress when something goes wrong is not necessarily better off because the product exists.

The World Bank defines financial inclusion around access to and use of affordable financial products and services, including payments, savings, credit and insurance, delivered responsibly and sustainably. CGAP similarly emphasizes not only access but people’s ability to use financial services that meet their needs.

The distinction between access and use is particularly important. A financial institution can operate in a community without that community being financially included. A bank branch may exist, but its minimum balance may be too high for a low-income customer. A digital service may eliminate the need to travel to a branch, but require a smartphone, reliable connectivity or digital skills that a customer does not have.

This is why the financial inclusion conversation has increasingly moved from the question of whether people are inside the system to the question of whether the system is useful to them. CGAP’s current work on “Financial Inclusion 2.0” captures this shift. Account ownership alone cannot explain whether people are managing financial shocks, controlling debt, meeting everyday obligations or building toward longer-term goals, so financial inclusion is increasingly being considered alongside financial health: whether financial services actually improve people’s ability to manage their financial lives.

Inclusion has to account for the rules around finance, not only the products

Gender provides one of the clearest examples. The World Bank estimates that around 400 million women are entrepreneurs globally, yet women-owned businesses continue to face substantial financing constraints, with collateral requirements, limited credit histories and gender-related barriers among the factors holding them back.

The legal environment can reinforce this. Nearly 40% of economies have at least one legal constraint affecting women’s rights to property, and World Bank research has found that women are, on average, nine percentage points less likely to have loans in economies where they do not have the same property rights as men. Property is not only an asset; within conventional lending systems, it can also be a gateway to credit.

Documentation creates another barrier. Globally, one in five women report that lacking the necessary documents is a barrier to owning a financial account. The World Bank also identifies know-your-customer requirements and customer due-diligence processes that are not proportionate to risk as potential obstacles for financially excluded populations.

If the underlying rules continue to assume that the ideal financial customer has formal income, conventional collateral, complete documentation, a stable address and an established credit history, expanding the number of financial products available will not necessarily remove exclusion. The system has to change alongside access.

Access is the starting point: financial services need to be available at a cost people can reasonably afford.

But access without capability is limited. People need the financial literacy to understand products, compare costs, assess risk and make informed decisions, which is why financial capability is treated as an essential component of responsible financial inclusion rather than a secondary intervention.

Then there is equity. Financial systems have to account for the gender, income, geographic, cultural and social conditions that determine who can actually use them. A product can be formally available to everyone while remaining practically inaccessible to people whose circumstances do not fit its assumptions.

There is also the question of appropriateness. Inclusion does not mean giving every customer the same product. A smallholder farmer with seasonal income does not have the same cash-flow pattern as a salaried employee, and a system that recognizes only one of these economic realities will inevitably serve some people better than others.

Fair assessment is another part of inclusion. Credit systems need enough information to manage risk, but they also need to avoid turning the absence of a conventional financial history into permanent evidence of risk.

Finally, there is protection and agency. As financial services reach more people, particularly through digital channels, consumers need protection against fraud, misleading products, inappropriate lending, data misuse and opaque fees. But protection only becomes meaningful when the consumer can understand the product, recognize when something is wrong and act on that knowledge.

That is why financial inclusion ultimately concerns more than access to financial infrastructure. It concerns people’s ability to use financial services safely and effectively, make decisions about their own financial lives and convert those services into greater economic opportunity and resilience.

How Far Have We Come? From Access to Meaningful Use

The financial inclusion agenda has changed substantially over the past two decades, and some of the most consequential changes have come from the infrastructure through which people access and use financial services.

According to the World Bank’s Global Findex 2025, based on nationally representative surveys of approximately 148,000 adults across 141 economies, 79% of adults globally had a financial account in 2024, up from 74% in 2021. In low- and middle-income economies, the share of women with an account increased from 37% in 2011 to 73% in 2024. At the same time, 1.3 billion adults globally remained without an account, with gaps persisting among women, poorer adults and people with limited digital connectivity.

The latest Findex also expands measurement beyond account ownership to how people save, borrow, make payments and manage financial risks, and it now measures mobile-phone ownership, internet use and digital safety, reflecting how closely financial inclusion is now connected to digital infrastructure.

The numbers tell two stories at once. The first is a story of extraordinary expansion. The second is a reminder that access is not the same as inclusion.

Mobile money changed the meaning of access

Few innovations illustrate this better than mobile money. Traditional banking requires physical infrastructure. A customer may need to travel to a branch, complete documentation, maintain an account and interact with a financial institution during operating hours. Mobile money changed the economics and geography of access by moving basic financial transactions onto telecommunications infrastructure and distributing the physical interface through agent networks.

The GSMA’s State of the Industry Report on Mobile Money 2026 records 2.3 billion registered mobile money accounts globally at the end of 2025, an increase of 268 million in a single year. More than $2 trillion flowed through mobile money services during 2025, a 23% increase in transaction value from 2024.

The physical infrastructure behind those numbers matters just as much as the accounts themselves. There were approximately 30 million registered mobile money agents globally in 2025, including 11 million active monthly agents. These agents cashed in around $430 billion during the year, demonstrating how digital financial services still depend on physical points of interaction, particularly where cash remains central to everyday economic life.

In many markets, the most effective digital financial infrastructure has been built by connecting the digital and physical worlds. The technology changed the delivery mechanism without requiring people to completely change the way their economic lives worked.

Yet mobile money also reveals the next challenge. Only 593 million of those accounts, about 25.7%, were active over a 30-day period in 2025, and the industry itself now describes its challenge as moving beyond access at scale towards meaningful, everyday use. An account that exists but is rarely used is different from a financial service that is integrated into someone’s economic life.

Agent banking brought financial infrastructure closer to the customer

The same principle applies to agent banking. For communities far from bank branches, the economics of traditional branch infrastructure sometimes made serving those customers difficult. Agent banking changed that equation by allowing existing businesses, merchants and other local operators to provide selected financial services on behalf of regulated institutions.

If accessing an account requires a two-hour journey, transport costs, time away from work and uncertainty about whether a transaction can be completed, the nominal existence of the account tells us very little about whether the service is accessible. Agent networks reduce some of those costs by placing financial infrastructure closer to where people already live and trade.

This is particularly relevant in economies where informal businesses and cash-based commerce remain significant, and it reflects a principle increasingly visible across digital finance: the closer financial services are to people’s existing behavior, the lower the cost of participation can become.

Digital payments are changing what can be observed

Digital payments have introduced another important shift. When a transaction takes place digitally, it produces a record, and that record can make economic activity easier to document than it was when transactions were predominantly cash-based.

The World Bank’s Global Findex 2025 reports that digital merchant payments reached 42% of adults globally in 2024, up from 35% in 2021. The World Bank also notes that digital payment records can provide small-scale merchants with evidence of cash flows that may support applications for working capital or other forms of credit.

This is where the connection between financial inclusion and financial visibility becomes particularly important. For a small business that has never produced the financial statements traditionally requested by a bank, a consistent record of digital sales can begin to demonstrate the existence and scale of its economic activity.

The implications extend beyond credit. Transaction records can help people track their own finances, reduce the risks associated with carrying cash and help businesses reconcile sales. And, when appropriate safeguards exist, they can create information that supports access to other financial products.

Digital identity can remove a different kind of barrier

Financial institutions need to know who their customers are. Customer identification and know-your-customer requirements are important tools for preventing fraud, money laundering and other forms of financial crime. But, as the documentation gap shows, those same requirements can become barriers when people lack the documents or records that financial institutions expect.

Digital identity systems, when designed appropriately, can help address part of this problem by making identity verification more portable and potentially reducing the cost and friction involved in proving who someone is.

The policy challenge is to find the balance between access and risk. This is why the World Bank’s work on gender and digital financial inclusion recommends risk-based and tiered know-your-customer approaches, alongside enabling agent banking regulations and investment in credit infrastructure.

Alternative data is challenging the idea of a conventional financial history

Traditional credit systems depend heavily on evidence of previous formal financial activity. That works well for customers who already participate in formal finance, but it leaves the circular problem at the center of financial exclusion untouched: a person cannot build a formal financial history while excluded from the services that create it.

Alternative credit assessment attempts to break that cycle by considering other forms of information. The World Bank identifies it as one potential tool for improving women’s access to credit, particularly where women face limited credit histories or lack conventional collateral. Alternative data can include information such as mobile-phone usage patterns, although significant questions remain about what data should be used, how it should be interpreted and what protections should govern its use.

But more data does not automatically mean better inclusion. An algorithm can reproduce the biases contained in the data on which it is trained. A new form of scoring can create a new form of exclusion if customers do not understand how decisions are made or cannot challenge inaccurate information.

Inclusive credit assessment therefore requires more than finding new data. It requires fairer ways of interpreting financial behavior, particularly for women and other customers whose economic activity has historically been poorly captured by conventional financial records.

Financial education has become part of the infrastructure

As financial services have become more accessible, the need for financial capability has become more visible. This is particularly important in digital finance, where the distance between the provider and customer can be reduced to a mobile phone interface. The same convenience that makes a service accessible can also make it easier for customers to accept terms they have not understood, disclose information without appreciating the consequences or fall victim to fraud.

Financial education therefore has to evolve alongside financial technology. It is no longer sufficient to teach people how to open an account. People need to understand fees, interest, repayment obligations, digital security, fraud, data privacy and the difference between different financial products, and they need the ability to evaluate whether a product is appropriate for their circumstances.

And financial education cannot be treated as a one-time intervention. As products change and people’s financial needs change, capability has to develop with them.

Consumer protection is becoming more important, not less

The expansion of digital finance has also changed the nature of the consumer protection challenge. Traditional financial consumer protection has focused on issues such as transparency, fair treatment, disclosure, complaints and redress. Digital financial services add new dimensions, including data privacy, cybersecurity, fraud, algorithmic decision-making and the speed at which harmful financial products can reach large numbers of people.

The latest Findex highlights digital safety as a new area of global measurement, and its data shows that while mobile-phone ownership is widespread, digital safety practices, including the use of passwords and other security measures, are uneven. The GSMA’s 2026 mobile money report likewise identifies consumer protection and fraud controls among the priorities for the industry’s next stage of development.

This is an important signal of how far the sector has moved. Twenty years ago, much of the conversation was about whether underserved populations could gain access to financial services. Today, the sector is dealing with a more complicated question: how do we make increasingly sophisticated financial systems work safely and meaningfully for people who were historically underserved by them?

The progress is real. But the next generation of financial inclusion has to be concerned with use, quality, relevance, safety and outcomes, and it has to ask whether innovation is creating new pathways into finance without creating new forms of exclusion.

That is where some of the most interesting work in financial inclusion is now taking place. Not in replacing the financial systems people already use, but in finding ways to connect them. Savings groups offer one of the clearest examples.

Why Savings Groups Became Part of the Financial Inclusion Conversation

In savings groups, members pool their savings, lend to one another and manage their collective finances according to rules they set themselves. Their relationship with financial inclusion emerges because the systems that people created for themselves do not always connect easily to the institutions that control larger pools of formal capital.

A savings group may have a strong record of regular contributions and loan repayment. Its members may have operated businesses for years. The group may have accumulated substantial savings and demonstrated the ability to manage credit collectively. Yet none of this necessarily appears in a conventional credit file.

This creates an important gap between financial behavior and financial recognition. The World Economic Forum recently highlighted this problem, noting that an estimated 500 million people participate in informal savings groups globally, while financial institutions often do not recognize participation in those groups when assessing creditworthiness. CARE reported that its savings groups generated almost $1.4 billion in member savings in the preceding year, illustrating the scale of financial activity taking place within these community systems.

The issue is that the formal financial system has historically had limited mechanisms for interpreting what happens inside these groups. This is why savings groups have increasingly become part of financial inclusion strategies.

The Evidence Is Already Pointing in This Direction

There is growing evidence that savings groups can function as a bridge between people and financial services that have historically been difficult to reach them.

In Nigeria, for example, the World Bank’s Nigeria for Women Project has supported more than 458,000 women through 22,094 Women Affinity Groups. Between 2018 and 2024, these groups accumulated approximately $4.8 million in savings and managed more than $12 million in internal loans to support members’ livelihoods. The programme was designed in response to persistent barriers facing women in rural areas, where formal financial institutions can face high costs and logistical challenges in serving small-scale customers.

Savings groups can also reduce barriers to saving and participation, particularly for women. Their proximity to participants and reliance on community relationships can help address information asymmetries and trust problems that otherwise discourage formal institutions from serving poorer and more remote customers.

This is an important shift in the financial inclusion conversation. The goal should be to create pathways through which different parts of the financial ecosystem can connect.

Those pathways need care. A financial record should not become an automatic invitation to borrow, and more credit is not synonymous with greater inclusion. The evidence on inclusive credit is increasingly focused on precisely this question: under what product designs and conditions does credit actually benefit underserved borrowers without creating new financial harm? CGAP’s 2026 synthesis of 405 credit-focused studies emphasizes that the relevant question is not simply whether credit “works”, but for which borrowers, through which products and under what conditions.

The same principle applies to digitization. The purpose of digitizing a savings group should not simply be to produce data that another institution can consume. It should first make the group’s own financial life easier to manage.

Better records. Fewer calculation errors. Greater transparency. More efficient meetings. A clearer understanding of savings and loans. Stronger financial and digital capability.

Once that foundation exists, the information generated through those activities can potentially support connections to other parts of the financial system.

What Inclusive Digital Finance Looks Like in Practice

Before a savings group can benefit from digital tools, its members need to understand the financial practices that the technology is designed to support: how savings work, how loans are issued and repaid, how interest is calculated, how group funds are managed and why accurate records matter. That is why digitization cannot be treated as a technology deployment exercise.

At DreamStart Labs, savings groups are introduced to financial and digital capabilities as part of the process of becoming digitally enabled. Working with implementing organizations and community facilitators, groups receive training that strengthens members’ understanding of their financial practices while building the confidence to use digital tools.

From digital readiness to better financial management

Once groups are ready to use digital tools, the value of technology becomes more tangible.

Every meeting requires members to calculate contributions, update records, track outstanding loans, reconcile balances and make decisions about their collective finances. When those processes are done manually, the time required can become significant and errors can be difficult to identify. Our product DreamSave allows savings groups to record savings, loans, repayments and other group transactions digitally, automating calculations and reducing that administrative burden.

By September 2026, more than 50,000 savings groups across 37 countries were using DreamSave, representing nearly 1 million members. At that scale, the significance of digitization is not simply the number of groups using an application. It is the growing volume of financial activity being recorded, organized and preserved digitally across communities that have traditionally relied on paper records.

Independent research conducted by Opportunity International on its DreamSave groups shows what that change can mean at group level. In a seven-country pilot involving more than 16,000 members, 96% of members were satisfied with their record-keeping using DreamSave, while frequent disputes over financial records fell by 14 percentage points. Sixty-five percent also reported shorter meeting times.

The significance goes beyond saving a few minutes during a meeting. When financial administration becomes easier, members can spend more of their meeting time discussing the financial decisions that actually matter. There is less room for simple arithmetic errors to become financial disputes, and members have a clearer view of the group’s financial position.

Some of the effects of digitization are less obvious. Every interaction with a digital financial tool can become an opportunity to build digital capability: understanding how to navigate an application, interpret financial information, verify a transaction and recognize the importance of maintaining accurate records. For people who have historically had limited exposure to digital financial services, these capabilities can become as valuable as the savings group itself.

The most significant possibility, however, may be what happens to the financial information over time. A savings group can generate years of financial behavior. When those activities are recorded digitally and consistently, they create a structured history of financial activity, and that history creates the possibility of a wider conversation about financial services, whether formal savings, payments, insurance or credit.

When Financial Inclusion Becomes Agency

A financial system can expand a woman’s ability to participate in economic activity without necessarily changing the social assumptions surrounding that activity. Financial inclusion therefore has another dimension: whether greater access to financial resources translates into greater economic agency.

A DreamSave savings group in Guatemala offers a revealing example.

In La Balaclera, in Santo Bartolo Aguascalientes, a community where World Vision has worked with savings groups, the groups initially faced a familiar form of resistance. They were groups of women, and that fact shaped how seriously they were taken within the community.

One member used the opportunities created through the group to start a small fruit and vegetable business. The business grew. She purchased a car to support it and later upgraded to a truck as demand increased.

The asset became evidence of something the community had initially failed to recognize: the women were not simply participating in a social activity. They were building economic institutions and using them to finance productive activity. And the change was not limited to one member. As the business expanded and its economic contribution became more visible, perceptions within the community began to change.

For the woman in this story, the progression was from collective saving to access to capital, from capital to enterprise, and from enterprise to growth. The savings group did not create her entrepreneurial ability. And DreamSave did not create her ambition. What changed was her ability to mobilize financial resources around those capabilities.

This is where the idea of financial inclusion becomes more consequential than account ownership. The objective is to expand the set of economic choices available to a person. It is also why gender cannot be treated as a secondary consideration within financial inclusion: when women encounter financial systems under different conditions, a technically neutral design is not enough.

The same principle applies to savings groups. The group itself can be an instrument of financial inclusion, but it can also become an instrument of agency because it gives members a structure through which they collectively exercise financial decision-making.

The Next Chapter of Financial Inclusion

The history of financial inclusion can be read as a gradual expansion of who financial systems are able to see. The Center for Financial Inclusion has described this as a broader shift from incremental gains in access towards outcomes such as financial health, resilience and economic participation.

Of the 1.3 billion adults still without a financial account, nearly 900 million have a mobile phone, including around 530 million with smartphones. The infrastructure for digital inclusion therefore already exists for many people who remain financially excluded. The challenge is increasingly about what stands between having the technology and being able to use it meaningfully, safely and affordably.

That gap will not be closed by technology alone. It will require financial products that reflect the realities of people’s lives, credit assessment that does not penalize people for having been outside formal finance, financial education that keeps pace with increasingly complex digital products and consumer protection that can respond to fraud, scams and data risks as quickly as financial technology evolves. And it will require a broader understanding of where financial innovation can come from.

The Center for Financial Inclusion’s theme for Financial Inclusion Week 2026 is “Inclusive Innovation: Building Financial Systems That Work for Everyone.” CFI’s framing recognizes both sides of the current moment: emerging technologies can expand what is possible, but without intentional and responsible adoption, they can also leave vulnerable people behind. This year, the programme will examine technology-led innovation alongside women’s financial inclusion, financial education, financial health, resilience and consumer protection.

The emphasis on protection is particularly important. As more people enter digital financial systems, the consequences of getting inclusion wrong can become larger as well. CFI’s latest research on scams notes that exposure to fraud and scams has grown alongside digital financial inclusion. Its analysis cites Global Anti-Scam Alliance research finding that seven in ten adults globally encountered a scam in the preceding year, with reported prevalence reaching 68% in Africa. For newly included customers, CFI argues, a single harmful experience can damage trust in the financial system itself.

This is why inclusion and protection cannot be treated as separate agendas. Financial inclusion is ultimately about people having greater control over their economic lives.

That is the conversation Financial Inclusion Week creates space for. DreamStart Labs will be part of it, joining practitioners, policymakers, researchers and innovators examining how financial systems can become more inclusive, responsible and responsive to the realities of the people they serve. The week will take place virtually from October 5 to 8 and will bring together thousands of participants around the theme of inclusive innovation.

Our work with savings groups is one part of that larger conversation. Because the future of financial inclusion will not be built by asking people to leave the financial systems they already have behind. It will be built by finding better ways to connect what already works with what becomes possible next.

Savings groups existed long before banks began talking about inclusion. From rotating labor associations and Yoruba esusu to modern Village Savings and Loan Associations, their history reveals something important: people have always found ways to finance one another. Digitization is simply the latest chapter in that story.

In 1963, German economist and microfinance scholar Hans Dieter Seibel traveled to Nigeria to study industrial labor and cultural change. During interviews with factory workers, he encountered something that would shape much of his later work in finance.

Many of the workers were saving through a saving club known as esusu. They were not simply putting money aside for emergencies. They were saving with ambition. Many hoped that the money accumulated through their esusu would eventually help them establish their own small enterprises. Hair salons. Workshops. Restaurants. Trading businesses.

The encounter challenged a familiar assumption about finance: that meaningful financial activity begins when people enter a bank. But it does not.

For millions of people, financial activity began long before a bank account, a credit score or a formal lending institution entered the picture. They saved with one another, lent to one another, pooled resources, and developed rules for contribution and repayment. They created systems of accountability. And they used collective resources to finance their livelihoods.

Savings groups, in other words, are not a modern invention designed to solve financial exclusion. They are among the oldest forms of inclusive finance.

Today, they are often discussed through the language of development, financial inclusion and women’s economic empowerment. There are Village Savings and Loan Associations, Self-Help Groups, Savings and Internal Lending Communities and dozens of other variations implemented by organizations across the world.

But long before, communities had already developed their own systems. The story of savings groups is therefore not simply a story about finance. It is a story about how communities have repeatedly found ways to organize capital when conventional financial institutions were absent, inaccessible or simply not designed for them.

And it is a story that continues today. The difference is that, for the first time, technology may allow the financial activity that has existed for generations to become visible to the wider financial system.

Before there were savings groups, there was collective action

It is difficult to identify a single moment when savings groups began. There is no universally agreed date or a single founder. That is partly because the underlying principle is remarkably simple. When individuals cannot easily accumulate enough resources on their own, they can do so collectively.

Members contribute regularly to a common pool. The resources are then allocated according to rules agreed by the group. This principle has appeared in remarkably different forms across societies.

Hans Dieter Seibel’s historical account of savings traces one possible lineage through West Africa. During research in Liberia between 1967 and 1968, Seibel surveyed indigenous cooperatives among all 17 ethnic groups in the country. What he found was a wider ecosystem of collective organization.

There were savings and credit groups. There were rotating associations. And there were rotating working groups.

These working groups may offer an important clue to understanding the evolution of collective finance. Before money became the primary resource being pooled and allocated, communities could organize another scarce resource: labor.

Members worked collectively on one person’s farm or productive activity and then rotated to the next member. As one farmer in neighboring Côte d’Ivoire reportedly put it: “le travail, c’est notre argent”. Work is our money.

The principle is strikingly familiar. Everyone contributes. One member benefits. Then the group moves to the next. The same logic would eventually become recognizable in rotating financial arrangements.

The resource changed from labor to money. But collective contribution and rotation remained. Seibel described rotating working groups as a possible historical predecessor to rotating savings groups. That history matters because it challenges the idea that informal finance emerged as a substitute for formal banking.

In many places, these systems existed before people were even aware of modern banking. They were not copying banks. They were solving a problem independently.

Esusu and the long history of saving together

Nigeria provides one of the most widely documented examples of this history. Esusu was dated back to at least the 16th century, with Yoruba people carrying the practice across the Atlantic during the transatlantic slave trade. Variations subsequently appeared throughout the Caribbean and later within immigrant communities in North American cities. From Nigeria, savings clubs and ajó, a form of savings collection involving regular deposits and later payback, also spread across West and Central Africa and beyond.

Virtually every ethno-linguistic group in Nigeria has its own name for the practice. The Hausa call it adashi. Most adults belong to one or several. These systems also drew early outside attention. In 1934, C.F. Strickland, a former British colonial cooperative registrar, studied esusu in western Nigeria as a possible foundation for formal cooperative societies.

The exact historical origins of practices such as esusu should be treated carefully. Informal financial systems are often older than their written documentation, and different scholars identify different periods in their development. But what is difficult to dispute is their longevity.

For generations, people have contributed money regularly to collective arrangements that allow members to access larger sums than they could easily accumulate alone. In Nigeria, there is esusu and ajó.

Across Francophone Africa, similar arrangements are often known as tontines. It comes from Lorenzo de Tonti, a 17th-century Neapolitan banker who pitched a different scheme entirely, a survivorship-based annuity, to the French court in 1653. Centuries later, through colonial-era French, the name attached itself to West and Central African rotating savings practices. Those practices had nothing to do with Tonti’s original idea.

In other parts of the world, rotating savings arrangements have their own names, structures and social rules. But the fundamental idea remains recognizable. What is perhaps most remarkable is that this idea did not remain confined to one part of the world.

Historical evidence shows similar financial arrangements emerging across continents.

The ROSCA did not have one birthplace

Today, one of the most widely used terms for this type of arrangement is ROSCA, or Rotating Savings and Credit Association.

A ROSCA generally works through regular contributions from members. At each meeting or contribution period, one member receives the pooled amount. The process continues until every member has received their turn.

It is an elegant system. Someone who receives the pool early effectively gains access to capital before they could have saved the entire amount independently. Someone who receives it later benefits from a structured mechanism for accumulating savings.

But where did the ROSCA originate? The most accurate answer is that we do not know of a single origin. And perhaps there was never one.

A recent historical study of ROSCAs in China provides an important example. Research into communal finance in Shanxi found that Chinese ROSCAs, known as hehui, have a history extending far beyond modern financial inclusion programmes. Some historical accounts trace them to the Sui dynasty. It became widespread practice by the Tang dynasty, between 618 and 907 CE, and the Song dynasty, between 960 and 1279 CE. By later periods, they were widely used to mobilize savings and provide credit, including for commercial activity.

The ROSCA is therefore better understood as a financial idea that repeatedly emerged wherever communities needed a practical way to mobilize resources collectively.

This is why savings groups can be found in such diverse settings. They are adaptable. Their names can change. Their rules can change. But the underlying principle remains useful.

People can often do collectively what they cannot do individually.

From rotating savings to accumulating capital

Not every community has regular incomes that make a rotating system practical. This distinction became particularly visible in Seibel’s research in Liberia.

In towns, where people were more likely to earn regular incomes, rotating savings groups were common. Members could contribute predictable amounts at regular intervals and receive the pooled sum according to the group’s agreed order.

Village economies often looked different. In communities where incomes were irregular, seasonal or dependent on agriculture, a rotating model could be less suitable. Instead, people formed Accumulating Savings and Credit Associations, commonly referred to as ASCRAs. Unlike a traditional ROSCA, money did not simply rotate from one member to another and disappear from the group’s pool.

Members made regular contributions that accumulated. The group could then lend from the collective fund. Borrowers repaid their loans, often with interest. That interest remained within the group and contributed to the collective resources available to members.

This was an important evolution. A ROSCA allowed members to take turns accessing a lump sum. An ASCRA created something closer to an internally managed financial institution. The group’s resources could grow. Loans could be issued. Repayments could replenish the fund. Interest could generate returns for members.

Seibel’s research in Liberia showed the importance of these accumulating associations, particularly in rural communities. This distinction would eventually become particularly significant for the modern savings group movement.

Because decades later, an international organization would build on this indigenous experience and help develop a methodology that could be replicated at scale.

1991: a new chapter in an old story

The Village Savings and Loan Association (VSLA), is often discussed as though it represents the beginning of savings groups. But the VSLA represents something different.

It represents a moment when a much older idea was systematized into a methodology that could be taught, replicated and scaled across countries.

In 1991, CARE sent a programme manager named Moira Eknes to a village in Niger to run a tree planting initiative. It was struggling. The women in the village could not own land, so they had little reason to invest in it. What they needed was capital, not trees. Eknes asked what they were already doing to get by. They described a method they already practiced. A small group. A few cents contributed each week. The pooled amount collected by a different member each round. A rotating savings group, in other words, by another name. Women there called it a “money merry-go-round.”

Eknes’s contribution was one small, familiar shift. Instead of letting the pool rotate and empty out, why not let it grow? Members could keep contributing, borrow from the accumulated fund when they needed to, and repay with interest, so the fund got bigger with each cycle instead of resetting to zero. A rotating structure had just become an accumulating one. It was the same shift from ROSCA to ASCRA that Seibel had surveyed in Liberia more than twenty years earlier, and arrived at again from scratch.

This was the birth of the VSLA and a transformational moment. Because the transformation was methodological.

The VSLA model introduced a structured approach to practices that communities already understood.

Groups could establish clear membership structures. Members could contribute savings regularly. Loans could be issued from the accumulated fund. Interest could be charged and eventually shared among members. Social funds could help members respond to emergencies. Groups could establish leadership structures and collectively agreed rules. Records could be maintained. And, importantly, the methodology could be taught to new groups.

This made replication easier. Other organizations could build on a foundational methodology while adapting it to local contexts.

Over time, this produced an ecosystem of related approaches. There were VSLAs. There were Self-Help Groups (SHGs). There were Savings and Internal Lending Communities (SILCs). And there were countless indigenous names and practices that continued to exist alongside these development methodologies.

Standardization created scale. But records created a new challenge.

As savings groups expanded, another challenge became increasingly apparent. Scale requires structure. And structure produces records.

A group needs to know how much its members have saved. It needs to know what happens when a member leaves. It needs rules for leadership, meetings and conflict. For many groups, these responsibilities have traditionally been managed through notebooks, passbooks, ledgers or other forms of manual record-keeping.

And for decades, this worked. It still works. But as the broader financial world changed, the limitations of paper records became more significant.

The modern conversation around financial inclusion expanded beyond the simple question of whether someone had a bank account. Financial institutions began looking at new ways to serve people outside traditional banking systems.

Mobile money expanded. Digital payments grew. Alternative approaches to assessing financial behavior began emerging.

Financial service providers increasingly recognized that a person could be economically active without having a formal salary, conventional collateral or a traditional credit history.

A farmer could be financially active. A trader could be financially active. A small business owner could be financially active. A member of a savings group could be financially active. But there was still a problem.

The formal financial system could only work with information it could see. And much of the financial history of savings group members remained locked inside paper records.

Imagine someone who has saved every week for five years. She has borrowed from her group. She has repaid her loans. She has used capital to support a business. She may have managed money for her group as a treasurer. She may have participated in multiple savings cycles. From her community’s perspective, she has a financial history.

But from a bank’s perspective, she may have none. Because her financial activity is invisible.

That is the problem digitization begins to address.

Digitization is the latest chapter, not a replacement

There is a temptation to tell the history of financial technology as a story of progress.

First came informal systems. Then came formal systems. Then came digital systems. But that story is too simple.

It assumes that each new system replaces the one that came before it. Savings groups show us why that is not necessarily true.

The social structures that made collective finance work hundreds of years ago still matter today and technology cannot replace those things. Nor should it try. The role of digitization is different. It can help make the existing system more efficient, transparent and visible.

A digital savings group platform can record contributions. It can track loans and repayments. It can automate calculations. It can manage social funds. It can preserve financial records over time. It can reduce the administrative burden associated with manual bookkeeping. It can create a more reliable institutional memory for the group. And, perhaps most significantly, it can begin to create a digital record of financial behavior.

This is where the historical story of savings groups meets the future of financial inclusion.

For centuries, people have saved, borrowed, and repaid. But not every saving history has been visible and not every repayment has contributed to a formal credit history.

People have built businesses with internally generated capital. But the economic activity created through those businesses has often remained disconnected from the institutions capable of providing larger financial products.

Digitization creates an opportunity to change that.

From a paper ledger to a financial footprint

This is where solutions such as DreamSave enter the story. It creates a digital footprint that opens possibilities that a paper ledger cannot easily create on its own.

With appropriate systems, safeguards and partnerships, documented financial behavior can help financial service providers better understand people who have traditionally existed outside conventional credit assessment systems.

This could create pathways to financial products such as credit, insurance and other services. But the goal should not be to make savings groups disappear once their members gain access to formal finance. That would repeat an old mistake in the financial inclusion conversation. The goal is linkage.

Community finance and formal finance can serve different purposes. 

Savings groups can continue providing something that formal institutions often cannot: local trust, flexibility, collective accountability and immediate access to internally generated capital.

Financial institutions can provide services that a group’s internal capital may eventually be unable to support, including larger loans, insurance and more specialized financial products.

The future is therefore not necessarily a transition from informal to formal. But a connection between the two.

An old idea with a new kind of visibility

The history of savings groups should change the way we think about financial inclusion.

Too often, financial inclusion begins with the assumption that people outside formal institutions are financially excluded because they are not financially active.

But history tells us many people have always been financially active. The Yoruba factory workers Seibel encountered in Nigeria in 1963 were saving. The members of gbe associations documented in Dahomey were saving. The indigenous cooperatives surveyed across Liberia were saving and lending. Chinese communities participating in historical ROSCAs were mobilizing capital. Farmers and craftsmen in nineteenth-century Germany were organizing self-help associations.

Savings groups have survived because they are not dependent on one particular technology, organization or historical period. They adapt and that may be their greatest strength.

The VSLA methodology was one adaptation. It took principles that had existed in communities for generations and organized them into a model that could be replicated at scale.

Digitization is another. It helps the model communicate with a financial system that increasingly operates through data. That is perhaps the most important lesson from the history of savings groups.

The next chapter

Savings groups have traveled a long way. From rotating labor associations to rotating savings. From indigenous cooperatives to accumulating savings and credit associations. From esusu and ajó to ROSCAs. From community-led practices to VSLAs, SHGs and SILCs. And now, from paper ledgers to digital records.

But perhaps the most remarkable thing about this history is not how much savings groups have changed. It is how much has remained the same.

At their core, savings groups still begin with that simple idea: People can build financial security together.

That idea has survived centuries. It has crossed continents. It has traveled with migrants. It has adapted to cities and villages, agricultural economies and trading communities. It has been formalized into methodologies and translated into dozens of languages.

Now, it is entering the digital age.

The next chapter is to understand what becomes possible when a financial system that has existed for generations is given new tools for transparency, efficiency and visibility.

Savings groups do not need technology to prove that they work. History has already done that.

But technology may help ensure that the millions of people who have been saving, borrowing, repaying and building livelihoods together for generations are finally visible to the systems that have, for too long, failed to see them.

Every week, across villages in Africa, Asia, and Latin America, millions of people gather to do something remarkably simple. They contribute small amounts of money into a shared pool, issue loans to one another, repay those loans with interest, and collectively decide how their financial future should be managed.

There are no marble bank branches. No credit officers. No collateral requirements. Often, there is not even an internet connection. Yet these groups have quietly become one of the world’s largest and most enduring financial systems.

Today, an estimated 500 million people participate in savings groups globally, with women accounting for roughly 80 percent of all members. These community-managed groups have become one of the most effective pathways to financial inclusion for women who continue to face structural barriers to formal financial services.

Despite their scale, savings groups are still frequently described as informal: a label that often implies they are temporary, unstructured, or somehow less capable than formal financial institutions.

The evidence suggests otherwise. Over the past two decades, rigorous studies across Sub-Saharan Africa, South Asia, and Latin America have consistently shown that well-designed savings groups help members save more, access affordable credit, invest in productive activities, and gain greater influence over household financial decisions. Rather than existing outside the financial system, savings groups have evolved into trusted community institutions that perform many of the same functions as formal finance, mobilizing capital, managing risk, extending credit, and enforcing repayment through accountability instead of collateral.

The question, then, is not whether savings groups work. They do.

The more important question is why millions of financially disciplined people who save regularly, repay loans, and manage collective funds remain largely invisible to the institutions designed to serve them. This is where digitization changes the conversation. Their viability has already been established; what technology adds is visibility. It transforms years of undocumented financial behaviour into verifiable financial histories, replacing paper ledgers with trusted records, informal reputations with digital footprints, and isolated community finance with a pathway into the broader financial ecosystem.

Financial inclusion, in other words, is not about replacing systems that already work. It is about helping the rest of the financial system recognize them.

Savings Groups Are Already Financially Viable

One of the biggest misconceptions about savings groups is that they exist because formal banking has failed to reach underserved communities. In reality, savings groups have endured because they solve problems that conventional financial institutions often cannot.

Unlike many formal financial products, savings groups are designed around trust, flexibility, and local accountability. Members determine their own rules, elect their own leaders, decide how much to save, agree on lending terms, and collectively enforce repayment. Every contribution, loan, repayment, and share-out happens transparently during regular meetings, creating a financial system built on participation rather than paperwork. This model has proven remarkably resilient.

Research on the CARE-pioneered Village Savings and Loan Association model finds that 89 percent of savings groups remain active five years after formation, with many groups expanding organically as experienced members establish new groups in neighbouring communities. Rather than depending indefinitely on external support, savings groups replicate through social trust and community ownership, demonstrating that the model is both financially and institutionally sustainable. Their success is perhaps most remarkable when viewed against the barriers their members face.

Globally, around 740 million women remain unbanked, while nearly 2.4 billion women of working age do not enjoy the same legal economic rights as men, limiting their ability to participate fully in formal financial systems. Women continue to encounter obstacles ranging from discriminatory lending practices and lower access to financial products to legal restrictions that affect property ownership, mobility, and economic participation. These barriers contribute to an estimated US$1.7 trillion financing gap for women-owned micro, small, and medium-sized enterprises.

For many women, these structural barriers are reinforced by social norms. Opening a bank account may require travelling long distances. Financial decisions may need approval from a husband or another family member. Limited financial and numeracy literacy can make formal banking intimidating, while traditional lending products often fail to reflect the realities of informal livelihoods.

Savings groups were never designed to eliminate these barriers overnight. They were designed to work despite them. By allowing women to save collectively, access affordable loans, and build financial confidence within trusted community networks, savings groups create opportunities that formal institutions have historically struggled to provide. The evidence increasingly shows that this participation changes more than financial behaviour.

According to the 2025 evidence synthesis by Innovations for Poverty Action, women participating in savings groups reliably show higher levels of savings and improved access to affordable credit. Studies also show that women become less dependent on expensive informal lenders and more likely to make decisions about business investments, food purchases, education, and healthcare within their households.

Crucially, these outcomes are not isolated to one geography. Across Ghana, Malawi, and Uganda, participation in Village Savings and Loan Associations increased total reported savings by 34 percent compared with non-participants, while studies found improved business activity, stronger access to credit, and increased influence over household decision-making. Similar findings emerge from studies in Peru, Mali, India, Côte d’Ivoire, and Cambodia, suggesting that the model performs consistently across diverse economic and cultural contexts.

The research also offers an important nuance. Savings groups are not a guarantee of higher household income in every context. The IPA review concludes that while evidence on income growth is mixed, the evidence for improved savings behaviour, better credit access, stronger financial resilience, and increased decision-making power holds up across the board.

The value of savings groups, then, is not simply that they help people earn more money. It is that they help people manage the money they already have more effectively. That is exactly what financial systems are supposed to do.

Digitization Doesn’t Make Savings Groups Work. It Makes Their Financial Behaviour Visible.

For decades, savings groups have operated on paper ledgers, notebooks, passbooks, and, in some cases, memory alone. These systems have worked remarkably well. They have enabled millions of people to save consistently, manage loans, build businesses, and support one another through emergencies. Their longevity is proof that the model itself is not broken.

But paper has its limits. A handwritten ledger cannot generate a credit profile. A notebook cannot demonstrate repayment behaviour to a bank. A passbook cannot produce the kind of financial history that lenders, insurers, and regulators rely on to make decisions. This is where digitization creates value. At its core, digitization is simply the process of converting years of trusted financial behaviour into structured financial data. Every contribution made during a weekly meeting. Every loan approved by the group. Every repayment completed on time. Every social fund contribution. Every annual share-out. Together, these transactions create something that paper records rarely can: a verifiable financial history.

Modern financial systems increasingly operate on data. Financial institutions make lending decisions based on evidence of repayment behaviour, transaction histories, and financial consistency. Yet millions of savings group members, despite demonstrating exactly these behaviours for years, remain invisible because their financial records exist only within their groups.

Digitization closes that gap. Research increasingly suggests that digital record-keeping does more than improve administrative efficiency. It strengthens the quality of savings groups themselves. Digital tools reduce calculation errors, improve transparency during meetings, simplify record management, and make it easier for groups to monitor savings, loans, interest earnings, and social funds over time. By replacing manual calculations with automated ones, they reduce disputes, strengthen accountability, and allow members to focus less on bookkeeping and more on decision-making.

These operational improvements are particularly valuable because trust is the foundation of every successful savings group. They depend on transparency.

Every member must be confident that contributions have been recorded accurately, loans are tracked correctly, and interest is distributed fairly. Digitization reinforces that trust rather than replacing it. It creates a shared source of truth that every member can rely on.

Platforms such as DreamSave were built around this principle. DreamSave digitizes the processes groups already understand. Groups continue saving together, issuing loans collectively, managing social funds, and operating according to constitutions they establish themselves. The difference is that these activities are now recorded digitally, with automated calculations, standardized record-keeping, and secure transaction histories that reduce administrative burden while improving transparency.

Technology, in this context, does not replace community governance. It supports it. It also strengthens something that many successful savings groups already recognize as essential: institutional memory.

Paper records are vulnerable to damage, loss, or human error. Leadership transitions can result in inconsistent record-keeping, while growing groups often face increasing administrative complexity. Digital systems preserve years of financial history, ensuring that institutional knowledge is retained even as membership changes and groups expand.

This matters more as groups mature and their transaction histories grow. The same review that documents these gains also flags where the evidence is thinnest: how groups can transition into broader financial ecosystems without losing the characteristics that make them successful.

That transition should not be mistaken for formalization. Digitization is not about transforming community finance into conventional banking. Nor is it about replacing weekly meetings with mobile applications. The social fabric of savings groups (the accountability, collective decision-making, mutual support, and peer trust) is precisely what makes them resilient. Technology cannot replicate those relationships.

Instead, technology documents them. It captures years of financial behaviour in a form that external institutions can understand. In doing so, it creates something that millions of financially responsible people have never had before:

A financial identity built on evidence. Because once years of savings, lending, and repayment are no longer hidden inside notebooks, they become a bridge to formal financial services.

From Digital Footprints to Financial Linkages: Making Financial Behaviour Count

For decades, financial inclusion has largely been approached as a question of access. How do we open more bank accounts? How do we issue more loans? How do we bring more people into the formal financial system?

These are important questions. But they assume that people outside the formal system have no meaningful financial lives until a financial institution reaches them. Savings groups tell a different story: one of financial activity that already exists but goes unseen.

Across much of the world, lenders rely on collateral, formal employment records, bank statements, or traditional credit scores to assess risk. Yet these requirements often exclude the very people who have demonstrated consistent financial discipline through savings groups for years.

A woman may have contributed to her savings group every week for five years. She may have borrowed multiple times. She may have repaid every loan in full. She may even serve as the group’s treasurer, managing thousands of transactions on behalf of dozens of members. Yet when she approaches a formal financial institution, she is often treated as someone with “no financial history.” Because no one can see it.

Digitization changes that equation. It creates opportunities that extend far beyond access to credit. A verified financial history can support access to microinsurance that helps families manage health emergencies or climate-related shocks. It can strengthen eligibility for agricultural finance that enables farmers to invest in improved seeds, irrigation, or equipment before planting seasons. It can support working capital for small businesses that have outgrown internal group lending while allowing entrepreneurs to continue participating in the community structures that helped them grow.

The savings group does not disappear. Its role evolves. Instead of being viewed as an alternative to formal finance, it becomes the foundation upon which broader financial relationships are built. Meaningful financial linkages work by connecting complementary systems, not extracting people from ones that already serve them well. Research points in this direction.

The same 2025 IPA synthesis cited earlier bears this out: across multiple countries, women in savings groups grew less dependent on high-cost informal lenders and increasingly accessed credit through structured, lower-cost channels. The review also identifies stronger linkages between savings groups and formal institutions as one of the most important opportunities ahead, and that opportunity reaches beyond banks and lenders. Governments can design policies around more reliable community-level financial data. Development organizations can monitor programmes without increasing reporting burdens on communities. Financial service providers can build products based on observed behaviour rather than assumptions about low-income households. Perhaps most importantly, communities themselves gain greater visibility into their own financial progress, strengthening transparency and accountability within their groups.

Seen through this lens, digitization is not merely a technological upgrade. It is an infrastructure for recognition: recognition that women saving every week are not charity recipients or passive beneficiaries, but investors, borrowers, lenders, entrepreneurs, and financial decision-makers contributing to local and national economies every day.

For too long, conversations about financial inclusion have focused on helping people “graduate” from informal finance into formal finance, as though one must replace the other. But in many underserved communities, the informal economy is not a temporary stage on the journey to development. It is the economy.

Savings groups continue to thrive because they are built around social trust, local accountability, and flexibility: qualities that formal financial institutions often struggle to replicate. Attempting to replace these systems risks weakening the very networks that make them effective. The future therefore lies not in substitution, but in interoperability.

Financial systems should be designed to meet people where they are, building on behaviours they already trust rather than expecting them to abandon those behaviours altogether. DreamSave makes this possible by creating a common language between community finance and formal finance.

One preserves trust. The other expands opportunity. Together, they create pathways that neither system could achieve alone.

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.