Summary: Financial inclusion provides vulnerable households and small businesses with formal banking, credit, and insurance, acting as a crucial safety net and economic driver in emerging economies. Because of this impact, the World Bank views formal account ownership as a core metric of human development rather than a simple banking statistic. While widespread mobile phone adoption has solved the initial challenge of reaching citizens, the current focus is utilizing technologies like digital identity to convert connectivity into genuine, safe financial access.
Financial inclusion is the ability to access useful, affordable financial products and services, including transactions, payments, savings, credit, and insurance, through a formal channel instead of cash or an informal moneylender. For emerging economies, this is an essential lifeline. A formal account lets a household absorb a medical bill or a bad harvest without sliding into poverty, lets a small business build credit history to grow, and gives citizens a direct channel to receive government subsidies, pensions, and emergency relief without leakage to intermediaries.
This role is why the World Bank treats account ownership as a development metric, not a banking figure.
Mobile phones have already solved the hardest part: reaching people. The question now facing emerging economies is not how to connect more citizens, but what comes next, and which technologies can convert connectivity into actual financial access. Global Findex 2025 points to a clear answer: digital identity, and Iraq shows exactly why.
The connectivity paradox
Financial inclusion has improved sharply over the past decade, and the World Bank credits mobile technology as a primary driver. Worldwide account ownership climbed from 51% in 2011 to 79% today, growth Global Findex 2025 attributes to the spread of phones, the internet, and mobile money.
But mobile access is now a victim of its own success, and a two-sided one. Across low- and middle-income Arab economies, connectivity has grown fast enough that it is no longer the constraint it once was. Iraq, Jordan, and Lebanon prove this: 90% of adults across low- and middle-income Arab economies own a phone, per the World Bank, and are online and active, yet formal account ownership across these economies still sits at just 40%.
That gap has two layers. The first is access: a phone gets a person to the door of the financial system, but a bank still has to verify who that person is before letting them in. Where verification depends on paperwork never accumulated, mobile access stalls at the threshold.
The second layer is safety, surfacing only after account opening. Findex 2025 found nearly one in five phone owners in low- and middle-income economies had received an unsolicited money request, the kind of contact that precedes OTP and PIN-sharing scams. Owning a mobile-linked account is not the same as knowing how to protect it.
This matters because it changes where the next investment should go. If connectivity were still the bottleneck, the fix would be more towers and cheaper data. Since connectivity has scaled, the bottleneck has shifted downstream, to whether an institution can verify who it is serving and whether that person knows how to keep the account safe.
Iraq as the case in point
Iraq is a useful test case precisely because it is not a low-income outlier. The World Bank classifies it as upper-middle income, a status held for twelve consecutive years, placing its income roughly in line with the regional average, and it is also grouped as an emerging market alongside countries like Indonesia, Brazil, and South Africa.
Regionally, account ownership across MENA rose from 45% in 2021 to 53% in 2024, and formal saving climbed from 11% to 17%. Iraq sits inside a region where the enabling conditions for inclusion, phones and internet access, are already largely in place. What is missing is not infrastructure but a reliable, interoperable way to confirm identity remotely and extend services to people who are online but undocumented in the eyes of a bank.
Iraq itself is now moving to close that gap. The Central Bank of Iraq launched its first National Financial Inclusion Strategy for 2025-2029 in May 2025, built with the World Bank, the Arab Monetary Fund, and the Alliance for Financial Inclusion, running alongside a separate CBI mandate requiring all government institutions to eliminate cash payments by July 2026. A parallel initiative is shifting civil servants from cash salaries to individual bank accounts, putting a paycheck-linked identity in the hands of a large share of the formal workforce for the first time. For millions of Iraqis, the effect is a bank account by default, and a first formal financial footprint to build on for credit, savings, and insurance later.
What digital identity actually fixes
Digital identity solves the specific failure point connectivity cannot solve alone: remote, trustworthy verification.
Biometric and digital ID systems let institutions confirm who a customer is without an in-person visit or a paper trail many adults in emerging economies lack. India’s JAM trinity, linking Aadhaar biometric ID, a bank account, and a mobile number, is the clearest large-scale proof of this, with account ownership reaching 90% among both men and women, a level MENA economies, including Iraq, have not approached despite comparable or higher mobile phone ownership.
The pattern holds: wherever digital identity infrastructure exists alongside mobile connectivity, account ownership follows, and wherever it lags, as in much of MENA, inclusion stalls even as phone and internet use climb.
The takeaway for institutions and policymakers
The next phase of financial inclusion will not be won by expanding mobile networks; emerging economies have largely already won that battle. It will be won by institutions that build interoperable digital identity infrastructure fast enough to convert existing connectivity into actual account ownership. Iraq, and much of the wider Arab world, represents exactly this opportunity: a population online, reachable, and ready, waiting on the identity layer that turns access into inclusion.
Sources
- World Bank, Global Findex Database 2025: Connectivity and Financial Inclusion in the Digital Economy (worldbank.org/en/publication/globalfindex)
- World Bank, “Building on connectivity to transform financial inclusion in Arab countries” (blogs.worldbank.org/en/arabvoices)
- Alliance for Financial Inclusion, “Iraq launches National Financial Inclusion Strategy 2025-2029” (afi-global.org)
- FinDev Gateway, “Financial Inclusion in Iraq” (findevgateway.org/country/financial-inclusion-in-iraq)
- ClearingPost, “Iraq Mandates Cashless Government Payments by July 2026” (clearingpost.com)
- World Bank Country and Lending Groups classification (datahelpdesk.worldbank.org)
