December 24, 2024
Authors: Eloise Duncan and Shela Tran, Financial Resilience Institute
What is Financial Inclusion anyway?
Financial inclusion refers to the ability of individuals and businesses to access useful and affordable financial products and services that meet their needs. These include bank or savings accounts, accessible and affordable credit, insurance or financial advice. As outlined by UNSGSA, nearly 80% of adults worldwide have access to at least a financial account currently based on the Global Findex 2021. In 2015, financial inclusion was identified as a key enabler of seven of the 17 UN Sustainable Development Goals (SDGs). The gender gap in account ownership between men and women in developing countries has also narrowed from 9 to 6% in the past 15 years, and more than 60% countries have implemented a national financial inclusion strategy. With access to financial services significantly expanded and a robust global network of partners supporting financial inclusion, there is an opportunity for organizations to focus on financial health, defined by our organization here. More people in Canada and around the world need to be able to access the financial services and help they need, with this an enabler of improved financial health, financial resilience and financial well-being.
This article provides data and insights on financial inclusion and acess-to-financial help challenges in Canada, for households overall, and those who are more financially vulnerable based on our Institute’s Financial Resilience Index model. It also provides market-leading data on the differences in financial resilience (and financial vulnerability) of households that have and have not been able to access specific financial help over the past 12 months, based on data from our Institute’s national Financial Well-Being studies (2017-2024).
Canada is Making Strides in Financial Inclusion – But There’s More to the Story
Recent data from the Financial Inclusion and Access to Financial Help Challenges for More Financially Vulnerable or Underserved Populations report shows encouraging progress in Canada’s efforts to close gaps in financial inclusion. Fewer Canadians at the national level are facing financial inclusion barriers as of June 2023 compared to a year ago, as highlighted through sample financial inclusion data provided by the Institute below.
For example, in June 2023, 9.9% of Canadians households reported experiencing gaps in financial support or advice they needed over the past 12 months. By June 2024, that number had decreased to 8.6%. Similarly, gaps in access to financial help programs and services dropped from 7.5% in June 2023 to 6.3% in June 2024. These improvements suggest that more Canadians were able to access the financial help they needed, an enabler of them maintaining or improving their financial resilience.
Proportion of households that report they have faced the following financial inclusion and access-to-financial help challenges over the past 12 months (June 2024 compared to June 2023)
The Persistent Gap for Vulnerable Households
Financially vulnerable households, especially those experiencing economic hardship, job insecurity, or other stressors, are more likely to encounter barriers to accessing reliable financial help. Analytics against the Institute’s Seymour Financial Resilience Index highlights that more financially vulnerable households consistently are more challenged in terms of financial inclusion and access-to-financial help challenges, with them needing more targeted support by Financial Institutions, Policymakers and others to help foster financial inclusion, and ultimately, improved financial health and resilience.
Households that agree have faced the following financial inclusion and access to financial help barriers over the past 12 months: overall and by financial resilience segment (February 2023 and 2024)
Canadian households with lower financial resilience scores are still far more likely to lack access to critical financial advice or support. From February 2023 to February 2024, 25% of ‘Extremely Vulnerable’ Canadians (scores between 0 and 30) reported being unable to access the financial support or advice they needed. In contrast, only 10% of Canadians overall faced similar challenges. This disparity extends to other forms of support as well as shown in the above chart. For instance, 7% of ‘Extremely Vulnerable’ Canadians in February 2024 reported being unable to access tax filing help to receive government benefits, compared to just 2% of Canadians overall as presented in the following graph. The good news however is that there has been a significant decrease in ‘Extremely Vulnerable’ Canadians facing this financial inclusion barrier between February 2023 and February 2024, as evidence by the reduction in ‘Extremely Vulnerable’ households facing this challenge decreasing from 13% to 7% over the period.
Households that agree they have faced financial inclusion and access to financial help challenges over the past 12 months: overall and by financial resilience segment (February 2023 and 2024)
Source: Financial Resilience Institute, February 2023 and 2024 and Seymour Financial Resilience Index ® and Financial Well-Being Studies
Financial Resilience Institute is tracking not only financial inclusion challenges facing Canadians and those who are more financially vulnerable three times a year through our Financial Well-Being Study, but importantly, the improved financial resilience outcomes (and financial well-being outcomes) of people experiencing reduced financial inclusion, and able to gain access to relevant financial services and help. We’re tracking this longitudinally for Canadians overall, key populations (such as Canadians living with low incomes) and for the customers of clients and partner organizations working with us.
Key Insight: Access to relevant financial help can foster improved Financial Resilience and Financial Well-Being Outcomes
Using our Financial Well-Being Studies instrument and peer-reviewed Financial Resilience Index model, sample data above highlights the improved financial resilience outcomes of people that are not challenged by certain financial inclusion and access-to-financial gaps compared to those who are. For example, households that could not access insurance to improve their financial security over the past 12 months as of February 2024 had a mean financial resilience score of 31.7 as of February 2024 (with these households ‘Financially Vulnerable’) compared to a mean financial resilience score of 51.73 for those who could access the financial help.
Mean financial resilience score of households who agree they faced specific financial inclusion and access to financial help challenges over the past 12 months compared to those who did not (February 2024)
Similarly, those unable to access help in managing their debt over the past 12 months had a mean financial resilience score of 29.08 as of February 2024, while those who could access this help had a mean financial resilience score of 52.12. Canadians who couldn’t get the financial support or advice they needed over the past 12 months had a mean financial resilience score of 40.25, compared to 51.7 for those who could access this help. These challenges were reported over the past 12 months from February 2023 to February 2024.
Low Income Canadians that have been able to access specific financial help and services for example also have improved financial resilience outcomes, as highlighted in our Low-Income Canadians Reports published in 2021, 2022 and 2024.
More data and insights are available in the Institute’s Financial Vulnerability and Challenges of Key Populations Report and other reports published by our non-profit, with our data and insights also included in key reports such as Public Policy Forum’s ‘All In: Pathways to Economic and Financial Inclusion in Canada’ Report published in December 2024, with Financial Resilience Institute a key report contributor.
While these statistics are promising, it is essential to remember that financial inclusion is not just about having access, it is about improving financial health and building long-term financial resilience. Canadians and others around the world who are able to access the appropriate financial services, tools and support for their needs, such as timely financial advice geared to their challenges and needs or relevant insurance programs, are better equipped to navigate both immediate challenges and long-term financial obstacles.
At Financial Resilience Institute, we have tracked these trends over time, and found that individuals who are able to access targeted financial assistance report better overall financial resilience. They experience less financial stress, greater confidence in managing their finances, and an increased ability to handle unforeseen financial setbacks. They can also have improved levels of financial well-being, and overall health and well-being.
This progress is a sign that we are moving in the right direction in Canada, but there is still significant work to be done. Financial vulnerabilities are not equally distributed across the population, and those who are most in need are still disproportionately affected by gaps in financial access. We continue to see more financially vulnerable Canadians taking up predatory payday loans and other products that put them further into debt for example, and the need for continued education and support so that more people can access products and services that move them ahead, not backwards. Financial inclusion challenges can also be exacerbated in rural communities, for key populations such as Indigenous Canadians, or for households (such as seniors) who may lack digital skills, knowledge or trust to be able to access relevant financial services and help they need.
Opportunities to Improve Financial Inclusion and Financial Health for More Vulnerable Populations
This disparity between the most vulnerable Canadians and those with stronger financial resilience underscores that financial inclusion must go beyond simple access to services. It needs to be accompanied by tailored support that directly addresses the unique challenges of those facing significant financial hardship. Without this targeted support, financial inclusion alone will not be enough to close the financial resilience gap or reduce inequities.
For ‘Extremely Vulnerable’ households and others, gaps in credit access often led to harmful choices like payday loans, which can worsen financial instability and create a cycle of debt. It is crucial to provide these individuals with alternatives to avoid such products and help build more secure financial foundations.
As Policymakers, Financial Institutions, and Employers work to help bridge these gaps, it is essential to take an inclusive approach that recognizes the needs of in particular more vulnerable households. To truly close gaps in financial inclusion and address challenges with financial vulnerability, we need to focus efforts on those most in need by providing them with the tools, advice, and financial assistance they require to build long-term financial stability and resilience. This is not easy, is a journey, and can require partnerships and a cross-sector collaborative approach. For example, Financial Institutions can partner with non-profit organizations to help bring scalable solutions to communities in need, and organizations can partner to create and provide tools and supports that can make a difference.
Our data indicates ‘top line’ improvements in financial inclusion numbers for Canadians. However, there is a need to harness dis-aggregated and longitudinal data, and to look at nuanced challenges and opportunities for more financially vulnerable households and those with unique needs.
The path ahead requires continued focus and efforts by Financial Institutions, insurance companies, non-profit organizations, Policymakers and the wider ecosystem, so that financial and economic inclusion can become available to more people. There are many impact pathways, and more work needs to be done to help financially empower more Canadians and key populations (such as Newcomers, Small Business Owners and others) to make informed financial decisions, navigate our complex financial services system, products and terms, and access the right financial products and services that meet their needs. Ensuring we incorporate lived-experience insights from those who are financially excluded themselves is critical, along with harnessing data and best practices from other jurisdictions. This will help organizations to together to help create programs and solutions that make a difference. Impact measurement to prove which programs and interventions remain critical.
More reports will be provided by Financial Resilience Institute on this important topic, with great progress made internationally on improving financial inclusion, and significant opportunities to continue this journey, and help foster improved financial empowerment and financial well-being for those who need help most.
Financial Resilience Institute tracks the financial health, financial well-being, and financial resilience of women and key populations, alongside financial inclusion and access-to-help challenges. This work levers the Seymour Financial Resilience Model ® and Financial Well-Being Studies instrument and measures the impact of targeted interventions and improved access to financial help. For more information, feedback or questions on this article, please contact us
[1] About the Financial Resilience Index model: The peer-reviewed Index measures household financial resilience: i.e. a household’s ability to get through financial hardship, stressors and shocks as a result of unplanned life events. This is measured and tracked across nine behavioural, sentiment and resilience indicators at the national, provincial and individual household level, building on over nine years of robust data from Financial Resilience Institute’s Financial Well-Being Studies instrument (2017-2024 and beyond). Information on the indicators and scoring model and Index development methodology are available through on our website. ‘Extremely Vulnerable’ households have a financial resilience score of 0 to 30; ‘Financially Vulnerable’ a score of 30.01 to 50; ‘Approaching Resilience’ a score of 50.01 to 70, and ‘Financially Resilient’ a score of 70.01 to 100.
Reports published since 2017 include a joint report on the ‘Financial Resilience and Financial Well-Being of Canadians during the Covid-19 Pandemic’ jointly published with Statistics Canada (September 2021).
[2] E. Duncan and K. Koci, Financial Resilience Institute (2021, 2022, 2023 and 2024) Financial Inclusion and Access to Financial Help Challenges for more Financially Vulnerable or Underserved Populations Report (January 2023); ‘Financial Vulnerability of and Challenges of Key Populations Report (January 2023); Financial Vulnerability of Low-Income Canadians Intelligence Memo (January 2024). The Financial Inclusion and Access to Financial Help Challenges for More Financially Vulnerable or Underserved Populations Report can be accessed at https://www.finresilienceinstitute.org/wp-content/uploads/2023/11/Financial-Inclusion-ReportJan10_Final.pdf
[3] The Financial Vulnerability and Challenges of Key Populations Report is at: chrome- extension://efaidnbmnnnibpcajpcglclefindmkj/ https://www.finresilienceinstitute.org/wp-content/uploads/2023/11/Financially-Vulnerable-Ecosystem-Report_Jan10Final.pdf
[4] Deep Dive Reports on Canadians with Low Incomes are at https://www.finresilienceinstitute.org/low-income-canadians-reports/