The Central Bank of Solomon Islands (CBSI) is working to advance financial inclusion through digital tools and data-driven decision-making. The objective is to narrow the divide in financial services accessibility between urban and rural regions. To this end, CBSI has initiated a geo-tagging exercise as part of its National Financial Inclusion Strategy 3 (NFIS 3), to map financial access points across the country. Financial access points include ATMs, bank branches, EFTPOS terminals, and mobile money agents. They refer to physical or digital locations or channels where people and businesses can access financial services such as savings accounts, loans, insurance, payments, or remittances.

Mapping the access points would not only help to understand geographical disparities in access to financial services but also help to streamline polices that push for greater access, particularly in remote areas. The Pacific Insurance and Climate Adaptation Programme (PICAP), jointly implemented by the UN Development Programme (UNDP), UN Capital Development Fund (UNCDF) and UN University (UNU), has been supporting CBSI with this geo-tagging exercise. The aim of the partnership is to explore its application to climate and disaster risk financing solutions, such as parametric insurance, in the Solomon Islands. The exercise entailed tagging over 955 financial access points in two provinces: Guadalcanal (including Honiara) and Western Province.

These provinces have the highest concentration of financial access points in the country, yet significant disparities persist in the availability and accessibility of these services between urban and rural areas. The exercise aims to provide an accurate, data-driven foundation for expanding financial services and strengthening financial resilience in the Solomon Islands. With UNCDF and UNDP support, CBSI will be expanding geo-tagging efforts in other provinces such as Choiseul, Central and Rennell and Bellona.

Identifying opportunities

Geo-mapping can be used as a tool to increase the rate of financial inclusion as well as deployment of climate risk insurance, especially in the Pacific Small Islands Developing States (PSIDS). Several communities in these countries see significant challenges in accessing formal financial services due to the geographic limitations and high cost of traveling within islands, especially in the times of crisis. Geo-mapping of ATMs, bank branches, EFTPOS terminals, and mobile money agents in the Solomon Islands has shown that the regulator and financial service providers can chart out data-driven strategies that prioritize those who need these services the most.

In case of extreme weather events, this exercise can be useful to ensure that parametric insurance payouts reach the communities without delays. For instance, when a cyclone or heavy rain triggers a payout, the communities face challenges in the form of damaged ATMs, inaccessible bank branches and disrupted network. Through pre-mapping the financial infrastructure, the payouts can be directed at the nearest alternative functional cash-out points instead to reduce the recovery time of affected households. 

Geo-mapping can play a crucial role in resilience-building efforts. All PSIDS are prone to natural perils, including the Solomon Islands. Having accurate data on the distribution of financial services across the country can allow the development and policy interventions to integrate financial access into disaster response planning. For instance, a risk overlay analysis could indicate that while the coastal communities are most vulnerable and exposed, most access points are concentrated inland, exposing a gap between risk and the financial protection mechanisms in place.

Access to geo-tagged financial access points can also contribute to more efficient risk-based insurance pricing and coverage. It allows insurers to adapt their models depending on the risk assessments of the areas when juxtaposing this data with the available financial infrastructure. By encouraging risk based premium adjustments, policyholders in low-risk areas pay lower premiums while those in high-risk areas can benefit from insurance guarantee facilities, government or grant subsidies, leading to an increase in parametric insurance penetration and resilience.

Financial institutions and regulators can use this data to identify high-potential areas for market expansion through shared-investments and/or government intervention to offer subsidies to financial service providers to establish access points in low coverage areas (as outlined in NFIS 3). In these ways, geo-tagging can be used to transform financial systems to be more inclusive, resilient, and responsive to the realities of those living in geographically remote communities.

Policy recommendations 

To expand financial services in remote areas. The geo-tagging exercise in the two provinces highlight that financial services are mainly clustered in urban centers like Honiara, Gizo and Munda, leaving many outer islands and remote rural communities without enough access. To address this, policymakers could explore solutions such as offering subsidies for operational costs or for partnering with local businesses such as post offices and retail stores to provide financial services. This would encourage banks and mobile money providers to expand their networks into rural and remote areas. 

Strengthen mobile money networks and digital payments. Mobile money plays a key role in expanding formal financial services in rural areas, however, with limited agent network and weak network connectivity, the adoption rates in outer islands remain low. M-SELEN is already expanding its agent network in remote parts and remains the most penetrated financial service provider, however, much work is to be done in terms of accessible infrastructure. Policies that support shared agent network and enable cross-network transactions could accelerate digital financial inclusion while also providing a reliable platform for parametric insurance payouts.

Leverage geo-spatial data for financial resilience against natural hazards. While overlaying this data with the climate risk data can help in understanding the financial vulnerability of certain communities, combining this with transportation networks and evacuation routes can further highlight infrastructure gaps that impede financial resilience during climate shocks. This insight can inform policymakers to prioritize the infrastructure development as well as pre-position the financial access points in a more effective manner.

Scale up geo-mapping for financial inclusion strategies. Furthermore, adding more layers, for instance, ratio of population accessing these service points, as seen in the case of Papua New Guinea’s Financial Inclusion Mapping tool — could support targeted policy interventions and private sector engagement. The regulators can then work in collaboration with disaster management team in the country to utilise this important tool for climate related risks and response mechanisms. 

Shreya Rajpuriya is a Climate Risk Insurance Specialist with UNCDF in Solomon Islands.