Why women’s financial inclusion makes good business sense

27th March 2016 Rosita Najmi

Equalising financial opportunity among men and women has long been a nice human rights idea circulating at development conferences but a priority for financial institutions? Not exactly.

But numbers don’t lie and now we finally have data and rigorous research to make the business case backed up by the right technology to make it financially feasible.

When women hold the family purse strings, they spend more on family essentials like food and child welfare. Closing gender gaps in account ownership and access to credit boosts incomes by 12 percent or more. And women’s economic empowerment is tied to many Sustainable Development Goals, including targets on poverty, hunger, health, education, and, of course, gender equality.

There is also a business case that you don’t need a Harvard MBA to see. Currently, financial services providers fail to do business with 40 percent of the world, many of whom are female. How can providers expect to maximise profits, when they’re almost categorically ignoring such a huge segment of the population?

The good news is we are seeing some progress. The UN Capital Development Fund and UN Women have joined forces; the Turkish G20 presidency presented concrete recommendations for how government, private sector, and the development community can take action; mobile network operators are making commitments to reduce the gender gap on mobile internet and mobile money services; and central bankers from around the world will convene in Tanzania in April to discuss policy frameworks for women’s access to financial services.

The bad news is that women and girls still make up 70 percent of the 1 billion people living on less than US$1 a day. While account ownership among women has grown from 45 to 58 percent since 2011, ownership among men has consistently remained 7 percent higher. And when it comes to the workforce and business ownership, women’s exclusion from the formal economy inhibits their profits, productivity, and prospects for growth. If women are to be economically empowered, and if we seek resilient economies, we need to change the whole financial system to be gender inclusive. And we need policymakers and financial providers to lead this change.

We can start by investing in digital solutions, which include mobile technology, cards, and internet transactions. Through digital technology, financial services can circumvent the limits women face from familial and cultural norms. These limits include a lack of mobility, due to a local or religious custom prohibiting females from leaving the vicinity of home; and, as Melinda Gates explores in her section of the Bill & Melinda Gates’s Annual Letter, a lack of time, due to the disproportionate hours women spend on unpaid household work. With restrictions like these, it can be very hard to make it to a bank or engage in financial transactions at all.

Digital solutions, on the other hand, offer speedy services that women can access from almost anywhere. They also have the advantage of being private and secure, enabling small but frequent transactions at very low cost and establishing a record that can be used to measure creditworthiness. Digital solutions can also advance critical data gaps.

While we do have impressive data to make the case for women’s inclusion, we could definitely use more. Sex-disaggregated data can help both policymakers and financial institutions better design products and delivery channels that make sense for everyone and are responsive to the female customer journey. Only a few countries—such as Papua New Guinea, Burundi, and Rwanda—track numbers and patterns by gender, and only Chile has done it for a significant period of time (15 years). In that time, Chile’s government has not only pursued effective interventions, but also measured progress against them: gender gaps in access to savings have closed, and the gender gaps in credit and cash flow management products have narrowed substantially.

Some organisations, including the IMF and MIX, are trying to fill the void of global supply-side data. The Financial Services for the Poor team at the Bill & Melinda Gates Foundation, where I work, has assembled interactive maps of financial access points in six countries. We also support sex-disaggregated financial inclusion on the demand side via the World Bank’s Global Findex and InterMedia’s Financial Inclusion Insights. Governments and providers can apply data like these to identify regions where access is concentrated or neglected and better understand what types of products and services the poor want.

Certainly, digital solutions and sex-disaggregated data alone will not bridge the women’s financial inclusion gap. Much work remains on product design and delivery, legal and regulatory barriers, and the norms that influence how women are perceived and perceive themselves in society. As you can see from the graphic below, the gap on identity documents (IDs) alone is significant. Easier access to legal IDs could advance the opening of accounts and ease customer requirements, and countries like India have already demonstrated successfully how unique, universal ID provision is both affordable and feasible.

Twenty years ago, at Beijing’s World Conference on Women, a movement was afoot. Since then, fintech innovations have developed that we can apply towards creating inclusive economies. So what’s stopping us? We’ve run the numbers, have the tools, and the political will has never been stronger. And not because financial suffragettes chant that it’s the right thing to do for society, but because women’s financial inclusion just makes business sense. We have reached the tipping point for women’s financial inclusion.

Percentage of men/women with IDs (Source: Financial Inclusion Insights Database)
Percentage of men/women with IDs (Source: Financial Inclusion Insights Database)


About the Author

Rosita Najmi Headshot

Rosita Najmi

Rosita Najmi is Program Officer at the Bill & Melinda Gates Foundation in Washington D.C. She has managed programmes, investments, and research at the World Bank, IFC, Omidyar Network, Mercy Corps, Accion, Tahirih Justice Center, and America’s Promise.

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