Today, 980 million women around the world still don’t have access to financial services. And even though that number is lower than it was four years ago, the financial inclusion gap between men and women globally has nonetheless stayed steady at 7 percentage points since 2011. Why does this gap persist and how can we move the needle on closing it? At FMO’s Future of Finance Conference last month, I had the opportunity to ask these questions to experts in the field including Saskia Vossenberg of FMO, Elisabeth Ballreich of Women’s World Banking, Mulenga Silwamba of Cavmont Bank, and Anna de Lanoy Meijer of Anna + Nina.
How can we begin to eliminate the gender gap? All of the panelists agreed that financial institutions aren’t doing enough to understand the banking needs of female clients. As Elisabeth put it, “most traditional banking products weren’t specifically designed with women’s needs and constraints in mind.” In an example given by Mulenga, creditors in Zambia often ask women for proof of address to open a line of credit, disregarding the fact that the household’s official documentation is typically in the name of their husbands. Elisabeth also noted that being approached by male bank agents has been found to dissuade female clients from using financial products.
Women themselves are not a homogeneous group. “Female entrepreneurs come in many colors, shapes, sizes, and backgrounds,” Saskia emphasized, and more effort is needed to better segment and understand the particular needs of female clients. All panelists agreed that first understanding and then building trust with female clients is key to closing the gender gap.
While it has been widely proven and accepted by those in the international development field that investing in women is a critical component to poverty alleviation, the business case for doing so is often not sufficiently understood or accepted by financial service providers. Facing pressure to meet short-term financial returns, bank managers may lack the long-term perspective needed to realize some of the gains that can accrue from reaching more women. The panelists I spoke with were eager to discuss building a more convincing business case for financial service providers.
First of all, some panelists noted that women are often more loyal customers, as demonstrated by higher retention rates than those of men. This is particularly true when their needs are being met with both quality service and appropriate terms and conditions. A study conducted by GSMA found that women are often loyal customers for businesses that properly meet their needs, providing free word-of-mouth advertising and drawing new customers. As mentioned by Elisabeth, “Women rely a lot on peer-to-peer reviews. One woman recommending a product to another woman is really powerful.”
Mulenga said that in her experience, women are generally more creditworthy than men. She noted that making investments in women is typically less risky because of the many responsibilities women have — they’re more likely to be caretakers in their home and merchants in their communities — and thus less likely to take risky investment decisions themselves. In many African societies, in particular, women actively manage the household finances — and yet 45 percent remain unbanked. This leaves a large portion of a market untapped, a population that if better understood could offer significant growth prospects for a financial service provider.
These reflections only begin to define the business case for investing in women, but more efforts are undoubtedly needed to see meaningful change. At Accion, we’re committed to working with financial service providers to find innovative solutions to the financial inclusion gender gap. Closing this gap will involve engaging with women in their local communities, bringing them into the conversation, and building trust. One institution that has made strides to close this gap is Swadhaar, a business correspondent serving the unbaked in India. The business makes it a priority to gather feedback from women entrepreneurs and refine products and processes to attract new and maintain current female clients. Only with this type of relationship-based business model will we drive account access and usage among women and create a financial system that works for all people.
Robin Brazier contributed to this article.