Realizing we don’t have all the answers: 4 questions on women’s financial inclusion

In my household, my husband and dog are the only males. I have two grown daughters, a granddaughter, our cat was a female and our horse is a mare. I feel fortunate that in the time and place where we live, for my daughters and granddaughter, economic and social empowerment is not a question but a given. This includes having their own income, their own bank accounts, and the information they need to evaluate and elect whether or not to use financial services. I hope I have modeled for my daughters that financial health and independence, like physical health and independence, is a life skill. 

I hold the same hope for women around the world, but know that access to, affordability of and information on financial services is not universal. For almost a decade of my career I have worked to advance the use of mobile and digital technologies to bridge the gap in financial inclusion. This has included work by our firm to build tools to support the capacity of development organizations to use digital payments; implement in-country programs to support digital financial services (DFS) ecosystem development in Indonesia, Liberia, and Sierra Leone;and strengthen agent networks’ ability to reach rural populations in Tanzania and Ghana. It has also included ongoing participation in communities of practice like FinEquity. 

The numbers on financial inclusion have moved in a positive direction with each release of Findex data, and in some countries, like Indonesia, more women than men have accounts. Progress has been made, but our work is not done — now we are confronting a deeper series of challenges in achieving, and understanding, what we mean by inclusion and economic empowerment for women.  

As we push on into a new decade and I reflect on our work in the lead up to International Women's Day this week, I found myself asking four questions about the goal of women’s financial inclusion.

1. How can we help women make informed decisions around financial services?

Money management matters to women and they often manage their own financial lives and those of their families. With the expansion of mobile phones and agent banking, access to more formal services to manage those finances are more within reach than they’ve ever been before. Programs to build women’s financial literacy have been around for years. Our work, however, shows that in rural areas there is often a limited understanding of the utility of a mobile wallet beyond the transfer of funds. (See the tool we developed for USAID on implementing a rural stimulation campaign.) The Information to determine the value of these services is not easy to find. Nano-credit may be available instantly, but its terms less evident. Promises of delivery of goods ordered remotely and paid with by mobile money may go unmet. Transaction fees and service costs may be deducted without an individual’s clear understanding or calculation of the impact. Consumer protection and service transparency is hard to translate onto a digital platform, where we all click agree to get the app to work or payment to process. A challenge for us now is to invest in new and engaging ways to build women’s digital financial capability so they can test new digital products and use them as informed consumers with choice.

2. How do we track — and effectively support — the women who choose not to use available financial products? 

We need to capture the power in saying no in measuring progress towards women’s financial inclusion. It is laudable for the global community and countries to set goals of full financial inclusion. But if we achieve 100% financial inclusion, how do we also measure whether or not women are informed and empowered to choose to not use services? It seems it’s time to add qualitative measures of whether people have information and are making informed decisions to our quantitative measurements of accounts and activities. Feedback from consumers often reveals valid reasons for non-use or low use, including, cost, distance, and relevance. How do we honor this information and feedback, and communicate back to the market the need for different products in order for supply to truly meet demand? This year, in developing a results framework for a new women’s digital financial literacy program with USAID, we’ll measure how the capacity building efforts empower women to make informed choices to use DFS — not just account use. 

3. Do we need to think about subsidies to offset how pricing influences decisions? 

We may have underestimated the effect of the price tag on using DFS. In our early work for NetHope and with NGOs, we spent time building tools to compare the costs of digital transactions with the often-unrecognized cost of paying in cash. (Check out the NetHope e-payments toolkit.)  These tools were created primarily for organizations using digital payments, which could absorb the transaction fees as operational costs. For consumers struggling to survive financially, transaction-based pricing can be prohibitive. Many of those living below the poverty line may disagree that DFS is better than cash. Efforts like the LevelOne project, funded by the Bill and Melinda Gates Foundation to create an open source payment software, have tried to tackle pricing. These are interesting initiatives, but did they draw provider interest from an industry that generates revenues from fees? Will agents offer services without compensation? Is it time to think about a cross-subsidy model, like we’ve used in telecom with universal service funds or in agricultural finance, in order to make services accessible for those living at the bottom of the pyramid? In reading about the gap in financing to meet the needs of smallholder farmers, I was struck by the stark conclusion in Rural and Agricultural Finance Learning Lab’s Inflection Point Report: without a subsidy the market is unlikely to fill that financing gap. Is the same true for DFS? For sustainability, revenue generation is important, but how and from whom? In G2P payments, governments might absorb the transaction fees, but how do we make it an attractive value proposition for individuals? We can’t shy away from the pricing issue, and this one is not about education or information. As blended finance becomes a more popular development strategy, how can this model support the growth of DFS ecosystems? 

4. If selling airtime becomes less dependent on agents, do we lose an important DFS agent source?

In the past two years, I had the opportunity to work in Ethiopia and Nigeria to evaluate the DFS ecosystems and application throughout development programming. In both countries I watched with amazement at the speed at which purchasing airtime top up moved from buying scratch cards from agents (often at the side of the road with an umbrella) to direct, individual purchase of airtime with mobile money. While this is not necessarily the case in every country, direct purchasing eliminates the need to visit the agent, unless buying a SIM card or a device. These agent networks are often an important and relevant source of mobile money and branchless banking agents, especially in rural areas. If the role of these agents continues to diminish in importance, how do we source qualified and effective agents for these networks? Relationships between providers and agents will need to be maintained, incentives will need to be replaced, and new product offerings will need to be marketed and communicated to keep agent activity levels high. 

What’s next?

I am looking forward to the continued evolution of DFS services to meet consumer needs. As with voice and data services, will new pricing models emerge that bring services within the grasp of all? Will people find that services bring them value and improve their financial management tools? Will providers listen to the market or new companies develop overlay products that bring a new level of relevance of products? 

As we continue the push for information on the relevance of DFS to people’s lives — and the evolution of products to meet their needs — we will be capturing learnings through our work with smallholder farmers, with a focus on PAYG solar and how we can use human-centered design initiatives (product archetypes or personas) to structure consumer outreach. Most importantly, we won’t shy away from asking the hard questions when looking at possible gaps in supply and demand — instances in which “failing” to meet 100% financial inclusion is actually a perfectly acceptable outcome.