Challenging the myths around women’s financial inclusion
Earlier this month, we teamed up with Jaclyn Berfond of Women’s World Banking for a FinEquity webinar on women’s use of digital financial services (DFS).
Moderated by Catherine Highet, Technology Lead at FinEquity, this webinar was part of CFI’s Financial Inclusion Week and designed to challenge six common myths around women’s financial inclusion. We tested assumptions, highlighted the contextual differences and nuances that exist across half of the world’s population, and considered the perils of stereotyping this population when it comes to access and use of financial services.
Click here to listen to the recording and view the slides, or read on for a summary of each of the myths.
1. There is no business case to serve low-income women
“While at one time it might have been said that women were unbankable, or could only be served by socially-oriented financial service providers, this mindset has dramatically shifted,” says Jaclyn. “I see it especially with the rise of digital financial services... DFS providers see a huge market opportunity presented by women.”
Many DFS providers see establishing market share as key to future growth, and low-income women represent a largely untapped market and business opportunity.
This is evidenced in the interest Women’s World Banking has seen from nontraditional players like commercial banks, insurance companies, mobile network operators, and fintechs, who want to join its mission and network to serve low-income women. Many of these stakeholders lack a clear strategy of how to acquire and engage with this segment, and are looking to Women’s World Banking for actionable recommendations.
2. Financial products designed for women exclude men
Current characteristics or components of exclusion expose the need for products and services that address context and capacity rather than different hardware configurations or gender-biased products. SIA CEO Shelley Spencer shared research to debunk the myth that financial services for women exclude men.
In its development of archetypes in its Women and Money project, IDEO.org found that digital financial tools are often designed to require knowledge and skills that low-income women don’t have — skills like literacy, numeracy, and digital proficiency. A study using the India model of the JAM trinity from the Center for Global Development estimates if women in the most disadvantaged group have an ID and a mobile phone they are nearly five times more likely to be financially included. the probability of their being financially included increases to 34%.
“These are gender-neutral things we can solve — and if we can solve them, [CGD] found that today’s financial inclusion gender gap would close by 5.5%,” says Shelley.
3. Women agents will drive women’s use of DFS
It depends. GSMA’s analysis of research across several markets shows a strong positive correlation between the percent of female agents in a provider’s network and the proportion of female customers. Other research shows women customers tend to find women agents more appealing, though there is wide variation across regions.
“There are certainly places where female agents are a necessity for inclusion of women, but we’ve seen many more contexts where it’s not necessarily required but could encourage the use of DFS because women are more likely to trust and really prefer to interact with female agents,” says Jaclyn. “Likely it’s a spectrum, and more research is needed to understand the context and validate any assumptions when thinking about how you’re going to provide digital financial services to women customers.”
4. Giving women phones will promote use of DFS
Giving away phones has been a point of contention in the sector, with some question around whether or not it’s an appropriate role for donors. Shelley suggests it’s time to renew the debate.
New research from A4AI shows 2.5 billion people live in countries where a smartphone costs more than a quarter of average monthly income. What do we do if phones are the access point, and affordability is the largest barrier to ownership?
Shelley shares several new phone financing initiatives and phone donations/subsidies in play, including Safaricom and Google’s announcement of smartphone financing in July and SIA’s work with TNM to make mobile phones affordable in Malawi.
“We know smartphones aren’t the only thing that’s needed — but as we look at literacy and other challenges, sometimes some of those barriers are helped with smartphones. Yes, feature phones are certainly still important, but if we want to forecast where we want to be in terms of equality, we’d like to get to the place of smartphone affordability. So how do we think about that in our design of programming?”
5. Women don’t have agency to control their own financial accounts or resources
We need more information. Suri and Jack research in Kenya found that when women have access to mobile money they are more likely to rise out of poverty, suggesting that agency by these women over the use of the service may exist. But this is only one study.
In the financial services realm, there are several levels of agency. Is it the unfettered right to have your own account and use it without fear of gender-based violence or retaliation, or informed decision-making that includes saying no to services that don’t fit?
“We want to be aware that in some environments and locations the mobile phone and access to financial services can be seen as a threat,” Shelley says. “How do we responsibly tackle that when we want to advance global goals of women’s financial inclusion and the mobile phone increasingly is the point of access?”
Recent SIA research with IFC on women smallholders and PAYG users in Uganda has been hopeful, showing women felt they had decision-making authority in deciding to access credit for agri-inputs. This held true, across age groups and marital statuses.
Women’s World Banking uses an empowerment framework developed by Martha A. Chen to assess four dimensions of change — relational, perceptual, material, and cognitive — and just started a series of research studies on the subject.
6. Government-to-person (G2P) transfers are an effective way to bring women into the formal financial system
This debate has become even more important as we move forward in the uncharted territory of the global pandemic. Since the outbreak of COVID-19, at least 200 countries and territories have initiated or modified over 1,000 social protection programs serving over 1 billion people as they cope with the health crisis and its economic effects.
So, is this statement true or false? The answer is it depends. As G2P programs transition from cash to digital payments into accounts, huge numbers of low-income populations, especially women, are accessing financial accounts for the first time. But most of these accounts are only being used to withdraw payments and otherwise remaining dormant.
Women’s World Banking research with the Gates Foundation and Fundación Capital finds that digital financial literacy is a barrier to G2P programs in almost all contexts. G2P transfers are seen as a huge opportunity for women’s financial inclusion, but stakeholders must be proactive to ensure that opportunity is realized.
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A common thread across all myths is the need to build women’s digital financial capabilities.
“Rather than specialized products or services, what we see across all these areas is that women need knowledge and skills to use digital financial services,” says Jaclyn. “We all need to think creatively about how we can build their financial capabilities, which will ultimately deepen their inclusion.”
Additional resources to help debunk the myths: