Looking at financial inclusion through a gender lens

During the Covid-19 pandemic, the digitisation of government relief payments resulted in a surge in financial inclusion worldwide, particularly for women. The most recent Global Findex Database Report (2021) shows that, among adults in developing economies with an account at a financial institution, around 420 million women had opened their first account to receive money from the government.

In addition, the study reported that the gender gap in bank account ownership across developing economies fell to six percentage points from nine percentage points, where it had remained for many years.

In addition to digitisation, there is also a better understanding among providers of what works in reaching women and including them in the formal financial system, Mary Ellen Iskenderian, president and CEO of Women’s World Banking (WWB), explained in her opening remarks at the 2023 Making Finance Work for Women Summit, which was held on May 24-25 in Mumbai and attracted more than 300 attendees.

“We know that an effective digital public infrastructure doesn’t ignore gender and that we have to pay attention to the unique barriers women face,” she said. “We know how to foster trust and provide incentives for women to build safety nets through formal savings. We know that gender diverse teams at all levels within a financial institution are a sure-fire way to attract more women customers. And we know that women agents, particularly those that come out of the community that’s being served, outperform their male counterparts with all customers on every metric: account balance size, deposit frequency, cross-selling other products, loan repayment rates, etc.”

The WWB summit explored themes such as gender lens investing, deepening digital engagement and the importance of leadership and diversity. It showcased innovative approaches to women’s financial inclusion and announced the winners of its Fourth Fintech Innovation Challenge, designed to identify innovations that target unbanked and underserved women.

Frictionless finance

Speaking on a panel entitled ‘Addressing growth through policy and regulation’, Rajesh Bansal, CEO of Reserve Bank Innovation Hub (RBIH), talked about the role of gender in the hub’s mission of frictionless finance for every Indian. He said: “As a part of our mission, one of the most critical elements is gender. We realised that we can’t focus on a billion without looking at what that means for 50% of the population. How do we ensure that every woman in India get access to finance in a frictionless manner?”

The RBIH is an independent, not-for-profit company set up and 100% owned by the Reserve Bank of India. It is working with providers to create new products and processes to enable women to access savings, payments and credit. Earlier this year, it launched a project with a fintech start-up focused on providing frictionless savings products to women to help them save as easily digitally as in a cookie jar. “We also launched a study on migrant women to understand how they use Indian digital payment rails, such as Unified Payments Interface, to send money home,” Mr Bansal told The Banker.

The fact that Mr Bansal has made gender his number-one issue is very encouraging, according to Ms Iskenderian. “We use a lot of language around the role of men as allies,” she notes. “[Mr Bansal] is someone putting their power, their expertise and the force of their organisation behind women’s financial inclusion.”

Mobile access

The leap forward in women's smartphone ownership and mobile internet access, even in countries where social norms have previously restricted women’s access to mobile technology, has also played a significant role in driving financial inclusion. According to GSMA’s Mobile Gender Gap Report 2023, the gender gap in mobile internet usage has decreased from 25% in 2017 to 19% in 2022.

Wing Bank is a leader in mobile financial services in Cambodia. Around 79% of adult women in the country have a registered Wing account, either a wallet or bank account. And 35–40% of factory workers in Cambodia — predominantly women — get paid through Wing Bank.

“We achieved that scale through our market reach and partnerships: more than 100 financial institutions, 16 insurance companies, over 500 corporates, thousands of small and medium-sized enterprises (SMEs) and 150,000 merchant partners are on the Wing network,” says Manu Rajan, division CEO, Wing Bank (Cambodia).

The bank created different digital platforms, such as a business-to-consumer platform, business-to-business platforms and Wing Agri for the agricultural community. “We have become the backbone of cash flow in the economy,” he adds.

Of the total number of loans in Cambodia, Wing Bank disbursed about 20% in 2023, but its volume is less than 2%. The majority are instant loans and 64% are to women. “We are serving the unbanked and people at the bottom of the income pyramid, such as women who need cash in a crisis or have an urgent need for finance,” says Mr Rajan. “The non-performing loan rate is less than 3% in spite of our scale.”

Now the lender is focusing on the micro-SME (MSME) segment. According to Mr Rajan, over 300,000 of Cambodian MSMEs are run by women and most of them are unregistered, as there is a reluctance to become formal because of taxes and administration costs. “They may need to hire someone to maintain their books, which is expensive and their price competitiveness goes down. Plus, they don’t have access to a larger market,” he explains. “We could see that only providing access to finance doesn’t solve this problem. But giving them access to finance and our platforms will create a much bigger impact on the Cambodian economy and income generation.”

Fintech for good

A co-winner of the fintech challenge was a South African start-up called Paycode, which is a smartcard-based payments switching and settlement system targeted at the unbanked and underserved, particularly in rural and semi-rural locations.

In his pitch to the judges, Gabriel Ruhan, CEO of Paycode, explained that the reason millions of people, particularly women, lack access to financial services is down to three main factors: identity (ID), connectivity and cost.

Paycode has created a regulatory-compliant functional ID using fingerprints. “We are able to issue a biometric smart card in under five minutes in remote villages. The card can be used for any financial transaction, just like a debit or credit card, which means access to financial services offline in real time,” he explained.

“In Mozambique, for example, where 72% of our users are women, they can use their Paycode card to receive payments for their goods, as well as make payments for food, utilities and school fees, withdraw cash, send cash to other cards, receive wages, pensions, save money, apply for micro loans and more.”

In an important innovation, Paycode’s solution also protects women that may be under pressure to hand over their savings. “If a woman finds herself in a situation where she’s being coerced to give her wallet funds to someone else, our smart technology enables her to place a pre-selected finger on the scanner when withdrawing money. If used, this fingerprint alerts the system that the user is in distress and will display a fake low balance instead of the actual balance, enabling the woman to always be in control of her money,” said Mr Ruhan.

Paycode’s technology helps women to save, with a main wallet in the card for day-to-day purchases and a savings wallet for children’s school fees, for example. They can also access a loan from the providers in the Paycode ecosystem. Additionally, the system stores data, so pregnancy records and children’s health records can be stored on the card.

The biometric technology is a great leveller, as many women feel uncomfortable about signing documents or providing their phone numbers. “Our gender intelligent designs have facilitated financial inclusion for over 2.5 million women and can change the lives of millions more women by delivering biometric digital ID and low-cost access to basic financial services,” said Mr Ruhan.

Scaling impact

While much progress has been made in women’s financial inclusion, Ms Iskenderian is cognisant of the work that still needs to be done, which is why WWB is focused on scaling its impact. Its strategy is to do a deep dive with a single organisation, then mine the learnings and replicate it elsewhere. “The first five years of our strategy has been largely about savings activation,” she says. “We’ve worked with four banks in India and then took the same model to four in Nigeria. We now know how to incentivise women to save and we’ve proven it in diverse financial institutions.”

WWB has just started the deep dives on entrepreneurial credit. It is exploring a more traditional lending model in India and also a digital lending model in south-east Asia, and will decide which one to replicate.

“We are also working on our advocacy. Our goal is to reach 100 million women with financial products and services that they previously hadn’t had access to. And that takes advocacy at the local level, to drive the policy change that actually directly affects women’s lives,” Ms Iskenderian says.