Tackling financial inclusion has been a major goal of the financial community for several years. However, according to World Bank figures, 1.7 billion people globally are without access to bank accounts. And most of them are women.
Figures from the World Economic Forum suggest that 55% of the unbanked are women. Around one billion women have no access to financial services, from simple chequing accounts to more complex products such as loans, insurance and credit. This impacts their economic security, their ability to make household decisions and — for small business owners — their ability to expand. The World Bank Group’s Global Findex Database 2017 found that the global gender gap in account ownership has remained at 7% over the past decade.
These issues are compounded in developing markets, where impoverished women are even more unlikely to hold accounts than their more affluent counterparts. Shanta Shiwakoti, chief marketing officer at Global IME Bank, a Nepalese commercial bank, says: “There are many educated and professional women in Nepal who have their own bank accounts, but the ratio is low compared with men. Access to finance in Nepal is only around 60%, and the majority without an account are women. There are still many women who are supported financially by male family members, who are often the only earners within a household.”
The impact of the pandemic has made these issues more stark, with women unable to access financial aid that may have otherwise required them to travel long distances and wait in line to receive physical cash payments.
Recognising the challenges women were facing, India’s government took the bold step to make payments directly to women who held Pradhan Mantri Jan Dhan Yojana accounts, a basic account offered by the Ministry of Finance to support excluded and low-income groups. The government paid Rs500 ($6.56) in financial support each month for three months in 2020.
A similar scheme to support women was also rolled out in Indonesia. The outcome was not just women receiving the funds to support their households directly, but encouraging many to open bank accounts for the first time.
Mary Ellen Iskenderian, president and CEO of Women’s World Banking (WWB), says: “The use of digital Covid relief payments in India and Indonesia saw around 25 million and 10 million bank accounts being opened, respectively. With so many women in India in particular having accounts for the first time in their lives, the challenge becomes how to keep them in the system. How do we make use cases that are relevant to women?”
Mental and physical barriers
Making banking products relevant to women and addressing their concerns is now the challenge for financial institutions. The barriers holding women back from opening accounts can come from multiple sources and, when they overlap, can create almost insurmountable obstacles. The issues around perception and patriarchal structures can have as much of an impact as geography and access.
Many women do not have the physical collateral to put against a loan
Ms Iskenderian says: “An issue you see across numerous developing economies is that low-income women don’t see a bank account as something appropriate for them; rather, they view bank accounts as something reserved for the wealthy. The more we can bring peers into the process to explain how a product works and what impact it has on individuals and families, we will then likely witness an uptick in more women starting to open accounts and remain with a bank.”
Having female representation not only makes women more comfortable with accessing banking services, but can also be good for business. Having sympathetic members of staff in the branch to explain services to customers who are using accounts for the first time can demystify the process. Ms Iskenderian explains that while working with India’s Bank of Baroda, WWB found women banking agents were better at engaging both male and female clients, and had a better track record in cross-selling products. “Once they’ve gained a level of trust, it is much easier to foster new relationships and grow the business,” she adds.
Representation needs to go right through to the top of a bank for real change to be happen. Pranu Singh, head of corporate affairs, brand and marketing at Standard Chartered Bank Nepal, says: “The bank started 2019 with no female representation on the executive committee, but since mid-2020, there are 30% female colleagues in the most senior management committee of the organisation. Equally prominently, in our local board of directors, there is 40% female representation, including the chairperson.”
This has revolutionised how the bank operates. “Having a diverse executive committee implies welcoming a diverse perspective from its members that challenges the prevalent status quo, thus leading to more innovative ideas and stronger decision-making. The bank has since initiated changes that are bolder and better aligned with the current changing times, adapting to new ways of working,” Ms Singh adds.
Even with greater representation, barriers to access remain. Where there are high levels of illiteracy, being unable to fill in forms or provide the correct documentation can make it impossible for some women to open accounts without assistance.
Birat Lekhak, programme and partnerships specialist at UN Women Asia and the Pacific, says: “Women’s lower levels of education and their relative exclusion from formal sector employment mean they are less likely to have the kinds of documentation of residence, income sources or tax records that formal sector financial institutions routinely require.”
To comply with know-your-customer requirements, banks may require formal proof of identification that these women do not have. These have often been prohibitively expensive to obtain, but in recent years the move to biometric ID has had a positive impact for both men and women looking to open basic bank accounts. The problems now come when they are trying to access more complex products.
“The issues we now see involve things like credit scoring, which does not take into account some of the payments women already make, such as micropayments, to create a rating for an individual. And many women do not have the physical collateral to put against a loan,” Ms Iskenderian adds.
While holding money in a bank account is, in theory, safer than cash, it can be costly. If a woman has to travel from home to the bank to access her money, this can accrue transport costs, and banking fees can take a chunk out of her deposits.
“High fees can eat into a low income,” says Kathryn Glynn-Broderick, associate director of financial inclusion programme at US-based research and policy non-profit organisation, Innovations for Poverty Action. “In some cases, people do not understand how fees are being applied. This can be damaging for women, who often make small, frequent deposits compared with men who make larger, less frequent payments.”
The data gap
Even banks with the best intentions can be blind to the practical obstacles women face. A key issue prohibiting greater understanding of the financial inclusion gender gap is the lack of data.
Natalia Kaur Bhatia, senior operations officer at International Finance Corporation (IFC), says: “The first step toward financial inclusion is to ensure the availability of gender-disaggregated data. Unfortunately, many financial institutions neither track gender data nor approach women’s markets as a separate segment. The key to achieving true financial inclusion is to tag, track and analyse gender data.”
Unfortunately, many financial institutions neither track gender data nor approach women’s markets as a separate segment
Without this, it is not possible to accurately gauge how women are interacting with financial services and whether their needs are being met. Ms Iskenderian explains: “WWB engaged on a project with a bank in Vietnam that was experiencing a high degree of customer churn. Through gender-disaggregated data we found 60% of men’s accounts were turning over in a year, compared to 90% for women. Our research determined the biggest turnover wasn’t with retail accounts, but with women who were running businesses utilising Facebook and e-commerce platforms, because they were not finding the services they needed from their traditional bank that was treating them as consumers, rather than business customers.”
Having access to data can give a bank greater insight into its customer base. Mongolia’s Golomt Bank created a range of products catered for women business owners after analysing its own data. It found that over the past five years, 53% of its business loans have been given to female entrepreneurs. The number of female borrowers has increased 26% over the past three years, and the bank provides Tg1.1tn ($385m) in loans to women business owners annually.
Reaching women customers can mean taking an unconventional route. Asian banks have been developing targeted products to reach the women who are still outside of the formal banking arena. Achieving this can involve going directly to male members of the household. In the male-dominated Nepalese society, women are often dependent on male relatives for their financial needs. Global IME Bank launched its ‘To My Beloved’ account to address this problem, with men encouraged to open accounts and make deposits for women. The goal is to give these women financial security and a greater sense of confidence in managing household expenses.
After opening these accounts, the holders will receive support in making the most of the services on offer. Ms Shiwakoti says: “The first step is to make the new account holders feel comfortable with their bank account, and then to educate them on modern banking and how to transact through digital products. They can then use mobile banking to pay for their child’s school fees, or groceries at the vegetable market. The terrain of Nepal can be very difficult and prevent some women from getting to a bank branch. If they can access their accounts by mobile, this opens up banking to them. Similarly, we also visualise those women could be entrepreneurs in the days to come utilising their skills.”
Although set up by male members of the household, women have full control of the service. The account holder is able to withdraw cash and use a term deposit to make savings and earn higher interest rates. They are provided with a debit card that allows them to use ATMs and make payments in store.
Past pinkifying
Once the barriers barring access to financial services have been navigated, banks need to ensure the products themselves work for women. This has to go beyond simply repackaging existing accounts and services to make them more appealing to female consumers.
Ms Glynn-Broderick says: “Some banks thought that offering services to women [didn’t have to go] further than ‘pinkifying’ them, by changing the marketing and offering a pink credit card. Really, offering services for women means addressing the many barriers they face.”
Having the right support for women business banking customers, for example, can help them to grow their business. But firstly, they need to be given the correct banking products and be educated how to use them.
Research from Boston Consulting Group published in 2019 forecast if women and men participated equally as entrepreneurs, global gross domestic product (GDP) could rise by up to 6%, adding as much as $5tn to the global economy.
On an individual country level, in Indonesia, a 2016 report from the Central Statistics Agency outlined that micro, small and medium-sized enterprises (MSMEs) contributed 60% to total national GDP. Further data from Bank Indonesia showed that 53.7% of MSMEs were owned by women, with 97% of employees being female.
Parwati Surjaudaja, president director of OCBC NISP Bank, says it was this data that made the bank realise there was a real business opportunity in providing services dedicated to women business owners. The bank launched its TAYTB Women Warrior programme in 2020 to provide banking services to women running small and medium-sized enterprises (SMEs).
As of September 2021, OSCB had disbursed Rp1.3tn ($91m) to women entrepreneurs and SME owners using gender-bond funds from the IFC.
Supporting women can also be good for a bank’s balance sheet, with IFC’s research on portfolio clients indicating non-performing loans for women-owned SMEs are 50–70 basis points lower than other loans.
With people forced to stay at home during lockdowns, the use of online marketplaces has increased and opened new opportunities for many small businesses. Ms Iskenderian says this presents a significant opportunity for traditional financial services to provide payment infrastructure and business support to these women entrepreneurs.
Some banks have already capitalised on this. Standard Chartered has partnered with Thulo Pasal, one of the largest online marketplaces in Nepal, to provide a Women Entrepreneurship Loan. Through this partnership female sellers can be offered subsidised interest rate loans.
Once a woman has been given an appropriate account for her business operations, banks also need to be sure they are teaching her how to use it to its full capacity. “Just because a woman has an account does not mean she will know how to use it beyond just saving money,” says Ms Iskenderian. “This aspect of capability is even more important for women entrepreneurs, who need to be taught to manage their household and business funds separately.”
Soft skills
A recurring feature of the banking services provided for female-run SMEs are educational programmes, providing business advice, networking opportunities and mentoring support. These types of services can be as important as providing financial support.
Ms Bhatia says that as well as missing out on loans due to the size of their company, many women are also not receiving business support. “These women need the whole gamut of non-financial services that financial institutions can offer — access to information, markets, skills and knowledge. These are some of the areas in which women are especially disadvantaged.”
Standard Chartered in Nepal has looked to rectify this by hosting an educational summit for 2000 participants to promote entrepreneurship and financial literacy. Ms Singh says: “The Businesswomen Summit and Awards was held to recognise and acknowledge women entrepreneurs across the country, specially from remote regions, who are trying to carve a niche for themselves by overcoming traditionally conservative barriers of the society and move towards economic freedom.”
Providing these additional business services also forms part of the TAYTB Women Warrior Programme. “Our added-value services are bound with the products and services that are linked towards personal and business financial solutions,” says Ms Surjaudaja. “Tools such as accounting software, digital marketing services and business classes are offered through a series of business modules that are designed to upskill entrepreneurs.”
In India, HSBC launched Awe, a mentoring and learning programme for women-led businesses created in conjunction with Start-up India and the Banking and Credit Council of the Women’s Indian Chamber of Commerce and Industry. The programme offers networking opportunities and masterclasses over a four-month period, addressing key themes including raising capital and mentoring.
Beyond banking
Many banks offering women-focused financial services are seeing it as part of their wider environmental, social and governance offering, and looking into what other services they can provide to these women, who may be locked out of other areas of society due to living in remote locations or low levels of formal education.
“The bank sees this as part of social responsibility,” says Global IME Bank’s Ms Shiwakoti. “We believe the empowerment of women is necessary for Nepal, and we see that as health, education and financial security.”
Under the ‘To My Beloved’ brand, the bank has been holding female health campaigns with the Family Planning Association of Nepal in rural areas of the country. There are further plans to launch a scholarship for female high school students to coincide with the bank’s upcoming 10th anniversary.
Standard Chartered has supported the creation of a business for women to help them to gain financial independence. The bank provided $50,000 to Maiti Nepal, a non-profit organisation supporting the victims of human trafficking. The Futuremakers by Standard Chartered project supported the survivors in setting up a business producing low-cost sanitary pads through providing equipment and training. The project has supported 10 women toward becoming financially independent and the bank has provided financial literacy sessions to help them make best use of their funds.
