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Asia-PacificSeptember 29 2022

Digital bridge for Asia’s gender gap

Following on from an assessment of traditional bank support for improving women’s access to banking in Asia published in the January 2022 issue of The Banker, Kimberley Long returns to the topic to explore how digital finance and mobile banking are addressing some of the issues the incumbent banks cannot reach. 
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Digital bridge for Asia’s gender gap Illustration by Richard Allen

The number of people who hold bank accounts across the developing markets globally has a long way to go to reach universal financial inclusion. According to Global Findex 2021 data, 74% of men hold bank accounts, compared with 68% of women. This gap is steadily shrinking, narrowing from 9 to 6 percentage points in developing countries. A significant part of this is thanks to the expansion of digital banking.

In parts of Asia, there are still significant gains to be made. Across south Asia, 66% of women hold an account, compared with 70% of men. However, Leora Klapper, lead economist for development economics at the World Bank, cautions that numbers are skewed by the high account ownership levels in India, where the gender gap is almost zero. “Without India, only 31% of women in the region have an account, compared with 45% of men. In Afghanistan, it is as low as 5% of women and 15% of men,” she adds.

Bangladesh microcosm

Bangladesh is, in many ways, proving to be a test case in the implementation of digital banking services for women. Across the population, account ownership stands at 63% for men and 43% for women. This is felt acutely in the country’s garment industry, which contributes more than 11% of Bangladesh’s gross domestic product. Of the 4.4 million people who work in the industry, 60% are women.

Ms Klapper says research by the World Bank has highlighted the personal needs of the women accessing financial services. For example, having female agents was noted as important, as women are uncomfortable giving their mobile numbers to activate their accounts through concerns that male agents would harass them. Further, women who receive their funds digitally have greater control over their own wages, with some telling how family members would wait at the factory gates on payday when funds were paid in cash.

The Covid-19 pandemic has fuelled an increase in digital account ownership in the country. With factories closed and millions of people losing their primary source of income, the government stepped in with financial support; however, funds could only be sent to mobile accounts, spurring millions of women to open bank accounts for the first time.

The Bangladesh Central Bank-backed mobile banking app bKash has also helped to normalise digital account ownership. “Now they have an account, these women have more options in accessing financial services, and for receiving domestic and overseas remittances,” Ms Klapper says. “Receiving funds via mobile is the cheapest option, meaning that more of the cash being sent back home from overseas is received.”

the Bangladesh government has called for manufacturers to move away from cash

Isvary Sivalingam

Research has found that women in Bangladesh who receive their funds digitally have better financial health overall. Rebecca Rouse, director of financial inclusion at US-based non-profit research and policy organisation Innovation for Poverty Action, says: “[Our] impact evaluation tracked how garment workers in Bangladesh behaved depending on if their wages were paid in cash or into a bank account. We found the women who were given mobile money had better financial health, and we suspect this is because they were able to access their funds more easily than those who had their money in the bank and were tied to bank opening hours.”

The importance of digital financial inclusion is being understood along the supply chain. As part of their environmental, social and governance goals, international retailers are looking to the wellbeing of the people who manufacture their products. The UN-based Better Than Cash Alliance has worked on digitising wage payments in the garment industry, working alongside brands including Gap, H&M and Marks & Spencer.

Isvary Sivalingam, south-east Asia lead at the Better Than Cash Alliance, says: “The Bangladesh government has called for manufacturers to move away from cash. Over time, in order to supply these companies, factories will have to demonstrate they are paying their workforce digitally.”

Smartphone issues

These developments demonstrate how progress can be made when there is a collective effort among stakeholders. Yet, it is still not as simple as increasing account ownership, as women are also less likely to own a smartphone.

Mary Ellen Iskenderian, president and CEO of Women’s World Banking, a US-based non-profit organisation promoting financial inclusion, says: “Smartphone use is the crux of the issue. We saw a real ramp up of smartphone ownership during the Covid-19 period, but there is still an 18% gender gap.”

There is also a cultural barrier to be crossed, with a stigma attached to women who own smartphones in some communities.

“In 2021, 38% of women in Pakistan owned a phone, compared with 87% of men. This can be down to societal expectations,” says Ms Klapper. “Research in India showed there was a perception that mobile phones distracted women from household duties.”

These types of issues can be overcome with greater involvement from both the private and public sectors, says Ms Sivalingam. “Governments can take action to end the mobile phone gender gap by building the infrastructure needed to support mobile connectivity, as well as by fostering competition and consumer choice. Mobile network operators can also make it easier for women to buy phones in rural areas, including offering more financing options, like paying in instalments.”

Education needed

A woman having a smartphone in her hand does not guarantee a direct conversion to mobile banking. A lack of formal education is the initial barrier for many women, with even more held back by inexperience in using such technology.

“Illiteracy is still a huge issue impacting women in particular,” Ms Iskenderian says. “We have seen some banks be smart about it, implementing services like voice recognition, with others bringing in digital literacy training to teach people how to use it.”

Ms Sivalingam expands on this point: “There is a challenge around products targeted at meeting women’s needs. We have seen user interfaces which are not in the local language. SMS messages sent in English alienate customers with lower literacy levels. In India, we have seen the UPI-based payment interface be offered in 20 local languages. In a country with so many languages, they will keep expanding the service. There are also projects with VoiceBase technology to support vocal transactions, helping with numeracy or literacy issues and where there is limited internet connectivity.”

illiteracy is still a huge issue impacting women in particular

Mary Ellen Iskenderian

A lack of formal identification (ID) is another stumbling block that disproportionately affects women. World Bank data gathered across Afghanistan, Laos, Cambodia and the Philippines found 40% of women said lack of ID was hampering access to bank accounts. Ms Klapper says: “Governments can do more to help with this by operating women-friendly registration sites to help them obtain birth certificates and passports.”

While technology is opening new opportunities, it should not be treated as a panacea. People who are inexperienced with using digital platforms are more vulnerable to exploitation.

“With any growth, we often see a proportionate increase in risk, and in the context of digital payments we’re seeing it in the form of fraud and scams,” Ms Sivalingam. “It is something we recognise in the UN Principles for Responsible Digital Payments, and we think it needs to be collectively addressed. Governments need to build a strong data protection framework that protects funds and the data associated with the transactions.”

Women also need to understand their consumer rights. Ms Rouse says: “Companies need to find ways to communicate that are appropriate to women, explaining the rights they have and how to redress if there is an issue. This lack of knowledge is a real issue as it can open up opportunities for theft or abuse, especially if women are relying on other people to conduct transactions for them.”

In addressing the digital divide, a greater need for education can travel both ways. Jessica Schnabel, global head, Banking on Women at the International Finance Corporation (IFC), says: “We’re seeing fintechs utilising gender-smart design to improve user experience. There are huge benefits in interviewing customers to understand their thoughts, their time constraints and how they access the [digital] platform.”

Empowerment and privacy

Encouraging more women to open accounts also relies on the soft skills of building understanding and trust in the system as a safe place to hold their funds. In some cases, this is helping women to build a level of control over their own finances they never had before.

“An important aspect in women’s financial empowerment is the ability to use resources in the way she would prefer,” Ms Rouse says. “In countries with strict gender norms, women aren’t able to bring much to the table in terms of bargaining power. Digital money adds a layer of privacy and control over funds received through employment or social benefits. It allows the woman to keep private how much money is in their wallet.”

Having a greater say over their own funds is an essential step in building up personal financial strength, especially for women in south Asia, who are among some of the least financially resilient in the world.

“These women depend on their family network for emergency funds, but these can be slow to arrive, or male family members can prevent them from being sent,” says Ms Klapper. “Women with greater control over their money are able to build up savings to use in emergencies. For example, in China, where there are high savings rates and labour engagement for both men and women, 84% say they could access emergency money.”

Funds being received directly by women often impacts how they are spent within a household. Research conducted by the World Bank in the Philippines found that when women have an account, households are more likely to buy a washing machine, and focus funds on education and food for their children.

Creating trust is another essential step in increasing adoption. “Women need to understand that their money is safe in these products and there needs to be trust,” Ms Rouse says. “Who they receive information from is important. We are conducting a study right now to understand if women clients are more likely to trust female agents, for example. These preferences need to be taken into account, especially in places like Bangladesh, where social norms are more restrictive.”

Ms Iskenderian says research from Women’s World Banking echoes this. “We’re seeing some hard data come out of India showing that women agents are much more effective in making people feel comfortable with the service. This applies to male customers too, who will often rather ask women for advice on using the service. The results have led the Indian government to take steps in reaching a target of at least 30% of digital banking agents being female.”

She further points to how having a respected member of the community in an advocacy role can enhance this adoption. “It is common in Indonesia for women to save with their midwives during pregnancy,” she says. “We have worked on a pilot with midwives to make them banking agents, to make use of their position as trusted individuals.”

Policy focus

The positive impact of having more women in agent roles has not gone unnoticed. The State Bank of Pakistan has issued a Banking on Equality policy to increase the number of female agents. It has also introduced a roaming agent policy, which takes banking services to the doorstep. While this had a significant impact during the Covid pandemic, it has continued in places where social norms restrict some women from leaving the home.

Ms Sivalingam says the impact of government policy is not to be underestimated, as it sends a strong message to the supply side. She points to what has been implemented in Indonesia, where a national women’s financial inclusion strategy has been established, with the target for more than 34 million unbanked women to enter the financial sector and work towards the country’s goal of 90% financial inclusion by 2024.

“Indonesia has developed the Family Hope Programme, which provides government to person (G2P) financial assistance, and specifically targets women,” Ms Sivalingam adds. “This has led to the very intentional decision to open accounts for 8.6 million women. Across both men and women, 16% have said they opened their first bank account to receive G2P payments. Because these sorts of changes have been mandated by the government, there has been a huge take-up across the banks and individual users.”

Natalia Bhatia, senior operations officer at the IFC, believes support should come from a combination of the development community, policy-makers and regulators, and financial service providers.

She says the development community should engage in outreach programmes and knowledge sharing, as well as support initiatives that boost the development of digital payment infrastructure. Policy-makers and regulators, meanwhile, should ensure their output is not gender-blind and encourage the private sector to promote digital services for women, highlighting how they are an untapped market segment. Gathering sex-disaggregated data will also improve understanding of consumer behaviour and needs.

“Financial service providers then can use the gathered data to develop their products,” Ms Bhatia adds. “With data being broken down according to sex, providers can look into each segment’s requirements, and then tailor products and solutions that meet the needs and preferences of women. For good measure, they could also increase the share of female staff in their organisations.”

Business case for support

As Ms Bhatia mentions, the case for expanding support to women extends to financial benefits. “There is a strong business case for more digital financial service companies to pull in women customers,” says Ms Schnabel. “Data from IFC customers shows there is a 4.4% non-performing loan (NPL) ratio to women-owned small and medium-sized enterprises (SMEs) compared with 5.5% NPL ratio for SMEs overall. Still, only 15% of SME loans in Asia are given to women-owned businesses.”

China’s Ant Financial has teamed up with UN Women on the five-year Together Digital programme to support women entrepreneurs in the cities of Chengdu and Changsha, focusing on areas impacted by the pandemic, including tourism, food and beverages, agriculture, and science and technology industries.

Women have been identified as needing additional support with utilising the country’s vast number of internet users — which hit one billion people with 4G access in 2018 — to increase business.

Sarah Knibbs, officer in charge for UN Women Asia and the Pacific, says: “In China, the internet wage premium for women is 90.6% of men, despite the fact that 55% of new internet businesses in China are founded by women. This illustrates the need for greater upskilling of women entrepreneurs’ capacities, information and knowledge, to ensure they benefit equally alongside their male counterparts.”

The programme will include the development of the ‘women micro and SME entrepreneur empowerment training package’, which will support gender-sensitive business management, financial literacy and digital marketing on gender-related subjects.

Together Digital is also being rolled out in Indonesia, where 2500 women entrepreneurs will receive online training and mentoring. The project will collaborate with the Ministry of Women Empowerment and Child Protection to engage with the male partners of the entrepreneurs to promote gender awareness and social norm change. The aim is to create a more equal relationship within the household, with a redistribution of unpaid care and domestic work.

Leveraging data

The possibilities from all the data being collected is considerable. Tzu-Chung Liang, south-east Asia financial services strategy and transaction leader at consultancy firm EY, says data can help companies to distinguish good customers, regardless of their gender. He points to how platforms like Grab cover multiple functions and have a broad picture of a consumer.

“Through the information logged by the phone, [a platform] can know how many steps the customer takes, the food they purchase and where they buy it from, and if they pay their utility bill on the day they receive it or wait until the last day [possible],” Mr Liang says. “All this can be used to create a customer profile to decide if a person is high risk, assess their credit score and [decide] what the loan terms should be. It can also show the customer behaviour needed to raise that score, [thereby] helping with financial education.”

While fintechs and start-ups are learning the benefits of engaging women customers, there is concern that understanding the importance of having these women-specific services is not reaching the essential investor level.

“There has been an increase in the number of fintechs talking about making their product more inclusive, which is creating a real opportunity,” Ms Iskenderian says. “However, when they start to grow as a business and move beyond Series A funding, investors want to see real scale and profitability. They may want fintechs to scale to a more affluent capital base to meet their goals. Some of our advocacy work is shifting towards capital providers to [help them] recognise the opportunity for scale and profitability, but also understand that it may take longer as they support these underserved populations.”

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Kimberley Long is the Asia editor at The Banker. She joined from Euromoney, where she spent four years as transaction services editor. She has a BA in English Language and Literature from the University of Liverpool, and an MA in Print Journalism from the University of Sheffield. Between degrees she spent a year teaching English in Japan as part of the JET Programme.
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