Digital Financial Services And The Financial Inclusion Gender Divide
On Norms and Agency Conversations about Gender Equality with Women and Men in 20 Countries, The World Bank
In my previous blog post, I wrote about smallholder farmers and how they are more likely to experience financial exclusion because of heightened operational and risk assessment challenges. Today, I want to focus on another group of people that is disproportionately underserved by financial institutions: Women.
As found in the World Bank’s latest Findex survey, 42% of women are still financially excluded globally, compared to 35% of men. While there has been an improvement since 2011, when only 51% of adults had an account with respect to 62% to date, the financial inclusion gender gap remained unchanged, at a steady 7% globally and 9% in developing economies. In some regions, it even worsened: in the Middle East, South Asia and sub-Saharan Africa, where more than half (57%) of the unbanked live, it increased to 10%, 18% and 9% from 8%, 16% and 7%, respectively.
However, the reasons why women experience greater financial exclusion than men cannot be limited to outreach and delivery costs or lack of data for risk assessments. The divide is rooted in prevailing gender norms and cultural constraints, just like gender inequality across any other dimension. While the specific nature of gender relations varies among societies, the dominance of women’s domestic role and men’s breadwinning role were identified as absolutely core to female and male identities by the most comprehensive study on gender roles commissioned by the World Bank. This finding strikingly held true across diverse generations, social and cultural settings of the sampled 4,000 women and men in 20 countries in all world regions. This role is inherently associated with less personal autonomy, fewer resources at one’s own disposal, and limited influence over the decision-making processes that shape one’s societies and own lives.
In such a scenario, what role has digital innovation played in overcoming these barriers and narrowing the financial inclusion gender gap? If we focus on mobile account usage only, the Findex survey reveals that worldwide only 2% of adults use a mobile account to date, reaching a peak of 12% in sub-Saharan Africa, with 45% having only a mobile money account. Indeed mobile money and digital financial services (DFS) are driving regional expansion in financial inclusion and have the potential to increase it worldwide, especially by leveraging on the digitization of payments. What is interesting to note is that when considering mobile account usage only, the gender gap is consistently lower: in those countries where mobile money penetration and uptake is the greatest, that is where more than 10% of adults reported to actively use a mobile money account, the gender divide drops on average by 3%. The highest decreases are observed in the United Arab Emirates and Rwanda, where the gender gap is lower by 20% and 10%, respectively, in this area.
Does this evidence suggest that DFS were successful in overcoming gender barriers and closing the financial inclusion gap? Whether or not this is the case was debated in a recent webinar hosted by The Seep Network. On one hand, the “pro” side, represented by BRAC and IPA, sees DFS as a game changer for women’s financial inclusion because it has helped overcome gender barriers. They believe this was achieved by offering greater ease and convenience to conduct financial transactions, especially in terms of delivery (i.e. service at your doorstep), access to multiple products as well as greater product customizability according to specific women’s needs. On the other hand, the “cons” side, represented by CARE International, argues that without first addressing gender-specific barriers, such as household power relations, lower access to education, lower control over resources, lack of self-confidence and self-esteem, DFS cannot represent a viable financial inclusion solution for women.
Such dilemma resembles that of the chicken or the egg: what came first? I personally believe that no straightforward answer can be given. Driven by this debate, I thought of plotting the Gender Development Index (GDI) against the mobile account gender gap obtained by the latest Findex, to see whether any clear pattern would emerge. As pictured in the resulting graph below, the negative relation is weak.
From this weak correlation, I would infer that rather than addressing gender barriers and women’s digital financial inclusion one at the time, as two separate issues, they should be tackled jointly: for optimum DFS product design, context-specific barriers should be taken into consideration in order to overcome them, while at the same time lowering them more rapidly.
As Gigi Gatti, the Grameen Foundation’s speaker at the webinar best put it, technology should be seen as an enabler of new opportunities and a multi-tier and multi-channel approach should be adopted when developing a solution. She also pointed out an undeniable truth: technology’s obsolescence rate is extremely fast and financial providers are moving away from bricks and mortar set-ups, towards technology platforms. Therefore, the gap will widen further unless we immediately ramp up efforts to digitally include women.