By Anna Gincherman, Vice President, Strategic Partnerships
Imagine what would happen if a bank received the following proposal: Take all the potential new clients in your market, and all the profits you stand to gain, then cut those numbers in half. Leave all that money on the table for your competitors to grab. Sound enticing?
Investing in women is not charity: It’s smart business. Click To Tweet
While it might appear absurd for a financial institution to make a decision like this, a surprising number of banks already do. By ignoring or vastly underestimating the women’s market, those financial institutions do an enormous disservice to themselves, not to mention their potential customers. They also make it much harder to shrink and eventually eliminate the financial inclusion gender gap.
The decision to disregard a vast, untapped market of clients might seem mysterious, but many banks have what they believe is a sound rationale for doing so. Ask finance executives why women make up such a small percentage of their institutions’ clients, and you’ll hear at least one of the following reasons: Women don’t make enough money to save; women keep lower balances; women transact more often but in smaller amounts, so they don’t justify the cost of investing in them. If those assumptions are correct, any outreach to the women’s market would be filed under “corporate civic responsibility”: a public relations and philanthropy play instead of a business strategy.
The problem is, those assumptions are wrong, and they’re costing financial institutions worldwide millions in unrealized profits or expanded market share. Investing in women is not charity: It’s smart business.
Women, it turns out, display nearly identical transaction patterns as men do once they’re on-boarded at a financial institution and are comfortable using its platform. But because most financial institutions don’t disaggregate data by gender, they have no way of seeing how closely women’s and men’s banking behavior matches up.
While it’s true that banks also ignore women because of a number of actual impediments that have traditionally made it difficult for women to use them—including a lack of time or money to travel to a branch—those issues are presenting less of an obstacle thanks to digital financial services (DFS). DFS are enabling institutions to reach millions of rural unbanked women who could never before access formal banking.
While more intangible issues that impact women’s financial activity—such as a distrust in banks and a hesitation about revealing confidential information—are yet to be resolved everywhere, they’re less of a prohibitive factor with the rise of digital banking.
Women’s World Banking has been at the forefront of this movement. One of the most influential advances in digital financial services is the project we began with Nigeria’s Diamond Bank in 2013, when we developed the BETA Savings product for low-income women entrepreneurs. BETA agents meet women entrepreneurs in person at the markets where they work, and handle all transactions digitally, building trust and removing transportation-related obstacles. We’ve since iterated on this innovation, adding products such as Target Savings, Kwik Loan, and Yello, all designed to eliminate the financial and logistical hurdles that keep women from using formal banking.
In Nigeria, the latest data should help overturn any bias, conscious or otherwise, about women’s value as clients. An analysis of non-outlier banking clients from 2013-2016, conducted by Women’s World Banking in partnership with Diamond Bank, shows that women keep higher bank accounts than men on average: ₦1407 for women, ₦1306 for men. Women also deposit and withdraw the same number of times annually, about 28, as men do. The data also shows that women deposit in amounts roughly identical to men: ₦5382 on average for women, only slightly lower than the ₦5512 figure for men. Women and men withdraw similar amounts too: an average of ₦17,663 for women compared to ₦18,286 for men.
The data paints a clear picture, but nonetheless, false perceptions that women keep lower balances, and transact more often but in small amounts, are ingrained even among experienced agents—and even among women agents. So Diamond Bank, for one, is actively putting the findings to use in combating gender bias among its agents, as demonstrated in this simple but impactful data analysis. Using data to train agents on the importance of reaching out to women is crucial and profitable, not just for women but for institutions and their agents too.
Women’s World Banking’s partner institution in Pakistan, the telecom provider JazzCash has found a similar trend in their data: once women were on-boarded to the product, their transactional behavior was very similar to men. This helped focus JazzCash’ efforts towards client acquisition, as they begin investing more significantly in the women’s market
Until recently, women made up only 12 percent of its clients. Research conducted by Women’s World Banking showed that referrals from existing clients are a key motivator for women to sign up. As a result, JazzCash is using new strategies for improving referral and onboarding methods: One is to train agents in methods for drawing women clients and converting them into active members, and another is to facilitate ways for women clients to invite friends onboard. The percentage of JazzCash clients who are women is now 18 percent and rising.
Figuring out how to target women more effectively—a challenge that varies region by region—has the added bonus of helping institutions kill two birds with one stone. The data shows that when financial products and consumer marketing are designed to work for women, men display a high uptake rate too. The reverse, however, is not true: Products designed with only men in mind tend to fall flat with women.
Now that the latest data is in, there’s never been a more urgent time for financial institutions to build on the ways in in which innovators like Diamond Bank and JazzCash are growing their businesses while serving women better. It’s simply too costly not to.
February 13, 2018
By Diana Boncheva-Gooley, Manager, Strategic Advisory (Digital Financial Services)
As digital and mobile tools become more and more accessible to even the most remote and developing markets, we often hear about the “promise” of digital financial services to provide a solution for unbanked women. What does it mean to truly deliver on this promise?
What’s needed to realize the potential of digital technology to drive women’s financial… Click To Tweet
Just adding a digital or mobile component to an account or service does not mean it will reach clients, especially women. In the same way, offering access to limited services like payments or transfers does not translate to meaningful financial inclusion for women. As a result, many digital financial service providers are missing the mark when delivering on the promise.
A History of Financial Inclusion
With support from MetLife Foundation, Women’s World Banking had the opportunity to investigate how this is playing out in one of the most fascinating markets for financial inclusion: Bangladesh.
In many ways Bangladesh is a birthplace for women’s financial inclusion. Professor Muhammad Yunus founded Grameen Bank and pioneered the concept of microcredit. Women’s World Banking network members ASA and Shakti Foundation helped establish microfinance as an essential tool for low-income women. Today, we know that full financial inclusion requires access to the formal financial system and a whole suite of products, including longer-term loans, savings and insurance.
We examined how bank-led mobile financial services or MFS (the term used for mobile phone digital products in Bangladesh) are rapidly expanding in the market with a focus on the implications for women’s financial inclusion. The opportunity is undeniable: MFS already surpassed non-bank providers such as microfinance institutions and is positioned to surpass traditional banks as well. However, these services as currently configured are failing to meet the requirements for true financial inclusion.
Assisted channels, such as agents conducting over-the-counter (OTC) money transfer or payment transactions via mobile technology, dominate the market in Bangladesh. OTC transactions can be seen as a stepping stone towards financial inclusion for populations with low levels of literacy, less technological knowledge and low barriers to entry (e.g. not requiring formal registration and its attendant forms and requirements). The appeal shows in the numbers: 13 percent of adults in Bangladesh have an MFS account while 28 percent use MFS without an account (unregistered).
However, there are drawbacks to the un-registered OTC model. Transactions are low—five per month for OTC users versus 11 for registered users. Bank of Bangladesh is also concerned that agents could take advantage of low-income users (higher transaction fees, risk of fraud and theft).
Additionally, unregistered users miss out on the benefits of having a formal bank account, including access to savings and other banking services.
While MFS user numbers are growing, the gender gap is significant. Only 27 percent of women use MFS versus 53 percent of men, and only 6 percent of women have a registered account versus 19 percent of men. MFS has the opportunity to demonstrate to the larger financial sector the potential and power of the profitable and sustainable low-income women’s market.
Understanding Barriers Facing Women
While OTC transactions through agents are simple, registering and using formal accounts can be intimidating for women who face a number of barriers. Financial service providers often fail to understand these barriers and assume it’s just a matter of time before women pick up new digital products.
We conducted focus groups with both MFS providers and women OTC users in Bangladesh and noticed a strong disconnect between how the two groups perceived usability of accounts. When asked about the mobile account interface, the providers reported that “English is not an issue” for women, and “I’m amazed at how well they adapt.” However, the women cited significant language and comprehension barriers. One participant said: “The English writing we cannot read, if they can make it in Bangla, we can understand.” Another said: “If it [used] emoticons, I could understand at least if they received the money with a happy face.”
Social barriers are a hurdle as well. While MFS providers believe women are comfortable with male agents, we heard a different perspective. One woman explained: “At the store, the agent is always male, but if it were a woman, I would prefer it because sometimes the boys will try to talk to me and ask a lot of leading questions to find out if I’m married.” This disconnect reveals a lot of room for improvement in serving women successfully.
Meeting Women’s Unique Financial Needs
Decades of research by Women’s World Banking shows that women have very complicated financial lives, and this definitely holds true in Bangladesh. In the household, women take charge of saving for emergencies, meeting health expenses, paying school fees and planning for the future. While OTC transactions meet short term transfer and payment needs they do not meet women’s and the family’s varied and complex financial needs.
Let’s look at the top three types of transactions by OTC users and examples of how a female user may conduct these transactions:
1. Cash-In Transactions (41%). She gives cash to the agent in order to transfer money to school for her children’s education fees.
2. Utility Payments (39%). She pays the family’s water and electricity bills.
3. Person-to-Person Transactions (15%). She transfers money to her parents in a neighboring village.
If these are her typical transactions, what’s missing? Where is the savings for her future? The loan for her business? The insurance in case of emergency? According to our research on savings mechanisms in Bangladesh, most low-income women are using informal, insecure means like samitis (traditional savings collectors) or stashing their emergency funds at home. If MFS providers designed savings accounts to better meet women’s needs, women will be more likely to use these accounts frequently and also access other banking products—a win-win for the client and the institution.
Delivering on the Promise
Based on their current reach in the market and success with transactional services, MFS providers in Bangladesh hold enormous potential to engage low-income women as active banking customers. With a deeper understanding of women’s lives and financial behaviors, here are our recommendations for reaching this potential:
1. Develop marketing and sales approaches that focus on women’s needs to onboard more active women clients. Materials and messages should be tailored to women clients and supplemented by one-on-one interactions with women agents and sales representatives.
2. Offer simplified interfaces through multiple channels that overcome barriers facing women. By improving product usability and testing additional digital channels (e.g. ATMs and mobile applications), providers can increase usage among women clients.
3. Make additional banking services available that meet women’s complex financial needs. Improve loyalty and transaction frequency among women clients by offering products and services like long-term savings and loan payment that are convenient and will help her build financial security.
With a rich history of pioneering financial inclusion efforts for women, Bangladesh is poised to make great strides in closing the gender gap. By researching women clients to truly understand their unique needs and designing products to meet those needs, MFS providers can deliver on the promise the technology can achieve for unbanked women.
February 5, 2018
By Ryan Newton, Manager, Strategic Advisory (Savings)
More than 170 million low-income individuals globally receive a payment from the government on a regular basis—and the majority of these government-to-person (G2P) payment recipients are women.
Did #Digital #G2P in #Mexico Bring Financial Inclusion to Its Millions of Beneficiaries? Click To Tweet
Digitization of these payments makes sense for governments: reduced distribution costs, fewer leakages, and more transparency. Shifting to digital payments instead of cash, for example, saves the Mexican government an estimated $1.3 billion annually.
The process to digitize is no small feat—governments around the world are overcoming many hurdles to bring millions of G2P recipients into the formal financial system.
However, digitization of these payments is not a seamless onramp to financial inclusion for its millions of recipients, as some industry watchers may claim. Instead, it is just the first step on the bumpy path to financial inclusion. Women’s World Banking is working with one of the world’s most successful digital G2P programs to ease this journey for its millions of recipients, a majority of whom are women.
What is Prospera Digital?
Women’s World Banking began working on the Prospera Digital project in 2016, as part of a consortium of partners led by the Coordinación de Estrategia Digital Nacional (CEDN) of the Mexican government. The objective? To promote financial inclusion of more than 7 million Prospera beneficiaries, 98 percent of whom are women. Other partners include the Behavioural Insights Team, DIRSI, CIDE, and Qué Funciona para el desarrollo. Prospera (formerly, Oportunidades) is a conditional cash transfer program founded in 2002 based on a previous program called Progresa, created in 1997. It aims to reduce intergenerational poverty by giving cash to each household to spend on education, health, and nutrition. Bimonthly payments are provided to participating families who meet conditions (corresponsabilidades) around health and education. It has been so successful in driving outcomes for low-income Mexicans that it has been replicated in over 50 countries.
All Prospera beneficiaries have an account at Bansefi (the government development bank, the only bank that can legally provide the accounts and payments) and an associated debit or chip card, with which they access their G2P payment.
Does digitization close the gender gap in financial inclusion?
According to the 2014 Global Findex, 44 percent of Mexicans have access to an account at a financial institution, with only a 4 percent difference between men and women. This small gender gap is impressive when compared to the overall gender gap in developing countries, which has remained steady at 9 percent.
By digitizing G2P payments, the Mexican government has put a bank account in the hands of millions of recipients. This automatic enrollment is a behavioral nudge in the right direction—along the lines of what earned Richard Thaler his recent Nobel prize (congrats!)—as it removes the barriers for low-income populations, especially women, of opening an account.
Because these women have accounts, they are considered “banked.” However, given existing barriers of mistrust or misperceptions around formal financial services, limited financial and digital literacy, and time constraints…can we consider them fully financially included?
Digital G2P payments ≠ financial inclusion
Emerging research shows that when the “state made me save”, dormancy on accounts is reduced. The Global Findex shows that adults who receive a government transfer are more likely to save and borrow formally than all adults. A 2016 study of more than 300,000 bank accounts of G2P recipients in Mexico found that recipients of G2P begin saving after the first six months of receiving their debit card.
While aggregate data may show increased savings over time, our qualitative research has shown little awareness and understanding of these accounts and either passive or limited usage.
Approximately 80 percent of Prospera beneficiaries are in the “closed loop” (canal cerrado): given the lack of banking infrastructure in the rural localities where most beneficiaries live, they must cash out their funds in full at designated bimonthly payment points. The card cannot be used outside of these payment events.
Instead of having an operable bank account, “this restriction effectively renders rural recipients’ accounts into bimonthly, temporary repositories of G2P funds, and nothing more…[cutting] the reach of the digital trail short”, says independent financial inclusion consultant Gabriela Zapata.
The remaining 20 percent in “open loop” (canal abierto) can access their bimonthly payment at any time through Bansefi branches, ATMs, agents, or through cash-back. They can also use the debit card for purchases. Open loop beneficiaries thus have an operable bank account.
She has an account—now what?
However, even among beneficiaries in the open loop, approximately 85 percent withdraw all of their G2P payment at once! If these beneficiaries are living in a community with accessible access points, why were they not using their cards beyond withdrawals?
Women’s World Banking understands from our research in Mexico and in other markets that women have distinct preferences for digital financial services: convenience, reliability, security, and confidentiality. Prospera beneficiaries did not perceive or understand the card or account as meeting these preferences.
We conducted research (in Sept 2016 and Dec 2017) to uncover the behavioral barriers that kept “open loop” beneficiaries from fully utilizing their cards, and in turn, accounts.
“I didn’t know I had a bank account.”
Prospera beneficiaries perceived the cards primarily as a means of accessing and withdrawing the Prospera payment. Thus, many would rather not risk losing the card and kept the card safely at home in between payments.
They had limited awareness, trust and confidence on what and how to use the card in other ways beyond withdrawals. Beneficiaries overwhelmingly did not know they even had a bank account linked to the card nor of the card’s benefits.
They were also uncertain whether the funds would still be available if not withdrawn and they feared of pressing the wrong button on an ATM or POS. Many cited being sensitive to any bank fees.
This lack of awareness extended to a program intended to promote financial inclusion of beneficiaries. Programa Integral de Inclusión Financiera (PROIIF) is a bundle of commitment savings, credit, and insurance products, together with financial education, offered by Bansefi. Savings contributions and loan payments are deducted from beneficiaries’ bimonthly payments. Beneficiaries are enrolled in special enrollment sessions and currently over 1.5 million Prospera beneficiaries are participating.
However, we found in our customer research that while PROIIF beneficiaries were more aware of having bank accounts than non-PROIIF beneficiaries, the process for opening and accessing these benefits were unclear. They often did not know if the accounts had been opened, how much they were saving or had saved, how much they owed, or how to access the insurance benefits.
Solutions to reach the “low-hanging fruit” in the open loop
Digitization of G2P payments can be an effective gateway to financial inclusion, but only if beneficiaries have access to a proper ecosystem—ATMs, banking agents, points of sale (POS), and branches.
Convenience also matters a lot: we learned from the Financial Diaries project in Mexico that respondents made over 85 percent of their purchases and financial transactions within a 30-minute walking distance from home. Without conveniently located access points (and reasons to use them), “closed loop” beneficiaries cannot yet fully realize the benefits of digital financial services.
Thus, we focused on solutions for beneficiaries in the “open loop” and beneficiaries migrating from “closed” to “open” loop. They have greater banking infrastructure available and opportunities to digitally use their payments and save in their accounts.
Our understanding of the beneficiaries’ behavioral barriers beneficiaries face combined with a behavioral map of the how they spend and use their money in their communities pointed to two important approaches for the interventions we ultimately designed:
• Highlight relevant use cases of the card and account, beyond withdrawals (purchases, balance inquiry, keeping money); where to use the card and how much it costs; and how to conduct transactions
• Promote specific actions that can drive usage such as leaving some money on the card at the time of withdrawal, and carrying the card (instead of leaving at home) to be able to transact when out and about
The resulting beneficiary and staff-facing interventions we designed together with the consortium of partners include:
• optimized content and design of a notification letter provided to beneficiaries migrating from closed to open loop;
• an SMS series to reinforce information and provide tips;
• updated training content for sessions delivered to beneficiaries on a bimonthly basis; and
• scripts and marketing collateral for Yastás stores, which are Bansefi banking agents.
We are working closely with the consortium partners to rigorously test and measure the effects of these interventions on account usage and will share results once available.
With this approach, we look forward to harnessing the important step of digitizing G2P payments as a true onramp toward increased account usage and ultimately greater financial inclusion of Prospera’s millions of women beneficiaries.
Have you had experience with increasing usage of G2P payments? Comment below or tweet at us (@womensworldbnkg and @RyanNewton_) and tell us what were the key factors for success or what challenges you have faced.
Understand the Blockchain in Two Minutes - YouTube
What is blockchain?
While Bitcoin was the first and best-known application, blockchain technology can be used for much more than transfer of currency. It can be used for contracts, records and many other kinds of data.
Blockchain—or distributed ledger technology (DLT) if you want to impress the cyber-geeks—is a decentralized way to keep a record of all transactions taking place on a network. It makes it possible to share information across multiple providers securely. Blockchain uses cryptography to ensure that data cannot be edited and no one person can change it. It has never been hacked.
Blockchain is transformative, and along with other technologies like machine learning, has tremendous potential to change the way financial services are offered. It is beginning to reach critical mass. In the last three years over US$1.4bn was invested in bitcoin and blockchain companies. Over 24 countries are currently investing in DLT: 90 central banks are engaged in discussions on it around the world and 80% of banks are predicted to be initiating DLT projects by 2017.
What can blockchain do for low-income consumers?
A digital ledger that can keep track of transactions and IDs of every client, all encrypted, is a powerful tool. We have not even begun to imagine the many possible applications in financial inclusion. Bitpesa is one of few companies operating in Sub-Saharan Africa, with operations in Nigeria, Kenya, Senegal and Democratic Republic of Congo.
International remittances: Blockchain has potential to help low-income workers send money home. Bitspark and rebit partnered on a solution for low-income women from the Philippines working in Hong Kong. This solution enables a worker in Hong Kong to send funds, which the recipient can withdraw at a cash agent or through a bank account. The payment is passed through bitcoin, but neither the worker in Hong Kong nor her family in the Philippines buys or sells bitcoin.
Loan disbursements: Digital lender Branch partnered with Bitpesa to enable transfers of funds from the US to local borrowers in Sub-Saharan Africa. Branch bought bitcoin in the US and made a local transfer through Bitpesa’s API, which could then be disbursed instantly disbursed into the cell phones of their digital borrowers.
Global micropayments:Premise Data is a data collection and analytics company that works with the World Bank, the UN and others. It used Bitpesa to pay hundreds of data collectors in Tanzania and Uganda the equivalent of $5 into their mobile money wallets every wee.
SME trade finance: SMEs in Africa are beginning to use Bitpesa to pay suppliers in China, Dubai, the US and Europe. The benefits are faster, more reliable and lower cost payments, with less working capital tied up.
In the future, blockchain is expected to improve:
Credit scoring – if all digital transactions were stored in a distribute ledger this could provide a reliable source of data for making loans.
Medical records and insurance, making it possible to automate claims payments
Land registry – getting title deeds out of dusty government offices and onto blockchain has potential to reduce fraud and make it easier for heirs to inherit land
Making it easier to prove who you are, get access to credit, register land titles, and receive insurance payments, blockchain has great potential to improve the way financial services are offered. Far from being only for cyber-geeks, it can be transformative wherever it is put it to service to make finance work for women.
Want to learn about the latest innovations in blockchain and other disruptive technologies in the financial services industry?
January 22, 2018
By Gayle Gatchalian, Specialist, Marketing and Communications
Almost every company, be it in technology, consumer goods or finance, says they want to “do well by doing good.” Investors, who apply that same philosophy, can use a gender lens to deploy capital that advances a social good—gender equality—and earning a financial return simultaneously.
When you can advance gender equality while earning a financial return: gender lens investing Click To Tweet
In the 2000s, the microfinance industry came into its own. The idea popularized by Muhammad Yunus with Grameen Bank in Bangladesh 30 years prior—that the poor could be profitably and sustainably served with financial services—had proven its case and the small non-profits and grass roots organizations that modeled themselves after his group lending model had achieved sustainability and commercial viability. Many institutions across the world were transforming into formal, commercial enterprises that were now able to offer much more than a group loan. As the industry grew, it also evolved, from simple microlending to a fuller suite of financial services that truly met the definition of financial inclusion for the poor and low-income people previously excluded from the sector.
Why focus on women as clients
More than half of the unbanked people in the world are women. Even as 700 million more people became financially included between 2011 and 2014, the gender gap was a persistent 7% across the globe, 9% among the emerging markets. This represents an untapped market opportunity for financial institutions, one that offers good returns for the institution. A 2010 study we commissioned found a positive correlation between the percent women clients and institutional growth, return and credit quality. The study showed that as the percent of women clients goes up, ROA goes up and non-performing loans go down. And as more and more institutions serve women with financial services, the industry simultaneously unlocks the positive impact women’s access can have on development outcomes such as health, education, food security, and water and sanitation.
This development however, came at a cost. An industry founded to bring financial access to low-income women was experiencing mission drift: as institutions transformed, they began serving less and less women. Perhaps more tellingly, the number of women in senior leadership at these institutions also declined significantly… troubling, since many of the founders and early leaders of the founding nonprofits were women.
A gender lens impact investor is born
Women’s World Banking watched these developments with concern. We knew we could slow this trend with our technical assistance and our gender diversity programs but even more powerful could be our role as an investor. Having an ownership stake in the companies at risk for or currently experiencing mission drift would provide us access to management and, more importantly the voting power to influence these companies to staying focused on women. And so in 2012, WWB Asset Management (WAM) was born and we launched the Capital Partners Fund, the only women-focused, women-managed microfinance equity fund in the impact investing space.
Gender lens investing belongs to a subset of Socially Responsible Investing (SRI) called Impact Investing. As opposed to SRI investments that mainly achieve social responsibility by selecting investments that meet an environmental, social or governance standard, impact investing actively seeks, in the deployment of private capital, a specific and quantifiable social return as well as a financial return. Investors that use a gender lens investment strategy aim to advance gender equality by investing in one of three ways: 1) in women-led businesses; 2) in institutions with gender-diverse staff and leadership; or 3) in companies that advance gender equality through their products and services.
By investing in women-focused financial inclusion companies, WAM combines all three approaches of gender-lens investing:
• WAM prioritizes financial inclusion companies that meet the definition of “women-owned”;
• It targets financial inclusion companies that are achieving standards of gender diversity at staff, management and board levels, and
• Its investees promote gender equality through the financial products and services they provide to women clients.
The Capital Partners Fund currently has US$50 million under management with 8 investments in 7 countries. Collectively, these portfolio companies serve more than 4 million low-income people, 82% of whom are women. Beyond the standard financial performance indicators, investees report on a set of gender performance indicators that track gender-disaggregated data on client and institutional gender diversity metrics.
As of 2016, Capital Partners’ portfolio companies consistently outperform their country peers on both client and diversity gender metrics: they have more female borrowers, staff, managers and board members. WAM also completed its first successful exit in 2016 when it divested from Ujjivan Financial Services at 2.4x return on investment capital in the biggest microfinance IPO in India’s history.
Enabling superior performance with Women’s World Banking
Why focus on women as talent
Study after study has shown that gender diverse institutions perform better. Data from our network of women-focused financial institutions showed that MFIs with more than 35% women in board, management and staff had higher return on assets (ROA) those with less. Credit Suisse’s very own Gender 3000 (2016) study found a correlation between greater gender diversity in senior management and higher financial returns. Companies where women make up more than 15% of senior management reported an 18% higher average return on equity (ROE) compared to those with less than 10% of women in decision-making roles. Further, the study found that financial companies with more than 15% women managers reported an ROE premium of 33% compared with those with less than 10%. Gender diversity within the ranks of a company isn’t just a social mission, it is imperative to the bottom line.
Portfolio companies benefit from the Fund’s relationship to Women’s World Banking, with its nearly 40 years’ experience serving the low-income women’s market. Capital Partners, through Women’s World Banking, is able to provide portfolio companies with added value—from market insight, expertise in women-centric product design or leadership training—to increase shareholder value. Among the programs available to portfolio companies is the Credit Suisse- supported Leadership and Diversity for Innovation Program (LDIP), a one-year program that partners a senior executive in a women-focused inclusive finance company with a high-performing woman leader, developing their skills to successfully serve low-income women while charting a path for more diverse leadership within the institution. Through leadership programs such as LDIP, Capital Partners and Women’s World Banking help advance portfolio companies’ double bottom-line.
Gender lens investing is not about pursuing gender equality as a social good for its own sake… it is also a strategy for financial outperformance. Investing in women as clients and as talent leads to stronger institutions, better returns and a more equitable world and we hope to see more investors apply an active gender lens investing methodology to their portfolios.
January 15, 2018
By Maura Hart, Manager, Knowledge and Communications
The future of women’s financial inclusion is inextricably linked to the potential of digital technology to break down barriers to women’s access to and usage of financial products.
“What have been the biggest accomplishments in digital financial services for women in the past… Click To Tweet
When it comes to financial inclusion for women, “digital financial services” (DFS) means different things in different markets. In some, DFS means the booming mobile money sector that is opening up unprecedented access to formal banking. In others, DFS is still just another unreachable tool for those without access to mobile phones where cash is still king.
The plenary session “What is the State of Digital Financial Services?” at Women’s World Banking’s Making Finance Work for Women Summit provided an honest look at the current DFS industry and the opportunities and challenges for women’s financial inclusion. Themes from this discussion set the tone for many of the subsequent sessions, which examined current approaches to using technology to reach unbanked women.
Moderator Diana Gooley, Women’s World Banking’s Digital Financial Services Manager, opened the session with the question: “What do you think have been the biggest accomplishments in the past 10 years?”
It’s a big question. Ten years in the digital technology sector is a lifetime. However, we need to look back before we can chart a path forward. The responses from our panelists were revealing as they focused not just on DFS itself but on the holistic benefits to women clients.
Digital enables more than financial access
Representing GSMA, Adrine Muhura pointed to a critical use case for DFS: giving women a reason to own a mobile phone and use it. She discussed what many consider the most successful model for mobile money update over the last decade, M-Pesa in Kenya. GSMA did a study in 2015 showing a 40 percent gender gap in mobile phone ownership among low and middle income countries. With the introduction of M-Pesa in Kenya, the gender gap in mobile phone ownership is now only 2 percent.
Marie Kyle, representing mobile insurance provider BIMA, also pointed to the doors that mobile money are opening for women. By providing women who traditionally had unequal access to bank accounts with access to digital payment channels, they can connect to other new services like health insurance.
Kyle said, “What DFS has done is started to level the playing field a bit. Provided you have access to a mobile phone, you can access the same services as male counterparts who are more likely to be banked.”
What’s slowing digital inclusion for women?
Gooley then turned the conversation to the future asking for the biggest challenges and shortcomings of DFS in serving women. Liz Kellison of the Bill & Melinda Gates Foundation pointed to the growth that’s required to reach full financial inclusion for women, particularly given the persistent gender gap in usage. “We haven’t figured out how to accelerate women to adopt and use at the same pace as men.”
How do we make this acceleration happen?
For the private sector, it starts with understanding women as a profitable market with distinct segments and developing innovative products to serve them.
For Women’s World Banking, research is paramount when designing successful products for women. We must do the work to understand women’s unique needs, preferences and barriers before determining how best onboard them and take them on each step of the customer journey. Muhura emphasized this point on the panel. “Women are not homogeneous; we need to go deeper.”
On the other hand, the public sector also has an enormous role to play when it comes to ensuring that that DFS products are accessible to women. Kellison pointed to the example of Tanzania, where the government works to open access through interoperability and less onerous KYC requirements.
Kyle then added “You see a lot of regulators in markets where DFS hasn’t taken off who are willing but, the regulatory landscape is fragmented…DFS means a new ecosystem; regulators who worked in silos in the past now need to work together.”
As Gooley later remarked, we could have kept this panel going for hours as we were just scratching the surface of the DFS environment and its impact on women’s financial inclusion. Check back here on the Women’s World Banking blog for more insights from the Summit on innovative approaches to serving women.
January 8, 2017
By Kerry Stephens, Specialist, Development and Strategic Partnerships
New technology, new players, new approaches—the past few years have been marked with the disruption of nearly every industry around the world. Financial inclusion is no exception and a tension amidst all this newness has been brewing.
From disruption to tension to collaboration in driving women’s financial inclusion Click To Tweet
Women’s World Banking CEO Mary Ellen Iskenderian touched on this tension when she lightheartedly prepared the audience for “hints of conflict” at the opening plenary of Making Finance Work for Women Summit in Dar es Salaam, Tanzania.
The panelists represented stakeholders new and old: Muna Sukhtian, Managing Director of Microfund for Women in Jordan, Ineke Bussemaker, CEO of NMB Bank in Tanzania and Summit co-host, Hassan Mahbub, Head of Mobile Wallets at JazzCash, a fast growing FinTech in Pakistan, as well as Mark Napier, Director of Financial Services Deepening (FSD) Africa.
Their conversation teed up what would be a predominant theme of the two-day event: the perceived clash between traditional and new financial service providers is giving way to collaboration as all players recognize their critical and interconnected roles in advancing women’s financial inclusion.
Financial inclusion to what end?
Financial inclusion conversations often focus on women’s access to savings, credit, and insurance. Today, Mark Napier pointed out, financial service providers need to look beyond access and focus on the “utility of finance” and how useful the products are to women. “Let’s talk more about land and housing, that’s what women want finance for, not just a savings account,” said Mark.
Digital financial services (DFS) provide low-income women with the proximity, security, and convenience they need in a financial service. Banks are partnering with mobile network operators (MNOs) and FinTech companies to deliver these solutions. But these partnerships can open debate over who the customer belongs to.
NMB’s Ineke Bussemaker thinks there is room, and indeed a need, for both. Banks can reach financial inclusion in terms of access, but it takes partnership with MNOs to reach financial inclusion in terms of usage.
The proof is in her own market. Over the past decade, with the emergence of MNOs and mobile wallets, Tanzania has witnessed the percentage of adults age 16 and over with access to a bank account grow from 15 percent to roughly 70 percent… if MNO services are included.
“Financial inclusion, if you limit it to banks, is still not very high,” said Ineke.
Why MFIs still matter
With private sector players moving deeper into the microfinance space, the panel discussed how MFIs continue to play a vital role. While MFIs have facilitated access to the unbanked, especially women, it “was a long road,” acknowledged Muna. She argued nevertheless that the real impact of MFIs has been and continues to be in empowering women. Muna shared the story of four MFW women clients who took out loans to continue their education. Over time, they experienced an increased sense of confidence in their household and a voice in their community, ultimately running in and winning their municipal elections.
“What MFIs have in their DNA, and what is important to maintain – is that when things are moving quickly, we have a responsibility to make sure that we are doing things in the clients’ best interest,” said Muna.
Rookies taking on risk
Hassan Mahbub of JazzCash responded to Muna’s concerns about responsibility. He pointed out that private sectors companies are taking on a lot of risk in delivering products and spurring competition. Traditional banks would not have done so.
Jazz is largest MNO in Pakistan, and has been operating for over 20 years. A few years ago, it introduced its mobile wallet, JazzCash, which today serves 14 million customers. Hassan claims JazzCash is creating new opportunities in Pakistan, where 40 banks serve only 12 percent of the country’s 200 million population; and where less than 1 percent of those customers have access to loans. Hasaan explained the banks don’t lend to consumers because the costs are too high.
“Not just bad debt, but also the due processes, credit checks, to verify the customer – it takes too much time,” said Hassan. “If telcos and banks can collaborate to build credit scores based on mobile phone usage, and if they offer that to the banks, that would ease our processes completely.”
“Women largely do not have access to financial services. The complicated social and cultural norms in Pakistan dictate their lives differently,” said Hasan.
Hasan said Jazz saw an opportunity in the untapped women’s market in Pakistan, not just for the overall good of empowering women, but also in commercial terms. Today, they are working with Women’s World Banking to address one of the key barriers to improving their women customer base: the lack of female agents in Pakistan. With Women’s World Banking’s support, Jazz is partnering with Unilever to onboard female retailers in the value chain as JazzCash agents.
For NMB, the focus is dual. Ineke explained that yes, serving women customers will bring additional profitability, but so will having women managers across the organization.
“We’re not promoting gender parity at all levels because we feel otherwise it’s unfair to women. We are promoting it because we feel it makes business sense,” said Ineke. “When you empower women, you empower 50 percent of our economy. That’s the business case.”
Among most of the 350 participants, there is excitement at the entry of and partnership with new and innovative players who together, are accelerating women’s financial inclusion.
November 20, 2017
By Karen Miller, Chief Knowledge and Communications Officer
Photos courtesy of AFI’s Facebook Page
Connecting unbanked women around the world with life-changing financial services is a challenge marked by big wins as well as sobering hurdles. Both were on display at the Alliance for Financial Inclusion (AFI)’s Global Policy Forum (GPF) in Egypt in September, which Women’s World Banking attended along with officials and institutions representing more than 90 countries. In a promising sign, this year gender-related topics received more attention than in the past. The forum’s 2017 theme, “Promoting Inclusion, Exploring Diversity,” included strategies for working with populations displaced by conflicts and climate change (which can disproportionately affect women), as well as for directly expanding financial access to the millions of unbanked women worldwide.
Are @NewsAFI members leading in driving women’s financial inclusion by example? Click To Tweet
The gender emphasis manifested itself in multiple ways throughout the Forum: from the plenary session on women’s financial inclusion to a breakout session focused on gender diversity. The focus on women showed a commitment to follow through on the Denarau Action Plan, announced at last year’s GPF, which listed the key steps policymakers must take to ensure that their financial regulations are inclusive of women. However, as much as these developments represent an encouraging step forward, this year’s conference also brought to light the work that still needs to be done in order to make significant strides in financial inclusion for women.
On the bright side
One noteworthy participant at the GPF was Egyptian president Abdel Fattah el-Sisi, who appeared not just for the obligatory few minutes that heads of state typically spend at such conferences. President el-Sisi gave inspired remarks and stayed for the opening panel, visibly listening intently and taking notes, even directing a comment to the panelists. His active presence suggested that Egypt was not only acting as host country but that it is also committed to the goal of financial inclusion, an important signal from the Middle East’s largest country where the gender gap in financial inclusion, according to the Global Findex, is 10%. This is further evidenced by the recent move of the Central Bank of Egypt to prioritize women’s economic and social development among its initiatives.
Another step in the right direction is AFI members’ approval to make the Gender and Women’s Financial Inclusion Committee as a permanent committee of the Board of Directors. With gender now a regular item on the board’s agenda, women’s financial inclusion will have a higher profile at AFI conferences, and members can move closer toward achieving the goals of the Denarau Plan. (One recent project, piloted by Women’s World Banking and Nigeria’s Diamond Bank and showcased in a case study published by AFI, points the way to what’s possible when stakeholders work together to build inclusive solutions that target women.)
Another positive development this year related to AFI’s governance is that gender balance is now a criteria for selecting board members. Three women have now joined the AFI board – Ms. Elvira Nabiullina, Governor of the Central Bank of the Russian Federation, Ms. Davaansuren Sodnomdarjaa, Chief of the Financial Regulatory Commission of Mongolia, and Ms. Maiava Atalina Ainu’U-Enari, Governor of the Central Bank of Samoa. This is keeping with the Denarau Plan’s commitment to ensuring that AFI itself is promoting gender diversity.
On the other hand…
It remains clear that AFI and its members must do more to succeed in expanding financial inclusion for women worldwide. For instance, while the creation of an official gender subcommittee is a positive step, its members are currently all women. The members’ high ranking as deputy governors ensures that the subcommittee has clout—but in order for it to be effective and not seen as just a women’s domain, the group should reflect gender diversity. Recruiting male champions will strengthen the committee’s already strong reputation.
In further evidence that women’s financial inclusion is still not a top-of-mind subject for many AFI participants, the breakout session I moderated on the pillars of gender diversity drew a lower turnout than the other sessions at that time. Approximately 50 members attended the gender diversity session out of the 700 participants at the GPF. Participants at the session included roughly 70 percent women and 30 percent men, the reverse of the approximate gender ratio at the conference.
Despite the relatively low attendance, the gender diversity session generated a lively discussion among high-ranking officials and panelists, including Dr. Monique Nsanzabaganwa, Vice-Governor, National Bank of Rwanda, who is a member of Women’s World Banking’s Africa Advisory Council. Nathan Naidoo from GSMA talked about how the organization initiated gender diversity at the agent level. Jessica Schnabel from the IFC discussed the linkage between gender diversity and overall bank performance; and Ute Klamert from GIZ discussed impact from the bilateral perspective. We also discussed how donors can influence gender goals in all kinds of products. In breakout sessions, we debated whether donors should mandate action on the issue, or whether it’s more important to begin by identifying specific ways to address gender and cultural barriers effectively on a local level.
Dr. Monique Nsanzabaganwa, Vice-Governor, National Bank of Rwanda
Participants exchanged some light-hearted banter too. In the elevator before the session, AFI attendees from the Swedish government—consistently a pioneer in gender diversity efforts—answered the question of whether they would attend the gender diversity panel by joking, “Isn’t that mandatory for Swedish government officials?”
With the presence at this GPF of 90 nations that, collectively, influence most of the unbanked population in the world, gender issues are now starting to get the audience they need. As with every effort to make change, however, inevitably some countries will lead and others will move at a slower pace. But the potential exists now to make real progress in financial inclusion for women from a policy perspective. That’s why it is of crucial importance that all the stakeholders keep working together to ensure that we can build on our achievements and realize our shared goals, without breaking our momentum.
Unintended consequences of India’s demonetization on the local microfinance industry Click To Tweet
One area that Women’s World Banking especially focused on was the impact of demonetization on inclusive finance, an industry that offers financial services to precisely the population that this move has most negatively impacted. Because our impact investing arm, Women’s World Banking Asset Management (WAM) has two investments in inclusive finance institutions in the subcontinent, we watched anxiously as delinquencies shot up in a market that just days before boasted some of the lowest portfolio-at-risk rates in the world. In time however, the microfinance market, just like the rest of the economy, stabilized into a new normal. A post from an ADB investor even lauded the resilience of microfinance clients in the country earlier this year. Inclusive finance institutions were out of the woods already… right?
Because of WAM’s investment model of activist shareholding, the investment team is in constant conversation with the boards and CEOs of its investee companies. I checked in with our Chief Investment Officer, CJ Juhasz, upon her return from a trip to the sub-continent to discuss developments in the region. Through this conversation, I learned that while there is something to the notion that the worst of the crisis is behind us, recent conversations she has had with board members and senior management at our investee companies have led her to believe that the long-term impact of demonetization is really only just revealing itself. The short of it? Demonetization has damaged discipline in India’s microfinance market and it will take many years and very deep digging into the numbers by both the institutions and investors before we can be sure that discipline has been restored to the levels it was before… if it ever will be.
In the immediate aftermath of demonetization, clients were obviously unable to pay because the currency they had was invalid. That didn’t make them bad clients. The expectation was that they would be repaying as usual once the currency machine kicked back up. According to CJ, what we didn’t expect were three developments that together resulted in a perfect storm that hurt clients’ willingness to pay, a willingness that in years past, institutions and investors could take for granted. No longer.
Demonetization Development #1 Loan Waiver Programs
Demonetization occurred mere months before a nationwide election so it’s not surprising that politicians hooked on this crisis to get elected. Many promised loan waiver programs: “if you vote for me, your debt will be waived.” But they didn’t disclose the fine print. Most loan waiver programs by the government targeted farm loans in areas facing drought—not microfinance loans gone bad due to demonetization. The government did step in to cover banks for losses on certain waived loans—but the waiver didn’t extend to microfinance institutions. Once the statement was made; however, the damage was done. MFIs found themselves having to chase after otherwise reliable clients and explain that the loan waiver programs they elected politician X to enact did not apply to him or her. Clients started defaulting even if they had resources to pay, damaging trust between the client and the institution.
How do we know the impact of these promises were real? A natural experiment of sorts proves it: in regions where the politicking was not as severe, discipline was not as negatively affected. This is also borne out in the financial performance of our investees*: stability correlated to areas where promises of loan waivers were less intense.
Demonetization Development #2 Top-up Loans
Recognizing that many of their clients needed a little help to get through the cash crunch, MFIs started offering top-up loans to their clients. While the move had the intended effect of helping clients through a rough spot, it makes it harder for the financial institutions (and their investors) to really know what’s going on. If a portfolio is growing again, is that because clients have stabilized their businesses and are looking for growth again, or is it because top-up loans have been issued to struggling clients? Portfolio at risk is happily going down again—that is to say, non-performing loans as a percentage of total loans are going down. But is that because clients are really starting to repay again, or have the institutions just increased total loans outstanding through issuance of top-up loans? Financial institutions, their investors and regulators are going to be busy for some time trying to figure out what really is happening with clients, their repayment discipline and the true health of the institution’s portfolio.
Demonetization Development #3 Competition
This last development is really quite interesting and a textbook case of unintended consequences. India has a very competitive microfinance market so institutions work very hard to retain their clients. Growth comes at the expense of a competitor—and clients know this. So when demonetization occurred and clients found themselves in situations where MFIs expected their clients to be delinquent, many clients realized that demonetization was like a “get out of jail free” card, where they could default on their current MFI and then jump ship to another one that was desperate for their business—regardless of credit history during the demonetization crisis. In the ultimate reversal of the predator-prey relationship that has characterized lending to the poor, in this instance it was clients that leveraged the chaos of demonetization to get a free pass on a loan and start anew.
Another unintended consequence
Loan officer integrity may be another casualty of demonetization. While not universal, there have been enough reports to suggest that this is, in fact, a “thing.” Imagine this: you are a loan officer who has been regularly collecting from about 300 clients in your branch. Demonetization hits and none of your clients can pay. Management understands the reasons and so the MFIs proceeds as best as possible, with the expectation that most clients will pay eventually. What you and your branch manager don’t know is when and how much clients will repay their loans.
Now one fine day, a group of your clients—recently liquid again after having been able to withdraw or exchange their large bills—give you a large lump sum payment in cash. When you get back to the branch, you find your branch manager overwhelmed with these out-of-schedule, too-large payments from several of your fellow loan officers. It will be weeks before the branch manager can visit all the clients and reconcile what they think they paid and what loan officers brought into the branch. The cash weighs heavy in your collection bag as you think, “my boss doesn’t expect me to have this cash today… oh this is so much money… maybe I can just walk away…” And this is what some loan officers have done—or tried to do. Demonetization essentially created a situation of extreme temptation for loan officers who are sometimes themselves just getting by financially. Just as reliable clients became unreliable, now reliable staff becomes unreliable.
“As an investor in Indian microfinance companies,” said CJ, “I am bullish but cautious.” Her hedging makes sense: while the industry is recovering, the damage to client discipline may be done. Indeed many market players that CJ spoke with say market discipline in India has been permanently dislocated. Traditional MFIs who had grown accustomed to the luxury of 99% repayment rates are now operating with 5-10% of the portfolio-at-risk, depending on where they are operating and it’s hard to say when and if that will improve. The longer term effects of demonetization are yet to reveal themselves.
Who knows—all this pain may have been just what India needed to fight corruption and get the digital gain it was seeking. In the near-term however, WAM and other impact investors in India will have to look behind the numbers for a very long time to understand the real impact of demonetization on India’s inclusive finance market.
* The worst affected areas were Maharashtra and Madhya Pradesh where WAM portfolio companies have less (but not no) exposure.
Focusing on the women’s market is good for the bottom-line. Women across the world are often the household financial managers and key decision-makers for household purchases. In the financial services industry where women represent a market opportunity of 1.1 billion, it’s a segment every financial institution can no longer afford to ignore.
Resolve to drive the double bottom-line: women’s financial inclusion Click To Tweet
Focusing on women can also have a paradoxical effect; that of reaching more male clients. Women’s World Banking’s own experience has shown that designing products and services with women in mind result in products that appeal to women and men, but not the other way around. When else can you expand outreach to the broader market by focusing on a particular segment?
For the past forty years, Women’s World Banking has worked with financial institutions that have recognized the value of serving the women’s market. We have helped pioneering cooperatives such as SEWA Bank in India, nation-wide microfinance institutions such as Fundación delamujer in Colombia to large retail banks such as Diamond Bank in Nigeria develop individual loans, microinsurance, youth and adult savings accounts that meet women’s needs delivered via bank branch, agent or straight to their mobile phones.
We have also advised international organizations and governments on how best to design and implement macro-level policies that support women’s financial inclusion.
Six reads to make this New Year’s Resolution a reality
So if your institution is looking for the next big thing, look no further. The women’s market can be your differentiator, your market growth opportunity, your portfolio quality booster… or all three.
While we’d love to work with every single financial services provider that has resolved to serve women, there is only fifty of us at Women’s World Banking and thousands of you. That’s why we make sure to gather our lessons learned into case studies that can help guide your transition into a women-focused institution.