Lindy Mtongana: Bridging the Gap in Women’s Financial Inclusion through Digital Financial Services
Hello, I’m Lindy Mtongana, and welcome to IFC Audio Stories, where we delve into private sector solutions to global development challenges. Today, as we celebrate International Women’s Month, we turn our attention to a pressing issue: gender equality and economic inclusion. These two elements are not just moral imperatives; they are essential for sustainable economic growth and development. Yet, women around the world continue to face significant barriers in accessing and utilizing financial products and services.
The Promise of Digital Financial Services
In our quest to explore solutions, we focus on how Digital Financial Services (DFS) could be the key to advancing women’s financial inclusion. The International Finance Corporation (IFC) has partnered with Dalberg to conduct a comprehensive survey of fintech firms across 17 countries. The resulting report, titled "Her Fintech Edge – Market Insights for Inclusive Growth," sheds light on the role of fintech in driving financial inclusion for women in emerging markets.
Today, I’m joined by report authors Anushe Khan and Jorge Godoy to discuss the findings of this pivotal study and the untapped potential of the women’s market.
Understanding the Research Objectives
Lindy: Anushe, let’s start with you. What was the primary objective of the research, and why focus on Digital Financial Services for women?
Anushe Khan: Thank you, Lindy. The primary objective of our research was to explore the transformative potential of digital financial services for women’s financial inclusion and economic empowerment. Despite the promise of DFS, we’ve observed that the barriers to access and adoption have been slow to diminish. Our research aimed to identify how fintech firms can bridge this gap. We surveyed 114 fintech firms globally to gain insights into their behaviors regarding women’s financial inclusion and to understand the challenges faced by those firms that have not yet tapped into this segment.
Key Findings from the Survey
Lindy: Can you summarize the key findings of your research?
Jorge Godoy: Absolutely. We identified six key findings:
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Underrepresentation of Women: Women constitute a minority of fintech customers, with more than half of the firms reporting that women make up less than 25% of their clientele.
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Data Collection Gaps: While 59% of fintech firms collect gender information during onboarding, only about a third leverage this data to tailor their marketing or products for women.
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Perception of Women Customers: The majority of fintech firms view women as more loyal, less risky, and equally or more valuable compared to men.
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Higher Lifetime Value: Fintech firms that tailor products for women report that these customers generate higher lifetime value, with 63% of such firms confirming this trend.
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Need for Support: Knowledge, research, financial support, and technical assistance are critical for effectively tapping into the women’s market.
- Ecosystem Support: An enabling ecosystem can accelerate fintech firms’ progress in serving women by providing tailored support based on market conditions.
Challenges in Attracting Women Customers
Lindy: Given that women make up less than 25% of fintech customers, Anushe, why is the uptake so low among women, and what challenges do these firms face in attracting them?
Anushe: The low representation of women in fintech can be attributed to several socio-economic barriers. Many fintech firms perceive women as less bankable compared to men, often due to factors like low financial or digital literacy and inconsistent income streams. Additionally, some women express skepticism towards digital financial services, preferring face-to-face interactions. However, this doesn’t mean that the market is inaccessible; it simply indicates that fintech firms need to take proactive steps to onboard more women customers. This includes raising awareness about available financial services and conducting market research to better understand and address these barriers.
The Opportunity for Fintech Firms
Lindy: What opportunities exist for fintech firms, and why should they prioritize women?
Anushe: Our research indicates that women are perceived as more loyal and less risky customers. In fact, 69% of lending-focused fintech firms believe that women’s loyalty is equal to or greater than that of men. Investing in this segment presents a clear business case; if women have better access to financial services, it reduces the gap in financial inclusion. Fintech firms have a unique opportunity to leverage their distribution capabilities to serve women effectively, allowing them to access services from the comfort of their homes.
Support Needed for Strategic Solutions
Lindy: Jorge, what support do fintech firms require to develop strategic solutions for women, and what role does the IFC play in this?
Jorge: To intentionally target women, fintech firms need knowledge, research, financial support, and technical assistance. They require market-specific insights into women’s needs and the overall market size. Ecosystem actors, including investors and multilateral institutions, can play a crucial role in accelerating fintech firms’ progress. The IFC can provide financing to help these firms strategically target women customers and women-led SMEs, leveraging over a decade of expertise in assisting financial institutions in serving women in emerging markets.
The Importance of Leadership Buy-In
Lindy: Anushe, what else did the research reveal about the importance of leadership in fintech firms?
Anushe: A significant takeaway from our research is that firm leadership must understand and internalize the business case for targeting women. In fact, 58% of fintech firms indicated that the belief of their leaders in the importance of women’s financial inclusion drives their strategic focus on this segment.
Successful Case Studies
Lindy: Did the research uncover any compelling examples of fintech firms benefiting from a gendered approach?
Anushe: Yes, one notable example is Juancho Te Presta, one of Colombia’s fastest-growing fintech firms. They have successfully addressed gender disparities in financial inclusion by establishing a strong business case for serving women customers. By collecting sex-disaggregated data and customizing their products to meet women’s unique needs, they have made significant strides in this area.
For more insights and detailed findings, I encourage you to visit ifc.org. Thank you for joining us today on IFC Audio Stories. A big thank you to my guests, Anushe Khan and Jorge Godoy, for sharing their valuable insights. Until next time, I’m Lindy Mtongana, goodbye!