Understanding the Fintech Gender Gap: Insights from Chen et al. (2021)

The rise of financial technology (fintech) has transformed the landscape of financial services, offering innovative solutions that cater to diverse consumer needs. However, a significant gender gap persists in the adoption of these fintech products. Chen et al. (2021) delve into this issue, revealing critical insights into how gender influences the use of fintech and the underlying factors contributing to this disparity.

The Spectrum of Fintech Products

Fintech products vary widely in their functionality and purpose. Some serve to complement existing financial services, such as online budgeting tools and financial planning applications. Others, however, act as substitutes, like peer-to-peer payment platforms and digital-only banking services. Chen et al. found that the gender gap in fintech adoption is approximately 50% smaller for products that complement traditional services compared to those that substitute them. This suggests that women may feel more comfortable using tools that enhance their existing financial practices rather than those that replace them entirely.

Gender Roles and Household Dynamics

To further investigate the gender gap, the researchers examined single-adult households. Surprisingly, they discovered that female-led households were still less likely to engage with fintech compared to their male counterparts. This finding challenges the notion that traditional gender roles within households are the primary drivers of the gender gap in fintech adoption. It indicates that other factors are at play, warranting a deeper exploration of attitudes and behaviors surrounding financial technology.

Attitudes Toward Privacy and Technology

One of the most compelling explanations for the gender gap lies in differing attitudes toward privacy and technology. The survey conducted by Chen et al. revealed that women are generally less willing to adopt new applications, such as digital banks. They also express greater concerns about sharing personal data for the sake of obtaining better rates or offers. Additionally, women report heightened anxiety regarding online security when dealing with financial institutions. When these differences in attitudes are accounted for, the gender gap narrows significantly, reducing it to approximately 2.2 percentage points.

The Role of Preferences and Discrimination

The reasons behind these differing attitudes remain an open question. One possibility is that they stem from inherent differences in preferences between genders, such as varying levels of risk aversion, as discussed by Croson and Gneezy (2009). Alternatively, the gap could be influenced by gender-based discrimination, particularly if women have had negative experiences with financial institutions, as suggested by Brock and De Haas (2021). Social norms and legal frameworks may also play a role, affecting how men and women perceive the costs and benefits of fintech products, as highlighted by Hyland et al. (2020).

Implications for Public Policy

The findings from Chen et al. underscore the need for targeted policy initiatives aimed at fostering financial inclusion. While fintech has the potential to bridge the gender gap in access to financial services, it is unlikely to do so without supportive policies that address the unique needs and concerns of different genders.

The design of these policies will depend heavily on the underlying causes of the gender gap. If the disparity arises from individual preferences, the scope for intervention may be limited. However, if discrimination or social norms are significant factors, then policies that aim to rectify these issues could promote greater financial inclusion through innovation and education.

Future Research Directions

Understanding the fintech gender gap is crucial for developing effective strategies to enhance financial inclusion. Future research should focus on the determinants of attitudes toward technology and price sensitivity, as these factors significantly influence adoption rates. By exploring these dimensions, researchers can provide valuable insights that inform policy decisions and foster a more inclusive financial landscape.

References

• Brock, J. Michelle and Ralph De Haas (2021), “Discriminatory lending: Evidence from bankers in the lab”, Working Paper.
• Chen, Sharon, Sebastian Doerr, Jon Frost, Leonardo Gambacorta and Hyun Song Shin (2021), “The fintech gender gap”, BIS Working Paper no 931, March.
• Croson, Rachel and Uri Gneezy (2009), “Gender differences in preferences”, Journal of Economic Literature, vol 47, no 2, pp 448–74.
• Demirgüç-Kunt, Asli, Leora Klapper, and Dorothe Singer (2017), “Financial inclusion and inclusive growth: A review of recent empirical evidence”, The World Bank.
• Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar, and Jake Hess (2018), “The Global Findex Database 2017: Measuring financial inclusion and the fintech revolution”, The World Bank.
• Hyland, Marie, Simeon Djankov, and Pinelopi K. Goldberg (2020), “Gendered laws and women in the workforce”, American Economic Review: Insights, vol 2, no 4, pp 475–90.