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The Gender Gap in Fintech: A Missed Opportunity
Despite the growing recognition of women as a vital segment for financial services providers, they remain significantly underrepresented in fintech portfolios. A recent report by the International Finance Corporation (IFC) highlights this disparity, emphasizing the need for the industry to enhance financial inclusion for women. The report, titled “Her Fintech Edge: Market Insights for Inclusive Growth,” sheds light on the factors influencing women’s representation in fintech and the performance of women customers compared to their male counterparts.
Insights from the IFC Report
The IFC’s comprehensive study surveyed 114 fintech firms across 17 countries and included interviews with leaders from 25 fintech companies between November 2022 and February 2023. The findings reveal that digital financial services have immense potential to advance women’s financial inclusion. When designed with women’s specific needs in mind, fintech solutions can effectively address barriers to access and usage, ultimately supporting their financial goals.
Persistent Barriers to Access
Despite the promise of fintech, barriers to access and adoption persist. According to the World Bank’s Global Findex Database, in 2021, men were 6 percentage points more likely than women to use digital payments—a gender gap that has remained consistent across developing economies since 2014. This gap is largely attributed to broader issues of digital service access.
Further research by the Bank for International Settlements indicates that this disparity extends beyond payments, with an 8 percentage point gap in the adoption of various financial services, including lending, insurance, and investment.
Low Representation of Women in Fintech Portfolios
The IFC study corroborates these findings, revealing that women are underrepresented in fintech portfolios. Notably, 63% of lending-focused fintech firms reported that women made up less than a quarter of their business customer base. Additionally, 27% indicated that women comprised less than a quarter of their total retail customers.
Firms with low representation of women often cite sociocultural and digital barriers as significant obstacles. Limited economic participation, reliance on informal credit sources, and lower loan size requirements further restrict demand for credit among women. Some fintech players also noted that women may exhibit lower digital savviness, preferring in-person interactions over fully digital platforms.
A Slightly Better Picture in Savings and Payments
In contrast, fintech companies focused on savings and payments report slightly better representation of women customers. Only 36% of these firms indicated that women accounted for less than a quarter of their business customer base, while 19% reported similar figures for retail customers. This suggests that while challenges remain, there is a growing recognition of the importance of catering to women in these segments.
Women as an Attractive Segment for Financial Services
Despite their low representation, women are considered an attractive segment for financial services providers. They exhibit higher loyalty, greater customer lifetime value (CLV), and lower default risk compared to men. The survey results indicate that women default less frequently in lending portfolios, with many fintech firms reporting non-performing loan (NPL) rates of less than 10% for their women’s portfolios. This trend is attributed to women’s more risk-averse financial behavior and societal pressures to repay loans.
Moreover, women tend to be more loyal borrowers. Industry stakeholders have observed that while women may take longer to build trust with digital platforms, they often become “stickier” customers once that trust is established. This loyalty extends to savings, payments, and insurance sectors, where women are noted to have lower churn rates and a greater tendency to maintain regular transactions.
The Underserved Market: A Revenue Opportunity
According to Oliver Wyman, women represent the largest underserved group in the financial services industry. Various barriers hinder their access to financial services, including limited financial literacy, lack of formal identification, societal norms, and unequal access to technology. On the supply side, challenges such as the absence of gender-disaggregated data and poorly designed products further reinforce these barriers.
Oliver Wyman estimates that financial services firms are overlooking a staggering annual revenue potential of $700 billion by failing to adequately address the needs of women. This presents a significant opportunity for fintech firms willing to innovate and create solutions tailored to this demographic.
Featured Image Credit
The featured image has been edited from a source on Freepik, showcasing the intersection of finance and technology through a businesswoman engaging with digital financial tools.
By understanding the dynamics of gender representation in fintech and the unique needs of women, industry players can unlock new avenues for growth and foster greater financial inclusion. Subscribe to our newsletter to stay informed about these developments and more in the fintech space!