Her Fintech Edge: Closing the Gender Gap in Financial Services

Lindy Mtongana: I’m Lindy Mtongana and this is IFC Audio Stories – where we talk about private sector solutions to global development challenges.

Gender equality and economic inclusion are essential for economic growth and development. But all too often women face barriers to accessing and using financial products and services,

As we mark International Women’s Month, today's episode looks at how Digital Financial Services could hold the key to advancing women's financial inclusion.

The International Finance Corporation partnered with Dalberg to conduct a survey of fintech firms across 17 countries.  The resulting report: Her Fintech Edge - Market Insights for Inclusive Growth explores their role in driving financial inclusion for women in emerging markets.

I’m in conversation today with report authors Anushe Khan and Jorge Godoy to discuss the findings of this study, and the full potential of the women’s market.

Lindy: Anushe, let me start with you. What was the primary objective of the research, and why the focus on Digital Financial Services for women?

Anushe Khan: Sure, thank you so much Lindy, for having me on. Well, we've always thought that digital financial services (DFS) is a game changer for women's financial inclusion and economic empowerment. But we've also seen that despite the potential, the barriers to access and adoption of DFS has been slow. So given this context, we thought that it would be important to see how we can help FinTech firms bridge this gap. The report is a first step to kind of get us more information and knowledge; why FinTech firms are accessing this particular segment; and for the ones that are not, what's holding them back. So given that, we've basically gone and conducted a survey of 114 FinTech firms from around the globe. And this report then provides insight on the FinTech behaviors’  that contribute to women's financial inclusion, and how it can help these firms to seize on this large, untapped segment.

Lindy: Can you summarize the key findings of your research?    

Jorge Goody: So, we found six key findings. Finding one, survey report found that women still make up a minority of FinTech firms customers. That means that more than half of FinTech firms report that women constitute less than 25% of their customers. Finding two, 5 9% of FinTech firms collect gender information from customers during the onboarding process, but only about a third, leverage sex disaggregated data to tailor their marketing or products towards women. Finding three, the majority of FinTech firms consider women more loyal, less risky, and more or equally valuable compared to men.  Finding four; FinTech firms that tailor products and services towards women reported higher lifetime value. Specifically, 63% of firms that tailor products and services have said that women customers generate higher customer lifetime value than men. Finding five: knowledge and research, financial support and technical assistance are critical to effectively tap into the women's market. And finding six:  an enabling ecosystem can accelerate FinTech firms progress in strategically serving women by providing tailored support based on market conditions at different  stage.

Lindy: So, women makeup less than 25% of FinTech customers. Anushe, why is the uptake so low among women and what challenges do these firms face in attracting women customers?

Anushe: Well, you know, there are a few things here. The low representation can be actually brought down to the fact that there are actually very few women customers that fintech’s consider bankable compared to men and that goes back to the socio-economic barriers that women face have faced. So for instance they have low financial or digital literacy to begin with. They may have informal or inconsistent income streams. Some women, they're perceived to be more skeptical in using digital financial services. They may prefer in person, face to face interactions. Some feedback have come back and said they're less trusting of technology. However, this doesn't mean that, you know, it is a market that FinTech firms cant access, it just means - from our experience that we've had within the banking sector - there are actions that can be taken to address this, action such as non financial services from the FinTech firms side to kind of onboard more women customers into their platforms, making them more aware of the financial services that's available. There's a lot of knowledge, raising awareness that can be done, a lot of market sizing and market research that can be done to help FinTech firms, and other financial service providers actually overcome these barriers. And it's not just the private sector’s responsibility, it is the ecosystem that can also come together to address some of these barriers.

Lindy: Talk us through then there's this opportunity that exists for FinTech firms and why they definitely should prioritize women?

Anushe: So as we've seen in our research that FinTech firms are considered more loyal, less risky, and more equally valuable as customers than men, right. The survey found that 69% of lending-focused FinTech firms, believe women's loyalty is greater than or equal to that of men. So if all of this investment is made in this particular segment, the women segment will be a very profitable revenue generating segment. So there is a very, very clear business case  and the other aspect to all of this is the whole economic, economic aspect to it. If women have more access to financial services, then obviously, the gap around inclusion and access to financial services is reduced. And we believed that FinTech firms have that unprecedented opportunity to enable that with their widespread distribution and the ability for women to actually access FinTech services from the comfort of their homes and other benefits that FinTech provides, you know that FinTech firms actually have that ability to bridge that gap.

Lindy: Jorge, in developing strategic solutions for women, what support do fintech firms require? And what is the role of IFC here?

Jorge: So to target women intentionally, the report highlights that FinTech firms need knowledge, research, financial support, and technical assistance to fully capture the women's market. Specifically, FinTech firms express needing market specific knowledge of  women's needs and market size, seek best practices and want to see a well evidence business case before going forward. Ecosystem actors including investors, multilateral institutions and incubators can accelerate FinTech firms progress towards servicing women strategically. Particularly, IFC can provide financing to FinTech firms to intentionally and strategically target women customers and women SMEs, building upon more than 10 years of expertise, helping financial institutions serve women customers in emerging markets. Also, IFC can help build capacity of FinTech firms to tailor products, services, and solutions to women customers, as well as non financial services, including sex desegregation of customers at onboarding.

Lindy: Anushe?

One of the things that came through very clearly was the fact that FinTech firms believe that leadership and investors actually must strongly understand and internalize the business case that the women segment brings to the FinTech firms. And 58% of FinTech firms point that the firm leaders belief in the importance of women's financial inclusion is the driver of why they target women strategically.

Lindy: Did the research reveal any compelling examples or case studies where FinTech firms have benefitted from applying a gendered approach to doing business.

One of Colombia's fastest growing FinTech firms, Juancho Te Presta- Basically Juancho Te Presta has been able to address gender disparities in financial inclusion by establishing a positive business case for serving women customers, collecting sex disaggregated data, and customizing its product to address women's unique needs across different economic segments.

Lindy: And of course there are more great insights in the report itself. Head over to ifc.org for more. Thats where we leave it today for IFC Audio Stories. A big thank you to my guests Anushe Khan and Jorge Godoy. And thank you for listening! I’m Lindy Mtongana, goodbye!