Tech and Financing Help Women Entrepreneurs Thrive in India
To celebrate International Women’s Day on March 8, we are sharing the stories of three inspiring Indian companies that have the same ambition of making this world more diverse and inclusive.
Empower women through financial education
Priti Gupta and Sairee Chahal live more than a thousand kilometers apart, but they share a mission—to empower Indian women through financial inclusion. Women, especially working women in India, often lag far behind their male counterparts when it comes to investing or making financial decisions. The reasons include lack of financial awareness, lack of capital, limited financial literacy, and social orientation.
According to a 2019 survey by the National Centre for Financial Education, only 21 percent of Indian women meet the minimum level of financial literacy. As a result, they often struggle to understand the financial jargon while finding it difficult to engage with banks.
In response, fintech entrepreneurs Gupta and Chahal launched LXME and Mahila Money, respectively, to provide women with a platform to interact, support each other, and access formal finance.
Priti Gupta (L) and Sairee Chahal (R)
“Reaching out to women with the right way of communication is the first step to breaking the gender barrier,” said Gupta, who lives in Mumbai and is CEO of LXME. “Traditional financial services don’t have enough patience to create communications dedicated to women customers.”
Chahal, founder of Mahila Money, acknowledges that Indian women often lack the confidence to ask for loans or make financial decisions.
“Safety means not being judged.” She added that even though data show “women are good customers with high repayment rates” the odds are against them.
Their projects made Gupta and Chahal finalists at the Alliance Hack 2021. Organized by Financial Alliance for Women (FAW), the Hackathon encouraged fintechs to innovate solutions to close gender gaps in financial services and unlock the full potential of the female economy. IFC was the first development finance institution to sponsor FAW—a members’ network of financial organizations dedicated to powering the female economy—and has provided support to FAW since 2005.
According to LXME’s Women & Power 2022 report, which surveyed 4,000 women, only 7 percent of Indian women make independent investment decisions through self-learning, and 33 percent of women do not invest at all.
Against this backdrop, LXME, India’s first financial platform for women, was created in 2020, offering tailored content, interactive workshops, and live sessions on financial planning as well as an investment platform for 160,000 apps and Facebook users. With a similar vision, Chahal previously founded SHEROES in 2014 to offer employment, entrepreneurship support, resources, and opportunities and has built a network of 24 million female users in a short period of time.
The women’s very small market represents a US$11.4 billion investment opportunity.
Solutions that focus on providing both financial and non-financial services will enable female customers to learn and earn - Wendy Werner, IFC’s Country Head for India
Even as COVID-19 hobbled economies around the world, it also prompted a huge increase in the use of mobile wallets and smartphones. In India, smartphone ownership among women increased by 10 percent from 2019 to 2020, according to the GSMA Association, which represents the interests of mobile network operators worldwide.
Given this trend, scaling up fintech solutions and platforms can potentially close the gender gap in terms of delivering financial services to women in India. “Digital technology offers the possibility to understand female customers’ needs and aspirations, enabling us to reach out to this segment,” Gupta said.
To optimize this opportunity, Chahal recently launched Mahila Money, a digital platform that offers microloans to women. Women can apply for a loan between Rs 50,000 and Rs 10,00,000 without the permission of a family member or husband. In addition, the platform provides post-loan support to customers, as many of them are new to fintech or other digital financial services.
“Women entrepreneurs present an attractive business segment with lower risk, higher profitability, and a more loyal clientele,” said Allen Forlemu, IFC Regional Director for Financial Institutions Group (FIG), Asia and Pacific. “The women’s very small market represents a US$11.4 billion investment opportunity. It’s not only the right thing to do, but also makes a business case.”
Still, for many female entrepreneurs, access to formal capital is the biggest obstacle to growth. According to IFC, the finance gap for 15 million women-owned micro, small, and medium enterprises (MSMEs) in India stands at $158 billion, and 90 percent of them don’t have access to formal financial products. “Solutions that focus on providing both financial and non-financial services will enable female customers to learn and earn,” said Wendy Werner, IFC’s Country Head for India.
Reshaping Inclusive Financial Services
To make financial markets in India more inclusive, IFC works with fintech platforms such as Mintifi to help it design products and services that can benefit more women entrepreneurs. With support from IFC, Mintifi has partnered with companies whose distribution and franchise networks are largely driven by women entrepreneurs and offered gender-smart financial services to help women-owned businesses secure financing.
“Finance is often a long-standing hurdle to the success of women-led SMEs in India,” said Anup Agarwal, Co-founder and CEO at Mintifi, “We have seen that being able to raise funds for their business has added a lot of impetus to their business needs as well as their independence.”
Eurokids is one of the businesses that benefits from Mintifi’s program. Due to lack of credit bureau records, most of Eurokids’ franchisees have very limited financing options. Women entrepreneurs running a highly successful franchises in the education space were not able to access traditional financing channels, leading them to rely on family for support.
Mintifi’s program has helped nearly 40% of Eurokids’ network get access to working capital, enabling women entrepreneurs to achieve financial independence.
On this International Women’s Day and beyond, let’s celebrate companies like LXME, Mahila Money, and Mintifi for their commitment to developing and implementing gender-sensitive solutions that bridge the gender gap, promote financial inclusion and empower women to grow their businesses.
Published on 8th March 2023