“There is a need to develop the capacity to collect and use gender-disaggregated big data on clients to build the business case for women, and in turn to inform their market proposition and client segmentation strategy.” – Cambodian National Financial Inclusion Strategy 2019-2025
Access to accurate and diverse data is the backbone of an equitable credit system. It ensures fair and equitable credit assessments for all applicants—regardless of income level or gender—and lays the foundation for inclusive financial opportunities.
To address the barriers women face in accessing credit, Women’s World Banking partnered with Credit Bureau Cambodia (CBC), the country’s only credit bureau, to investigate how data and credit assessments can be leveraged to create a more inclusive ecosystem. Our study aimed to explore the following:
- How can the financial sector generate and collect more accurate gender-disaggregated data and scores to ensure better inclusion of qualified women loan applicants, especially those on low incomes, and protect borrowers from taking multiple lines of credit across formal and informal sectors?
- How can the credit ecosystem evolve to become more transparent and equitable? In other words, what can be done towards shaping this infrastructure such that it might work better for women?
Our approach included a deep dive into the current practices of financial services providers (FSPs), examining their impact on both women applicants and how providers perform credit assessments. We also covered several other key sector stakeholders, including regulators and policy makers, sector support institutions as well as women loan applicants themselves.
A Unique and Challenging Financial Inclusion Landscape
“Remarkably, women are playing an important role in economic and social development. In Cambodia, SMEs account for around 98% of all businesses, contributing around 58% to the GDP and providing around 73% of total jobs. More than that, 61% of these MSMEs are operated and owned by women,” according to H.E. Kry Nallis, Secretary of State at Cambodia’s Ministry of Women’s Affairs
Credit has a crucial role as one of a range of products relevant to advancing women’s financial inclusion. Particularly in Cambodia, it is often the first financial service, disbursed mainly by microfinance institutions, for women micro-entrepreneurs.
The high uptake of credit, lower extent of account ownership, and an entrenched co-borrower system – where 90% of loans are joint credit obligations – make Cambodia a unique case when discussing financial inclusion. Another differentiating feature of the local landscape is that the proportion of female-led businesses compared to male-led is one of the highest in Southeast Asia.
While 76% of the credit was attributed to rural areas where disbursement was balanced between men and women, this feature is also consistent with the general demographics of Cambodia where approximately 74% of the population live in rural areas.
Our analysis of CBC’s data confirmed that only 77% of loans are secured, highlighting that approximately one-quarter of Cambodia’s loans are by contrast unsecured, most likely coming from Cambodia’s competitive microfinance industry, a sector that serves predominantly women customers. On the other hand, 97% of the total system loan balance from National Bank of Cambodia-regulated entities are secured, accentuating how SME banking products have room for development in Cambodia. This situation in turn presents a specific challenge for the country’s many women-owned enterprises as they grow.
These businesses predominantly operate in retail trading, food services, and fashion and crafts, sectors that often do not require large capital equipment that can be used as collateral for loans. While unsecured microfinance credit is available for small loans, the co-borrower practice means that bank credit is often used to support the husband’s business first, and women must rely either unsecured microfinance credit or on bootstrapping for their funding.
CBC’s position as the country’s sole credit bureau lends it far-reaching influence within the system, particularly for enabling fair and affordable borrowing. Juxtaposing this characteristic with the fact that equitable access to credit is paramount to female financial inclusion, it follows that strengthening credit assessment and reporting models for both CBC and the sector at large would naturally forge a more accurate and more equitable formal lending environment.
Overall, the FSPs interviewed highly valued the data provided in CBC’s credit reports for their credit risk analysis, citing a strong reliance on the reporting of prior defaults and credit write-offs, number of recent loan inquiries, and overdue payments. On the other hand, since fewer than half of Cambodia’s population engages in formal financial services, CBC estimates that approximately 20% of credit profile inquiries have no existing CBC credit record and are for first-time borrowers or borrowers with limited credit histories, known as thin-file customers.
While CBC’s credit reports and scores play a vital role in the credit ecosystem, particularly for medium- and large-sized businesses, FSPs serving low-income women must rely on internal credit scoring models to evaluate first-time or thin-file borrowers.
Additionally, although several FSPs actively collect gender-disaggregated data—a significant step forward—using this data for decision-making and product design is not yet standard practice across the industry.
In the interests of transparency, CBC actively promotes on social media information on how it uses credit data for credit reports and scoring. CBC also offers consumer-facing avenues through which customers can access their credit reports free of charge as well as learn more about CBC’s credit scoring methodology. However, financial literacy is still nascent. In our research, twenty-eight of the thirty women interviewed stated they did not know they could see their credit scores through CBC’s user channels.
These insights helped us build a picture of the prevailing ecosystem, leading us to suggest several action areas for further progress.
Varied Recommendations, But Common Themes
Women’s World Banking and CBC research looked at how the sector’s three key stakeholders – policy makers and regulators, CBC itself and FSPs – can contribute to more equitable access to finance. The common threads uniting our proposals for the stakeholders are expanded and more accurate data collection and the application of a gender lens.
For policymakers and regulators, we recommend six action steps:
- Improve the interoperability of data among CBC, non-bank FSPs, telecom and utility companies to facilitate data sharing; as such, the National Bank of Cambodia must tackle issues which inhibit sharing across ministries and government authorities.
- Require data sharing with CBC by entities regulated by the Non-Bank Financial Services Authority (NBFSA) and their use of CBC data in their credit risk decisions.
- Enforce common definitions of MSME loans based on loan purpose rather than size.
- Mandate use of gender-disaggregated data in FSP’s decision making and product design.
- Establish a unique digital government ID to improve tracking and use of financial services.
- Strengthen digital financial capability.
CBC can take four action steps:
- Accelerate work to obtain access to alternative data for incorporation into its credit reports and for improvement of K-Score accuracy.
- Increase public communication of information on the general methodology for K-Score and predictive default rates.
- Continue improvements in data quality through engagement with FSPs to ensure the accuracy of their data inputs.
- Apply a gender lens when designing financial capability modules and interactive tools.
FSPs should:
- Apply a gender lens for all decision making and product design.
- Share at the industry level successful approaches to leveraging alternative data.
- Conduct error analysis and improve the quality of data inputs.
High-Impact Recommendations
Our recommendations focus on creating a fair and equitable credit ecosystem, with three high-impact actions:
- Enhance Data Sharing: Establish mechanisms for NBFSA-regulated entities to share data with CBC. This improves credit assessments by banks and non-bank financial institutions, ensures all credit risks are reflected in applicants’ profiles, and prevents over-indebtedness, particularly for low-income customers.
- Apply a Gender Lens: FSPs should not only collect gender-disaggregated data but also leverage it in designing products, delivery processes, and educational materials for women borrowers. Including female perspectives at every stage is key. CBC sets a strong example, with 54% of staff and 40% of management being women, and its Data Analytics Department achieving gender parity. “We believe in leading by example,” says CBC CEO Sothearoath Oeur.
- Accelerate Alternative Data Use: Expand and diversify alternative data sources—such as utilities, telecom usage, and transaction histories—to strengthen credit reporting. This helps thin-file individuals with limited credit histories gain access to credit and improves the predictive power of tools like the CBC K-Score.
As one FSP representative observed, “Our customers are paying their utility bills – we know that they are paying. So, based on their payments, we can [provide] loans for those who are paying utility bills”.
Summing Up – It’s All To Do with Cooperation and Disaggregated Data
Ultimately, fostering cooperation among stakeholders is crucial for achieving the goal of affordable credit in a transparent, accessible credit ecosystem that offers entrepreneurial and personal opportunities for individuals and households, especially low-income women. We must emphasize the critical importance of collecting and utilizing gender-disaggregated data in decision-making and the design of FSP products.
A better ecosystem for women is a better ecosystem for everyone. When products, policies, and systems are designed with women in mind, all of society benefits.
