Nearly one billion women remain outside the formal financial system, unable to participate in or benefit from financial growth and prosperity. Despite advances for women in recent decades, the gender gap in financial inclusion stubbornly remains at 9% across the emerging markets, requiring greater efforts from financial service providers and policymakers to level the playing field in access to finance.
In her recently released book, There’s Nothing Micro about a Billion Women: Making Finance Work for Women, Mary Ellen Iskenderian, President and CEO of Women’s World Banking, provides a comprehensive look at why women’s financial inclusion matters, arguing that it’s more than just a social good; in fact, closing the gender gap in financial inclusion also boosts business and benefits economies.
In this Q&A installment, Mary Ellen outlines the fundamentals and far-reaching benefits of financial inclusion, the concrete actions financial service providers can take to close the gender gap, and the role of Women’s World Banking in championing inclusive finance.
Q: There’s Nothing Micro about a Billion Women: Making Finance Work for Women explores the importance of closing the gender gap in financial inclusion. To start us off, what is meant by “financial inclusion”? Why is it that women are more likely to be financially excluded?
To be financially included, individuals and businesses would have access to the full range of affordable financial products and services they need, such as payments, savings, credit, and insurance. By this definition, one-third of the world’s adults—1.7 billion—are financially excluded, and more than half of them are women in emerging markets.
When we discuss financial inclusion and what it means to be fully included in the formal economy, we shouldn’t focus solely on measuring access. We should be asking whether people have the knowledge and confidence to actually use financial products. With the spread of digital financial services, having the appropriate technology, such as an internet-enabled smartphone, has become increasingly essential, but women in low- to middle-income countries are 18% less likely than men to own one. Additionally, we should ensure that people are not treated in a predatory manner by financial service providers and charged excessive fees and usurious interest rates.
Unfortunately, financial exclusion most often impacts women, particularly those of color or low-income status. Compared to men, women face more barriers, ranging from restrictive social and cultural norms to discriminatory laws to low levels of financial literacy, which prevent them from accessing the formal financial system. Another major barrier to women’s financial inclusion is an overall lack of products and services that are specifically designed to meet women’s unique needs.
Q: You describe the transformative impact of financial inclusion on women’s lives, drawing from the real-life stories of women clients you’ve met. What are some of the positive changes you’ve witnessed as a result of women gaining greater access to financial products and services?
As I’ve seen from so many women clients, financial inclusion offers a path towards transformative change and empowerment on multiple levels. Material changes in women’s circumstances, such as increased household income and assets, are an immediate, and more obvious, outcome. Many may not realize, though, that the ability to access and use financial resources also brings about cognitive changes, like improved knowledge, skills, and awareness; relational changes, like increased decision-making in their businesses and households; and perceptual changes, like greater self-confidence and a sense of self-worth.
When women are economically empowered, they have agency over their lives. For some women, this means they can start a business or they’re able to escape domestic abuse. In other cases, women are more likely to vote or run for public office because they’ve been financially included.
Q: Looking at the bigger picture, what are some of the other benefits of women’s financial inclusion, beyond empowering women?
Women’s financial inclusion has broader systemic impact, extending beyond the circumstances of any individual woman. For one, it yields undeniable societal returns. When women have access to and control over financial resources, they are more likely than men to invest in the health and education of their families, which improves their earning potential and creates an intergenerational multiplier effect.
Financial inclusion can also drive economic growth. The International Monetary Fund (IMF) has made downward revisions to their economic growth projections for 2022, decreasing from 4.9% in October 2021, to 4.4% in January of this year, to 3.6% just last month. While this slowdown can be attributed to several factors, closing the gender gap in financial inclusion could compensate for that shortfall. In fact, when given equal footing as men and able to participate equally in the labor market, women can be an economic force—potentially adding as much as $28 trillion to the global GDP by 2025.
Q: In the book, you argue there’s a strong business case to be made for women’s financial inclusion. What do financial service providers stand to gain from serving women customers? What has kept them ensuring that finance is more equitable and inclusive?
In overlooking the women’s market, financial service providers are missing out on an incredibly lucrative business opportunity. To illustrate: Oliver Wyman estimated back in 2019 that financial service providers actually stand to gain $700 billion in annual revenue by doing nothing more than providing financial services to women at the same rate they’re provided to men. To give just a few examples, if there were gender parity in financial services there could be $2 trillion in new bank deposits and $50 billion in additional life insurance premiums.
Women entrepreneurs, in particular, remain a profitable, but underserved, market segment. Across the globe, there are 12 million women-owned micro, small, and medium enterprises (MSMEs), more than half of which are in the developing world; however, a majority—70%—of these businesses cannot access adequate growth capital. If financial institutions were to provide these capital-starved, women-led businesses with credit at the same rate as men, they could generate $30 billion in additional annual revenue.
Women also tend to be more loyal customers for financial service providers; for example, in developed markets, 61% of female clients stay with a bank more than five years compared with 46% of male customers. Moreover, women typically have better loan repayment rates, are less likely to bounce checks, and tend to be longer-term savers than men.
Although there’s a compelling business case for women’s financial inclusion, the financial industry hasn’t yet seized the opportunity. If financial service providers shifted their mindset and started to view unbanked and underserved women not as charity cases, but as potential customers, they could tap into a sizeable and rewarding market of small business owners and purchasers of financial products and services.
Q: What can financial service providers do to make sure that finance works for women?
 Financial service providers have been slow to design and market products that meet women’s needs. In many cases, financial products and services have been designed by men for men; in others, they’ve been designed to be superficially appealing to women—also known as “pinkwashing”—or gender neutral. To better serve women customers, though, financial service providers need to employ women-centered product design. At the end of the day, finance won’t work for women if it doesn’t take into account women’s needs, capabilities, and aspirations.
A second recommendation to make finance more inclusive would be for financial service providers to collect sex-disaggregated data, as a way to improve outreach to women customers and drive business decisions. Most governments throughout the developing world do not require financial service providers to report this data. As mentioned earlier, the women’s market is a sizeable one, but without sex-disaggregated data, women customers will continue to remain invisible.
Lastly, financial service providers should invest in gender diversity in their staff, leadership and governance, which not only plays a critical role in advancing women’s financial inclusion, but is also good for business. Companies with gender diverse teams are able to reach more women as customers, can better acquire and retain talent, and boost innovation. Moreover, gender-diverse businesses report greater, and more consistent, sustainable profits.
Q: What is Women’s World Banking doing to drive impact in the financial inclusion space and address the needs of unbanked, underserved women?
At Women’s World Banking, we see financial inclusion as a stepping stone to women’s empowerment. For more than 40 years, we’ve championed inclusive finance, designing, scaling, and investing in gender-driven policy change, product solutions, and workplace leadership programs to create economic stability and prosperity for low-income women across the globe. Together with financial service providers, policymakers, investors, and donors, we turn insights into action and bring women-focused financial solutions to market.
To date, we’re well on our way to helping 100 million unbanked and underserved women by 2027, having provided 14 million women with financial access in emerging markets and built a network of financial service providers who reach 138 million women.
