By all appearances, this is an era of growth for savings accounts designed for low-income women. While the microfinance industry was built on credit, in recent years we have seen a shift toward broader financial inclusion through a range of products, including savings.
There are two main reasons for this: first, many microfinance institutions have transformed into regulated financial institutionsand are able to offer savings to their clients; and second, some commercial banks have realized the sizable market opportunity of the under-banked and are developing products to serve this segment. But how well are these savings products actually meeting the needs of women?
Our updated Women’s World Banking publication, “Gender Performance Indicators 2.0: How Well Are We Serving Women?” is designed to help financial institutions more effectively measure their gender performance along a range of products, including savings. This publication offers a timely update to our previous Gender Performance Indicators manual, released in 2013, in which we paved the way by helping credit-led institutions assess how well they were serving low-income women. In the update, we describe three main areas of focus:
1. Who are our savers?
Segmentation of clients by gender is one of the most basic indicators that an institution can track, yet it’s surprising how few actually do this. Banks need to keep accurate data on the number of women’s savings accounts, as well as on women savers as a percent of total savers (as some clients have multiple accounts). Institutions must also track new women savers as a percent of total new savers, to measure the effectiveness of outreach to women.
2. How much are women saving?
It is also crucial to track savings portfolio by gender, and look at trends over time. Discovering the growth rate of savings accounts held by women will help the institution to understand who is contributing to its deposit base, and to design products better suited to its women clients.
3. How actively are women actually using their savings accounts?
Institutions must also measure savings activity, and look at the size and frequency of deposits and withdrawals, by gender. This will help create a picture of how engaged, and valuable, women clients are to an institution. At Diamond Bank in Nigeria, we found that while women tend to deposit less frequently and in smaller amounts, they also withdraw less frequently—and over the longer term they save more of their deposits than men (24% as opposed to 19%, respectively).
Further, these indicators can help financial institutions make the business case for serving low-income women. It is expensive to open accounts for people who aren’t going to use them, and we know the amount poor people can save is relatively small. But what we at Women’s World Banking have found is that once institutions tap into the market of low-income women, and serve it effectively with savings, they form long-term relationships that become more profitable over time. As financial institutions understand their clients’ behavior, they can offer more and better products. For example, Diamond Bank entered the low-income market with a specially designed savings account, and based on the information tracked, were able to develop both a commitment savings and an express credit product– ensuring a sustainable value proposition for the low-income segment.
The increase in the number of financial institutions offering savings products targeted to low-income women is welcome to be sure. This development is a significant milestone in the financial inclusion space, particularly for Women’s World Banking which has been advocating for over 35 years the value of the women’s market and the need for a full suite of financial products to effectively serve this market. But we welcome it with a note of caution—if not designed specifically to address the needs of low-income women, these products risk being unappealing and irrelevant to the very people they were intended to reach. The gender performance indicators can do much to keep financial institutions on track and give them hints on finding their way back, if they happen to lose their way.
