Does the Fintech Revolution Leave Women Behind?
Credit Suisse is supporting Women's World Banking in their quest to address gender balance in finance.
The financial services sector has seen an unprecedented upswing in innovation in recent years. Non-banks, ranging from telecommunication to financial technology (short "fintech") companies, are breaching former banking strongholds and are defining the standard of digital banking with their technological innovations. By targeting key banking segments such as payments and (short-term) lending those companies are pushing banks to follow suit and digitize their services to offer a more customer-centric experience.
The introduction of digital financial services has dramatically increased the potential for product outreach resulting in a significant uptick in involvement from a client base that previously had no access to financial products and services. By lowering financial inclusion barriers such as accessibility, security, privacy, convenience and costs, digital services have helped reduce the global "unbanked" population by 5 percent to 20 percent from 2011 to 2014. According to the World Bank's Global Findex Database, this accounts for 700 million more people who were able to open a bank account. While this result reflects the great importance of the digitalization of the financial services industry the disparities however remain for women, more specifically women at the base of the pyramid, as the gender gap for "unbanked" people remains unchanged at 9 percent in the developing world.
Gender Diversity Still Matters
Why has the gender gap not closed? Research suggests that there is not one core reason but a combination of factors that has challenged the integration of women into the financial services sector as clients and employees. At the base of the income pyramid in Emerging Markets these issues can be missing a regular source of income, lower literacy levels, the lack of official identification documents, and/or cultural restraints.
Women on average tend to be better savers, more loyal clients and are less likely to default on due payments.
Leaving low-income women's financial needs unmet and missing out on female clients represents a missed business opportunity. Market research performed over the last 40 years by our partner, Women’s World Banking, has found that – compared to men –women on average tend to be better savers, more loyal clients and are less likely to default on due payments. Since both fintech companies and traditional banks seek to grow their customer base, it would be unwise to leave this potential client base untapped. Therefore, digitalization and the current fintech products and services have to be adapted to reflect women's needs to overcome the barriers to the financial inclusion of women.
To tap into the female market, companies have to take into account that women have distinct preferences and uses of financial services and products. For example, women prefer services that prioritize convenience and ease of use. They are also more likely to use financial products to save for their children’s education and to develop their businesses. Based on the past and current gender gap in the financial services industry (e.g. according to the report "The CS Gender 3000: The Reward for Change", 16.9 percent of global financial services managers are female) it is fair to assume that financial products have traditionally largely been designed by men and with male customers in mind. The assumption that women would adopt those services in time disregards the way women approach and use those services. Research performed by Women's World Banking suggests that financial services, including loans, savings accounts and health insurance offerings, that effectively meet women's needs do also appeal to men.
Diamond Bank's BETA Savings account is for example such a product that is specifically designed to meet women's preferences/needs. Women's World Banking worked together with Diamond Bank to create a product that addresses the challenges, which market women in Nigeria are facing when getting formal financial access. Research revealed that market women in Nigeria had limited possibility to apply for legal documentation, saved money in small amounts and had difficulties leaving their place of business to transact at a branch or ATM. To adjust the BETA product to the women's needs, the Know Your Customer requirements for the BETA account were simplified through the removal of minimum balance or fees and the bank sent banking agents to visit the women at their market stalls to allow them to open accounts, make deposits or withdrawals, through the agent's mobile phone.
In order to achieve a higher female participation in senior management positions, we need more than new policies and quotas, we need a cultural change
Mickey Doshi, CEO of Credit Suisse India
From Women for Women
In order to successfully design a product for women, it is important that women are involved in an early stage of the process. However, the percentage of women holding influential positions in the financial services sector is still very low. Released in 2016, the Credit Suisse Research Institute "The CS Gender 3000: The Reward for Change" states that in the analyzed financial businesses only 11.6 percent of management positions were occupied by women. It is therefore imperative for financial services companies to increase the number of female leaders. This will have a positive impact on how it serves and grows the number of female clients. Additionally, it will help closing the gender gap in financial inclusion.
To build capacity and strengthen female positions in (micro-) finance institutions in developing and developed markets, Credit Suisse is collaborating with Women's World Banking through the Microfinance Capacity Building Initiative (MCBI) on their flagship "Leadership and Diversity for Innovation Program". The program aims at training female high-potential employees of Microfinance Institutes and their supervisors in leadership and gender diversity in a year-long accompanied program that includes two in-class seminar weeks. Each female employee and her supervisor are using the taught knowledge to develop female tailored services and products that will help cater to female clients.
While the program and partnership with Women's World Banking is global, Credit Suisse uses the opportunity to advocate its key messages around the globe, including in India where the program participants are hosted during a week of in-class sessions. Mickey Doshi, CEO of Credit Suisse India believes that "to achieve a higher female participation in senior management positions, we need more than new policies and quotas, we need a cultural change and have to involve all our employees to achieve this. 'The CS Gender 3000: The Reward for Change' shows once again that the inclusion of female leaders in organizations is crucial and pays off financially. As a financial industry leader we want to learn from other organizations around the world and we are proud to support the program with Women's World Banking."
- Women's World Banking (2015): Digital Savings: The Key to Women's Financial Inclusion?
- PriceWaterhouseCoopers (2015): Banks taking a quantum leap through digital, 9th CII BANKing TECH Summit.
- Ernst & Young (2015): Empowering women: uncovering financial inclusion barriers, Steering trends to serve the goal.
- The Global Findex Database 2014
- Iskenderian, Mary Ellen (2015): Why financial inclusion for women is critical for shared prosperity, WEF,
- The CS Gender 3000 Report (2016)