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| How to address the stubborn gender gap in banking across the globe | How to address the stubborn gender gap in banking across the globe |
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| Women who open a bank account gain greater economic empowerment, save more for things such as health emergencies and their children’s education, and purchase more nutritious food. So says Leora Klapper, a lead economist in the Development Research Group at the World Bank. Yet, while nonprofits, banks, and researchers have made serious strides, the data convincingly (and discouragingly) still shows far fewer women than men own a bank account and far fewer women than men use formal credit. | Women who open a bank account gain greater economic empowerment, save more for things such as health emergencies and their children’s education, and purchase more nutritious food. So says Leora Klapper, a lead economist in the Development Research Group at the World Bank. Yet, while nonprofits, banks, and researchers have made serious strides, the data convincingly (and discouragingly) still shows far fewer women than men own a bank account and far fewer women than men use formal credit. |
| The numbers show the truth. The 2011 Global Findex Data (which Klapper co-authored) reports 97% of adults in the United Kingdom possess accounts and equally between men and women. In other developed countries, 90% of men and women possess a bank account. In Nigeria, however, where 33% of adults possess an account, only 26% of account owners are women. Even within the richest 20% of earners in developing countries, a striking 9% gender gap in bank account ownership remains. | The numbers show the truth. The 2011 Global Findex Data (which Klapper co-authored) reports 97% of adults in the United Kingdom possess accounts and equally between men and women. In other developed countries, 90% of men and women possess a bank account. In Nigeria, however, where 33% of adults possess an account, only 26% of account owners are women. Even within the richest 20% of earners in developing countries, a striking 9% gender gap in bank account ownership remains. |
| Much is at stake. The G20 2011 women report shows while 8 to 10 million formal women-owned small and medium enterprises (SMEs) in emerging markets exist (representing 31 to 38% of all SMEs in emerging markets), women-owned enterprises grow far slower than male-owned businesses. | Much is at stake. The G20 2011 women report shows while 8 to 10 million formal women-owned small and medium enterprises (SMEs) in emerging markets exist (representing 31 to 38% of all SMEs in emerging markets), women-owned enterprises grow far slower than male-owned businesses. |
| My husband can't drink cement. | My husband can't drink cement. |
| Studies also consistently show women, once armed with a bank account, feel economically empowered, Klapper says. “Women in the Philippines are more likely than men to have an account. Otherwise, from Ghana, Sri Lanka, to India, remarkably, we hear the same story – women want their money safely outside of the house to avoid their family borrowing or stealing their earnings. A bank account encourages women to save and helps build a relationship to leverage credit so women entrepreneurs can start or grow a business.” | Studies also consistently show women, once armed with a bank account, feel economically empowered, Klapper says. “Women in the Philippines are more likely than men to have an account. Otherwise, from Ghana, Sri Lanka, to India, remarkably, we hear the same story – women want their money safely outside of the house to avoid their family borrowing or stealing their earnings. A bank account encourages women to save and helps build a relationship to leverage credit so women entrepreneurs can start or grow a business.” |
| Barriers to entry | Barriers to entry |
| Mary Ellen Iskenderian who heads Women’s World Banking, a nonprofit working with banks in developing countries to bridge the gender gap, says part of their work is convincing financial service companies that women are indeed excellent clients. “With small tweaks, specific to design and marketing, banks can easily tailor their products to women,” she says. | Mary Ellen Iskenderian who heads Women’s World Banking, a nonprofit working with banks in developing countries to bridge the gender gap, says part of their work is convincing financial service companies that women are indeed excellent clients. “With small tweaks, specific to design and marketing, banks can easily tailor their products to women,” she says. |
| Related: Hillary Clinton criticizes Silicon Valley's gender gap during tech summit | Related: Hillary Clinton criticizes Silicon Valley's gender gap during tech summit |
| Iskenderian adds the regulatory barriers frequently preventing women from taking out a loan in their own name, or owning a home, also mean women frequently lack the correct collateral to put against a bank loan. Additionally, in developing countries, women-owned enterprises are typically small enterprises (versus medium to large ones,) which risk-averse banks typically view as non-viable investments. “This problem connects directly to the kinds of small enterprises women tend to go into: service businesses, food-related businesses, garment or textile manufacturers,” she says. | Iskenderian adds the regulatory barriers frequently preventing women from taking out a loan in their own name, or owning a home, also mean women frequently lack the correct collateral to put against a bank loan. Additionally, in developing countries, women-owned enterprises are typically small enterprises (versus medium to large ones,) which risk-averse banks typically view as non-viable investments. “This problem connects directly to the kinds of small enterprises women tend to go into: service businesses, food-related businesses, garment or textile manufacturers,” she says. |
| The G20 Women’s Report cites other nontrivial logistical barriers – lack of transportation, poor quality roads, and severe time restraints (from juggling family chores, children, and their business) as restricting women from financial services. Klapper and coauthors’ research shows women in countries where there are laws preventing women from inheriting property, divorcing, and disobeying their husband are less likely to own an account, save, or borrow. | The G20 Women’s Report cites other nontrivial logistical barriers – lack of transportation, poor quality roads, and severe time restraints (from juggling family chores, children, and their business) as restricting women from financial services. Klapper and coauthors’ research shows women in countries where there are laws preventing women from inheriting property, divorcing, and disobeying their husband are less likely to own an account, save, or borrow. |
| Cultural forces also prevail. The G20 report cites Solomon Island women hiding their crops and keeping their business deliberately small, or spread thinly across multiple enterprises to avoid their husband confiscating their earnings. (Iskenderian hears similar stories in every country she’s visited with Women’s World Banking, including the US.) | Cultural forces also prevail. The G20 report cites Solomon Island women hiding their crops and keeping their business deliberately small, or spread thinly across multiple enterprises to avoid their husband confiscating their earnings. (Iskenderian hears similar stories in every country she’s visited with Women’s World Banking, including the US.) |
| And Klapper notes ample research in Sri Lanka, Ghana and other countries shows giving cash grants to women-owned micro and small businesses doesn’t help profits or survival rates. In rural Ghana, women lectured Klapper on the American style husband-and-wife joint bank ownership being “a terrible idea”. One woman showed Klapper a half-built structure opposite her window. Every week she gave a builder a few dollars to build more of the structure, reasoning: “My husband can’t drink cement.” | And Klapper notes ample research in Sri Lanka, Ghana and other countries shows giving cash grants to women-owned micro and small businesses doesn’t help profits or survival rates. In rural Ghana, women lectured Klapper on the American style husband-and-wife joint bank ownership being “a terrible idea”. One woman showed Klapper a half-built structure opposite her window. Every week she gave a builder a few dollars to build more of the structure, reasoning: “My husband can’t drink cement.” |
| Bright spots on the horizon | Bright spots on the horizon |
| Klapper pins some hopes on mobile money and service accounts in East Africa as showing incredible potential for sharing financial services. Still 300 million fewer women than men with low and middle incomes subscribe to mobiles, according to a GSMA Women and Mobile report with the Cherie Blair Foundation for Women. Meanwhile, 9 out of 10 women surveyed reported feeling safer (and more secure/hopeful financially) because of mobiles. | Klapper pins some hopes on mobile money and service accounts in East Africa as showing incredible potential for sharing financial services. Still 300 million fewer women than men with low and middle incomes subscribe to mobiles, according to a GSMA Women and Mobile report with the Cherie Blair Foundation for Women. Meanwhile, 9 out of 10 women surveyed reported feeling safer (and more secure/hopeful financially) because of mobiles. |
| With Women’s World Banking, Nigeria’s Diamond Bank launched a savings account so women in Nigeria, where 73% of women have never used a financial product, can open a savings account using mobile phones. Women’s World Banking hosted Diamond Bank executives to Peru where women entrepreneurs and bank executives showed how removing high ATM usage fees builds trust with women and a loyal client base. In the first year, more than 132,000 new users opened bank accounts. | With Women’s World Banking, Nigeria’s Diamond Bank launched a savings account so women in Nigeria, where 73% of women have never used a financial product, can open a savings account using mobile phones. Women’s World Banking hosted Diamond Bank executives to Peru where women entrepreneurs and bank executives showed how removing high ATM usage fees builds trust with women and a loyal client base. In the first year, more than 132,000 new users opened bank accounts. |
| As part of this growth, more banks now send agents to the marketplace to set up accounts for women for savings and deposits. This system challenges the unregulated, frequently corrupt savings services popular among the unbanked in Africa, such as the Sou Sou and Rousca services in Nigeria. | As part of this growth, more banks now send agents to the marketplace to set up accounts for women for savings and deposits. This system challenges the unregulated, frequently corrupt savings services popular among the unbanked in Africa, such as the Sou Sou and Rousca services in Nigeria. |
| Additionally, digital payments offer women more privacy and security. Klapper and coauthors’s new pilot with a Bangladeshi factory shifting from cash to digital payments studies employees’ job retention, productivity and their ability to budget their pay. (Eighteen percent of profiled employees skipped meals close before payday.) In the US, a recent report showed a drop in women-targeted crime after government payments went digital. | Additionally, digital payments offer women more privacy and security. Klapper and coauthors’s new pilot with a Bangladeshi factory shifting from cash to digital payments studies employees’ job retention, productivity and their ability to budget their pay. (Eighteen percent of profiled employees skipped meals close before payday.) In the US, a recent report showed a drop in women-targeted crime after government payments went digital. |
| Related: Workers in the informal economy around the world - in pictures | Related: Workers in the informal economy around the world - in pictures |
| Big business and MBA programs are also circling the wagon to help close the gap, with more people delighting in applying their work talents and creativity to something larger. A team from Credit Suisse is working with Women’s World Banking on potential alternative bank lending structures for SMEs. Most leading business schools today offer MBA project-based classes helping improve the way those living in the base of the pyramid live, and many focus on financial inclusion for women entrepreneurs. Meanwhile, the Findex data and other subsequent surveys have inspired several other broader, gender disparity surveys. | Big business and MBA programs are also circling the wagon to help close the gap, with more people delighting in applying their work talents and creativity to something larger. A team from Credit Suisse is working with Women’s World Banking on potential alternative bank lending structures for SMEs. Most leading business schools today offer MBA project-based classes helping improve the way those living in the base of the pyramid live, and many focus on financial inclusion for women entrepreneurs. Meanwhile, the Findex data and other subsequent surveys have inspired several other broader, gender disparity surveys. |
| Shifting the needle | Shifting the needle |
| Yet much work and research lies ahead. For instance, Women’s World Banking’s research agenda addresses how a woman’s business (and livelihood) changes once she opens a bank account, and what changes for her community. Meanwhile, the World Bank will publish its 2014 Findex data this April showing updated insight into women’s ownership and use of accounts. | Yet much work and research lies ahead. For instance, Women’s World Banking’s research agenda addresses how a woman’s business (and livelihood) changes once she opens a bank account, and what changes for her community. Meanwhile, the World Bank will publish its 2014 Findex data this April showing updated insight into women’s ownership and use of accounts. |
| “The gender difference in the way money is dealt with and managed is stressful,” Iskenderian admits. “But ultimately, women all over want to know they have extra for a rainy day, and money solely in their control. That’s what we all hope our product development, financial education and empowerment efforts will achieve.” | “The gender difference in the way money is dealt with and managed is stressful,” Iskenderian admits. “But ultimately, women all over want to know they have extra for a rainy day, and money solely in their control. That’s what we all hope our product development, financial education and empowerment efforts will achieve.” |
| D G McCullough is a branded content writer, editor and writing professor based in North Carolina. | |
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