In the second in a series of blog contributions throughout the year to complement the European Microfinance Award 2022 on 'Financial Inclusion that Works for Women', Inez Murray from the Financial Alliance for Women discusses the opportunity represented by the female economy and how financial institutions can best serve it. She overviews the business case for serving the women’s market by highlighting aggregate performance from the Financial Alliance for Women’s members.
Although a lot of progress has been made, women are still disproportionately excluded from the formal financial system and make up more than half of the world’s unbanked population. There is also a significant opportunity to serve those women that are banked, more deeply. The female economy is a bigger than the GDP of China and India combined, but the financial services industry is still only beginning to unlock its full value.
Financial institutions can positively impact their bottom lines and build a loyal customer base by serving the women’s market well. Women are controlling more of their own wealth and influencing most household purchasing decisions including where to bank. They are creating new businesses at greater rates than men; over a third of the world’s businesses are owned or operated by women. Women exhibit strong behaviors as customers—they are great savers and a reliable source of liquidity, are more likely to pay back their loans, and are loyal customers who stick with institutions that treat them well.
We know that most women are underserved by their financial services providers and many don’t have access to formal financial services at all. Those that do are largely dissatisfied. Women often want different experiences with their financial services providers than men do. They are careful decision-makers and prefer to have more information and more time to decide on significant financial actions but are more open to financial advice. They self-report less financial know-how and so want business and financial education. They are less networked and want to be connected. Above all, they want a relationship with their financial services provider, one that solves for their lifecycle needs. These preferences require a customer-centric approach that allows them to thrive and their businesses to grow.
Financial services providers are data-driven organizations, but not always when it comes to women. Collecting quality gender data at each stage of the sales funnel is necessary for designing effective financial products and services. It is also necessary if regulators are to design truly gender intelligent financial inclusion policies.
The Opportunity – A Win-Win Approach
Financial Alliance for Women creates platforms where members can learn from each other’s experiences, publish proprietary data and research, advocate for global policy change and equip our members to design women-centered products, services, and strategies. Together, over 80 Alliance members are serving more than 66 million customers through providing $156B in credit while employing 144,000 women.
Learning from peers works. Nearly half the Financial Alliance for Women members have grown their women’s markets programs to the intermediate or advanced stage since joining the Alliance. Part of this is their ability to report sex-disaggregated data on their performance with women customers on a yearly basis.
Our latest report shows very positive trends:
- Average loan sizes and deposit balances for women had reached 80 percent of men’s, far higher than their relative size in years past.
- Even as their loans sizes grew relative to men’s, women customers continued to pay back loans at greater rates, a fact we have seen each year regardless of loan type.
- Over 60 percent of retail and business banking revenue comes from women-centered financial offerings.
- The average non-performing loan rates are 1.5 percent for women clients across all segments – 53 percent lower than the rate for men.
All proof that serving women with the holistic value proposition they need to succeed—access to finance, information, education, networking and recognition—is a win-win.
Let’s Build on This Momentum
We hope these insights encourage financial services providers around the world to emulate our Members and become the providers of choice for women. Whether you’re a financial services provider executive or work to promote financial inclusion, there are many ways you can get involved.
- Become a member of the Alliance and take advantage of our global clearinghouse for best practices and a unique platform for peer learning.
- Check out our resources library, which offers a wealth of information on how financial institutions can better serve the market.
- Spread the word by reposting to your social networks about the value of the Women’s Market.
Only through action will better financial services for women become a reality.