Can digital financial services improve Women’s Economic Empowerment?

by 08th May 2017
A woman member of a savings group in Kenya A woman member of a savings group in Kenya

The number of women in the world who still lack access to formal financial services stands at 1 billion. While this figure is going down, the discrimination that women face compared to men, in terms of their access to and control over loans, savings and bank account services, continue to hold women back. If we are to see this 1 billion figure drop down to zero, then private sector organisations, governments and civil society organisations must work together to tackle the barriers slowing up progress, and invest in solutions to target women’s equal inclusion in the formal financial arena.

Later this month, I’ll be headed to Bangkok to attend the SEEP Network’s Learning Forum on Women’s Economic Empowerment where I will speak about CARE International’s experiences of utilising Digital Finance, as part of our efforts to accelerate access to financial services for the world’s poorest and most marginalised women.

What does Digital Finance offer for women?

Digital Finance means delivering financial services through technological innovations (for example, via mobile money) and can provide a platform for the provision of other services, such as credit, insurance, savings and even financial literacy.

Digital Finance creates an opportunity that is convenient, flexible and secure. Irrespective of end users’ roles, tasks or activities, a wide range of digital products can be accessed anywhere and at any time and, through the PIN requirements, these products remain secure. This is particularly pertinent for women, given that more often than not – in those communities (the majority of which are rural) which lack access in the first place – it is women who have more restrictive movements compared to men.

It is CARE’s experience that the effect of increased uptake of digital financial products by women creates a higher percentage of end users with an empowered sense of self-dignity, an appetite to save, and to ultimately gain more decision-making authority, both as individuals and inside the household.

What are some of the challenges in creating Digital Finance solutions for women?

Unsurprisingly, perhaps, several barriers currently exist when it comes to rolling out larger scale Digital Finance initiatives for women. These can be broken down across the following areas:

  • Supply side – It remains the norm that maximising profits and minimising costs are the two most important objectives for the private sector entities who operate within the Digital Finance space. In creating new digital solutions for marginalised, rural population groups, these same commercial entities have to manage the consequences of what they would term as a “higher risk” client base – given the upfront costs on research and development and product testing – and hence they are reluctant to invest heavily in this as a core strategy.
  • Demand side – Many millions of women around the world are restricted by low mobility, limited access to information, and social and cultural norms which predicate that women’s financial independence and autonomy are much lower than men’s, meaning that there are typically low levels of digital literacy among women. In many contexts, too, stringent Know Your Customer requirements – such as identification documents – present further hurdles for women.
  • Technology side – From a technology stand-point, women face more issues which prevent them from being positioned to access digital products. In rural areas, mobile phones are owned and controlled by men and, unless a phone is under a woman’s control, she will never have influence over when to use it for other services. Even when a woman has a say in the matter, the way digital products are designed does not favour women, as there are typically short turn-around times for product sign-ups, which doesn’t favour literate or semi-literate customers still grappling with a “menu” mostly written in another language to their own.
  • Infrastructure – Digital platforms and mobile technology are mostly accessed nearby to trading centres, in towns or by highways, and are not available in more rural areas. This requires a woman to then travel out of her neighbourhood to access a service and, as this blog reiterates, taking into consideration the all too prevalent imbalance in household gender roles, access to this service for women won’t be conducted on a needs basis, but as and when convenient.

Recommendations for the future

In spite of these barriers, CARE’s experience has been that formal financial service providers are starting to realise the business opportunity for banking savings groups. Earlier this year, CARE submitted a briefing paper to the UN High Level Panel on Women’s Economic Empowerment (specifically to their Working Group on ‘Financial, Digital Inclusion and Property’) which laid out this recommendation, and also made a call to action that these providers should offer digital and field agent platforms, in order to overcome the supply and demand side costs which exist.

CARE feels strongly, too, that these providers should serve and work with development partners to design products tailored to the needs of the millions of Village Savings and Loan Association (VSLA) members which we have helped create over the past decades. We know that demand for financial services from low-income groups is at an all-time high, and we also know that some of that demand is from our VSLA members (CARE currently has 5 million VSLA members) who want access to quality group bank accounts, as well as to mobile-based solutions.

At the recent East Africa Linkage Summit in December – which brought together customers with bankers, policy-makers, regulators and development partners – a number of practical solutions for bringing millions more low-income people into the realm of financial inclusion were discussed, and several commercial banks attending were already either partnering with an mobile network operator, or had acquired their own mobile network operator platform, to offer a mobile-based solution to customers, in order to overcome proximity and cost-to-serve barriers.

I look forward to taking up this topic again in Bangkok at the SEEP Forum, and learning from the growing number of organisations who are championing Digital Finance as a genuine route out of poverty for women around the world.

Grace Majara

Prior to joining CARE International UK as Senior Advisor – Financial Inclusion, I led the Women and Youth Financial Inclusion programme for CARE International in Uganda where I provided strategic direction and leadership for a number of financial inclusion, enterprise development and market access programmes.

I championed the Village Savings and Loan Association (VSLA) methodology and took it to scale for CARE Uganda and across the region. I have over 18 years experience in developing and implementing financial inclusion and innovative solutions that includes VSLA programming, digital technology, financial literacy and linkages, enterprise development and value chain programming.

Through my work, I have partnered with banks, microfinance institutions, mobile network operators and others in the private sector to adapt financial services to meet the needs of poor and marginalised people, especially women and youth, and have been involved in creating and co-creating innovative solutions, including digital solutions, to bring financial inclusion to previously unreached communities.