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Expert Views: Digital Inclusion is the Key to Getting Women Bank Accounts

As part of our ongoing Expert Views feature, we asked four women at the forefront of the economic empowerment movement what financial inclusion for women really looks like. The verdict was unanimous.

Written by Jihii Jolly Published on Read time Approx. 4 minutes
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A woman repays her loan at a community microfinance meeting in Uganda. Neil Thomas/Corbis via Getty Images

Economic empowerment for women is inextricably linked to sustainable development. Experts say it’s an essential part of the fight for gender equality, autonomy and eliminating violence against women, but still, structural and cultural barriers consistently exclude women from participating in the formal economy.

One of the biggest economic disadvantages women face is in gaining access to a bank account, often because they don’t have the requisite identification documents. The World Bank has found that worldwide, 42 percent of women are without bank accounts.

What is holding women back from accessing mainstream finance, and what can advance the drive for greater inclusion? Women & Girls asked four women at the forefront of economic empowerment movements for their views. While challenges vary and governments play different roles in different regions, all four cited one major factor: digital inclusion.

Jeni Klugman

Fellow, Harvard Kennedy School and managing director, Georgetown Institute of Women, Peace and Security

Despite progress in recent years, we know from the Findex that unbanked rates are highest for the poor, those in rural areas and women. In developing countries, men are 9 percentage points more likely to have a bank account. The largest gender gaps in access to financial services are in the Middle East and South Asia.

Governments should eliminate discriminatory laws limiting women’s rights to inheritance, property ownership and choice of work. These laws are especially common in the Middle East and North Africa. Governments can also simplify procedures for obtaining official identification, including digital/biometric systems for those who lack traditional paper documents. In Nigeria, for example, U.N. Women and MasterCard are partnering to provide women with personal identification cards that have electronic payment functionality.

One of the steps that the private sector can take is to streamline “know-your-customer” regulations for opening bank accounts. Poor customers who make small transactions and maintain low balances should face fewer regulatory barriers. Banks can also reduce the costs of savings accounts.

Digital accounts offer enormous potential, and the benefits for women have been well documented in Kenya and elsewhere. McKinsey Global Institute estimates that it saves providers 80 to 90 percent by offering customers digital bank accounts, which make it feasible to serve low-income customers even when their account balances and transaction volumes are small.

Sarah Gammage

Director of Economic Empowerment & Livelihoods, International Center for Research on Women

When individuals have access to financial services and products, even in poor communities, they are better able to plan and manage their income, and households are more likely to hold savings and to invest these savings in productive uses. Yet, conventional financial products and services still do not reach the poor and women well.

Global Findex data reports that 58 percent of women around the world have a financial account, compared to 64 percent of men. Poor women are 28 percent less likely than poor men to have a formal bank account. Digital platforms such as Mpesa [a Kenyan mobile payment service] appear to have the potential to address the gender gap in financial inclusion. But despite some prominent successes digitizing payments and transfers, women still face barriers to accessing and using digital financial services.

Access to mobile technology and the ability to use it are critical factors for digital financial inclusion. Women are 14 percent less likely than men to own a mobile phone. In South Asia, women are 38 percent less likely to own one. If fewer women own mobile phones, fewer women are able to register phone-based financial accounts in their names, preventing them from fully accessing various digital financial services, like making or receiving money transfers, receiving credit, paying bills and making decisions about their use.

Reema Nanavaty

Director, Self Employed Women’s Association (SEWA)

When women workers in the informal sector organize themselves in the form of a union to get out of a vicious cycle of vulnerability and poverty, they realize that access to capital is their biggest cash constraint. All of them were economically active and needed capital. In the absence of available capital from mainstream financial institutions, they had to depend on informal, expensive sources of capital which were very exploitative.

in our experience, the formation of savings groups has proved to be an effective means of employment creation and income generation among very poor women. An increase in income for the poor means buying adequate and nutritious food and asset creation. Participation of women in forming their own savings groups has been positively correlated with decline in seasonal and long-term forced migration in search of work and water.

Our fundamental belief is that microfinance is not an end in itself. Rising out of poverty requires access to skills, markets, social security, creation of assets and empowerment through organizing. The biggest challenge at present is how to we integrate financial inclusion with digital inclusion.

Mary Ellen Iskenderian

President and CEO, Women’s World Banking

We can’t discuss women’s financial inclusion without acknowledging the undeniable role digital technology can play in offering low-income women access to financial services. Many providers offer digital financial products, but they assume it’s only a matter of time before women adopt these products, without considering the barriers they face, even with mobile phones in their hands.

Cultural and social norms, low financial and digital literacy, a lack of awareness of their options: All of these factors must be taken into consideration in designing products for women.

In Pakistan, Women’s World Banking is partnering with mobile banking provider JazzCash to improve women’s uptake and usage of their digital bank account. We learned that women make up only 15 percent of JazzCash clients, and while there is no difference between how women and men use the account, the problem lies in the account opening process.

In Pakistan, most accounts are opened via agent, 95 percent of whom are male, and clients must provide their cellphone number to open an account. Now, how comfortable would a woman in Pakistan be providing her phone number to a male stranger? We are testing other ways for women to sign up for the account, including SMS messages as well as exploring referrals from other women and establishing female agent channels.

Women know what they want from financial services. Financial service providers, as well as policymakers and regulators, must listen to them. Only then can we leverage technology and design solutions to achieve women’s financial inclusion.

These statements have been edited for length and clarity.

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