Banking on women matters more than ever

More women hold low paid jobs, are at greater risk of losing jobs, and have greater health risks

Progress at meeting the woman’s banking demand has been sketchy

Meeting women’s banking needs and demands has continued to be supressed by banking supply side and enabling environment disparities. Inequalities have existed in the ability of women to access finance across all parts of the value chain. In some countries, lack of the rights of women to hold collateral and high collateral ratios has impacted their ability to borrow. Lack of gender disaggregated data collection has made it difficult to measure progress and define the key bottlenecks.

Of the 1.7 bn adults unbanked globally, 56.7% are women (source World Bank). Virtually all unbanked live in developing worlds with half or more living in Bangladesh, China, India, Indonesia, Mexico, Nigeria and Pakistan. Of those women who are banked, approximately 1/5th of the bank accounts lie dormant offering a cross-sell opportunity.

The rise of entrepreneurship is generally accepted as being good for the progress of economies and job creation. Forty percent of the 572m entrepreneurs globally are females, but progress is varied across the globe. The USA, Canada and France represent the benchmark for progress of high growth businesses. In developing markets majority of female entrepreneurs are micro-entrepreneurs. Their ability to access finance and supply chains, skills gap and enabling environment have played a key role in hindering progress. The World Bank/IFC estimate the global women SME credit cap to be $1.7tn.

Entrepreneurship has led to the creation of wealth and c. $76 trillion, 36% of global wealth (source: Boston Consulting and Harvard Business Review) is held by women. Increasingly women are creating their own wealth through business. These women are taking control of their wealth, focused on creating legacies and lasting sustainable impact. Their wealth gives clout and banking legacy matters.

Progress at closing the gender gap at threat of being rolled back

Banks have yet to develop digital plus gender inclusive business model and solutions designed to meet needs of the various women’s segments. Such an approach has gender centricity embedded in the DNA, with appropriate data and measurement models. This slow progress can be further amplified by the pandemic.

The UN policy brief on the impact of Covid-19 (April 2020) , highlights the threat of the limited gains made at closing the gender gap being rolled back. Across all spheres, from health to economy, security to social protection the impact of COVID-19 is exacerbated for women and girls:

• More women hold low paid jobs, are at greater risk of losing jobs, and have greater health risks (as many work in the care industry) impacting ability to save
• Women tend to perform the bulk of unpaid care work, which has increased. As an example, in Latin American the value of unpaid work represents between 15.2% to 25.3% of GDP (source UN April 2020)
• Over 30% of entrepreneurs face survival issues – government financing interventions have not accounted for gender disparities in the system e.g. the UK
• Health of women is adversely impacted through the reallocation of resources and gender based violence is on the increase.

Banks have a key role to play, accelerating building an inclusive and gender smart recovery

Once banks have taken action to ride out the initial waves of business continuity, they need to turn their attention to strategy and the role they will play in building an inclusive and gender smart recovery.

 Commercial banks have the opportunity to examine their role as intermediators, redefine what they are intermediating and develop appropriate models. A holistic ecosystem model for example that adopts gender lens thinking, can provide the platform to improve financial lives, support business growth and address inequalities. Considerations for a holistic model include developing:

• Financial and non-financial solutions that ease concerns of customers, get them through the survival stage and on to recovery e.g. of non-financial solutions include Skill development, Health, Digital solutions
• Access to procurement opportunity and supply chains including the banks own procurement
• Collaborations with various non-banking capital actors to increase the finance pot
• Sustainable solutions e.g. access to clean water, sanitation, energy, sustainable farming
• Philanthropic solutions and partnerships e.g. focus on girls education, health, digital equality

Banks will need to accelerate digital distribution to reach existing and new customers particularly the unbanked. Big data technologies and learnings can be leveraged to develop alternative credit models that speed-up decision making and finance access. Whilst in the short-term branches will need to be redesigned to provide adequate protective measures, the future of robot run branches is already here. Perhaps the big banks will become the ultimate fintechs.

Gender culture development and disaggregated data fuels the shift towards gender-centricity. A gender opportunity assessment can jumpstart collection and lay out the roadmap. Gender-disaggregated findings about the bank’s operations and portfolio is key to monitoring progress and defining impact of the crisis. The gender lens data can be leveraged to inform and shape policies, proposing government interventions to provide financial support and boost growth.

The data also supports Developments Finance Institutions and multi-lateral agencies, who are playing a vital role providing finance solutions to commercial banks.

Banks that behave responsibly, adopt a socially responsible tone, and address gender inequalities are well placed to build inclusive legacies. This is apt for the time of a changing society and its values.