#ChoosetoChallenge: FinTech and the Future of Women’s Economic Empowerment

Historically, social norms have kept barriers in place which have limited financial inclusion for women. Traditional roles as housemakers set in place ideas and structures that were and still are limiting women's ability to gain financial access. These limits range from the very basic inability to open a bank account to the more complex notions of complete financial independence and freedom. 

And while social norms can take ages to change organically, innovations in FinTech offer a great opportunity to kickstart and propel change. With new services and technology, we finally have the power to speed up the process and greatly broaden financial access to the billions of women who need it. 

The Disparity is Real

The good news is, from 2011 to 2017 the overall gap in access to finance narrowed. The total unbanked adult population was 49% in 2011 and by 2017 it was down to 31%. 

However, when we break this down by gender, the progress looks a lot less positive. 72% of men today have access to a financial account, while only 65% of women have that same access. 

This difference has remained exactly the same since 2011.  And closing this gap is not just for the benefit of women. Studies have shown that closing this gender gap could spur economic growth, reduce inequality, stimulate business evolution as well as boost social inclusion. 

But in order to achieve these goals, a more inclusive financial system is needed.  Here are several major obstacles to equal financial access (for women):

• No ID to prove identity
• Not enough capital
• Mobility constraints
• Financial illiteracy

None of the above limits are exceptionally difficult to overcome. Products designed with sex disaggregated data to create gender-smart tools, financial education which is specifically designed for women, and empowerment of FinTech companies which put an emphasis on women’s financial needs are just a few of the many steps that can be taken to close the gap. 

Sex disaggregated data for product design

Sex disaggregated data collection is especially important when it comes to financial institutions. This data would go a long way towards getting a more exact picture of the disparities and difficulties women face. Disaggregated data would allow us to track the progress being made as well as potentially highlight stumbling blocks women face, and in which markets and regions the impediments are greatest. This data could also encourage more inclusion by clearly showing the overwhelmingly positive impacts more women in finance – and more women with access to finance – could have. 

By implementing the above solutions, finance would not only become more inclusive by enabling women to make more transactions and access more capital, it would give them much greater access to financial freedom. This newfound access could lead to more savings which in turn could elevate more people out of poverty.

Narrowing the Worsening Covid Gap

The Covid-19 pandemic has exacerbated the problem. Evidence shows that women have disproportionately felt the economic impact of the pandemic. 

Since the beginning of restrictive measures 25% of self employed women in Europe and Central Asia have lost their jobs compared to 21% of men. As unemployment continues to rise, this gap is expected to widen. 

The stakes have been raised in regards to extending financial access to women. It’s never been more important for leveling the playing field as it is now. Without a new course offering policies to lift women economically, women will once again face a disproportionate weight of an economic crisis. 

Funding FinTechs

Recent studies have shown that while FinTechs led by women face unique challenges when it comes to raising capital, those that do have women in leadership positions often have greater earning potential than companies without women in senior positions. 

But as is suggested in the opening of this article, there is a significant gap in the customer base served by these FinTechs which continue to be male customer oriented.  Regionally, this disparity is clearest. Areas with greater financial inclusion gaps have far fewer FinTechs led by women. 

Empowering Women for a Global Recovery

As I alluded to earlier in this piece, the greater access women have to financial services, the more empowered they are economically. The more ability they have to save, take out loans, build towards their own and their family’s futures, the stronger the economy is for everyone. 

A recent study from India showed that women will use financial services more when they are served by female employees. However, women make up only 22% of bank employees and 12% of microfinance institution employees. More female employees would lead to more women using the bank which would lead to more competition to create FinTech services which cater the needs of underserved women. 

In the wake of covid-19, this injection of energy is vital to a healthy and timely recovery. Estimates state the world’s GDP would rise by around $28 trillion in 2025 if women were financially on the same level as men. This massive injection could propel the global economy to new, post covid heights. It’s time to act!