Engage, encourage, and empower – the need for financial inclusion for women

I often get asked about the intersection of gender and financial empowerment, and I have been highlighting in my interactions that gender inclusion is still a far cry.

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According to the new Financial Inclusion index developed by RBI, India is only at the halfway point in meeting financial inclusion goals.

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There is an inherent unconscious bias in society, and we women tend to move away from the active workforce at a certain age. From the get-go, women are not made to feel empowered to make any conscious decisions for themselves. As far as financial matters are concerned, their male counterparts tend to make decisions for them, with many not even given a fair opportunity to educate themselves. Over the years, the patriarchal nature in most sections of the Indian society has given access to financial resources solely to the male members of the family which has eventually limited or kept bare minimum the scope of decision-making for the women members.

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A paradigm shift in the thought-process is required. In times like these, of disruptions and transformations, businesses and nations can develop and grow in stature in a sustained manner. Creating an inclusive workforce where there are no biases, preferences, or disparities between men and women need not be a pipe dream.

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We need more women at leadership levels across segments as I do realise that there is a slow and gradual uptick for women in tech space to be precise. At PayU, we realise the competitive business advantage of having a diverse and inclusive work force and in appealing to a diverse set of customers, especially when expanding into new markets. It is critical for organizations today, especially fintech and technology companies to promote mentoring, diversity and inclusivity not just as a concept but as an organisational culture and ethos. We need to provide for the right mentorship opportunities for the sustained push with full executive sponsorship. We need more women in leadership roles across segments. At PayU, I see us driving this at a very successful rate.

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A deeper dive into financial inclusion of women led me to a Goldman Sachs Global Investment Research Report. The report found that loan rejection for women-owned SMEs in India were almost double to those owned by men. This disparity exists because of the traditional thought process that women should manage domestic affairs, while men are responsible for household finances. This outlook also leads to women not being able to provide collateral, as they aren’t given equal assets within their family. I strongly feel that this mistrust and forbidding behaviour towards women also makes them unsure of themselves. The lack of faith slows down a woman’s ability to be financially independent.

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It doesn’t stop here.

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The income disparity among male and female workers in India is a widely-known fact. The wage game in the Indian job sector has a negative impact on the academic opportunities provided to female students as well. According to the World Bank’s Global Findex Database 2017, about 76% of women in India have an account with a formal financial institution. However, this figure is not a true indicator of their ‘financial inclusion’. The accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY) are on a decline. As of September 2019, 13% of them are zero-balance accounts and 17% are inactive. Despite a large number of women opening bank accounts, the gender gap is evident in the credit market in India, and a World Bank report states that the proportion of female dormant accounts (42%) among all female bank accounts is the highest in the world, than their male counterparts at 32%.

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While these figures are disheartening, there is huge scope for improvement. A study by McKinsey concluded that India could add up to $770 Bn to its GDP by 2025 if female labour force participation in the country is brought at par with the male section of the population. In order to increase the participation of women in the Indian economy, the government, banks, financial institutions and corporations need to provide wider access to financial services at both the grassroot level and in metropolitan areas.

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We need to work towards showing women how to use their skills and abilities in the most efficient manner. The promotion of micro-entrepreneurship among women can avoid their departure from the economic cycle of the country. Fintech companies can and should leverage technology to enable entrepreneurship for those in the marginalised sections of the society. The need now is to boost adoption through financial awareness and improve the inclusion quotient. Social touchpoints at the grassroot level, like village self-help groups can be leveraged to spread awareness about financial independence, using fintech solutions.

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To further integrate women in the economic cycle, fintech start-ups are using technology to promote entrepreneurship amongst rural women by extending differential financial solutions and enabling them to invest through low interest microcredit. They also give out loans to small and medium businesses. Over the years, as the traditional banking sector has remained partially successful in extending its services to low-income and vulnerable groups, fintech has emerged as an industry disruptor. Fintech companies should provide a safety net to alleviate risks that marginalised sections of the society, particularly women face, on a day-to-day basis.

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Additionally, as service providers, a gender lens while designing new products is essential. Financial service providers must engage with women directly to understand their needs, behaviours, and preferences and try to create value through products that will solve their pain points. This, along with the availability of more female banking agents networked, will help encourage women to use mobile financial services.

It’s prudent that we remain cognizant of building relationships and developing trust. When offering products, fintech players must ensure that terms and conditions are transparent. Avoiding service downtime, inadequate data protection, and insufficient agent liquidity must be avoided at all costs, to establish trust and reliability.

Along with fintech, there needs to be a well-rounded approach for financial inclusion for women. While fintech players continue to develop systems to improve financial inclusion, the Indian government, policy makers, and regulators play a huge role. This includes improving infrastructure at a macro level, providing financial literacy at a meso level, and a change in the attitude and support by the government and formal banking sector at a micro level.

To increase usage among low-income adults, particularly women, the government should engage in a Public-Private Partnership (PPP) with service providers to invest further in education and awareness-building. The government, development agencies and experts can invest in research on the gender and social norms preventing Indian women from participating in the formal financial system. More information about how social norms affect attitudes and behaviours of women will help the financial inclusion community develop effective strategies, products, and services that account for these limitations.

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Collectively, there need to be coordinated efforts to align interests and approaches by buyers, suppliers, service providers, policymakers, and regulators. Doing so will help the financial inclusion community collaborate, to ensure systems are established so more women use digital products and services actively.

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Women being active decision makers in every aspect of business and life, isn’t just the right thing to do but the smart thing, and making financial inclusion a reality is the first step.

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