The previous posts in this series made the case for advancing women's financial inclusion worldwide and emphasized the importance of gender disaggregated data. We’ve already learned how microfinance institutions can use this data and gender analysis to find out how effectively they are serving women. As our industry learns more about the needs, preferences and behavior of female clients, this blog will look at how banks are evolving to design better services that work for women.
When I was in Nigeria this November, I learned how Diamond Bank used consumer insights to design a new savings product that so far is proving to be popular with its female clients for the right reasons: it mirrors the convenience of informal financial services combined with the security of formal saving. Diamond Bank, a leading full-service bank in Nigeria that operates nationwide, only six months into this process, already managed to increase its women clientele from 32 to 41% .
With a fast-growing retail division, Diamond Bank has clearly recognized the market potential of increasing its female client base. In Nigeria, only 38% of adult women have access to formal financial services compared to 47% of the men, according to a 2012 access survey by Enhancing Financial Innovation & Access (EFInA), a financial sector development organization that promotes financial inclusion in Nigeria. Female customers tend to be younger, less educated and have lower levels of income than men. More than 40% of the women get their income from trading or running their own business. The 2012 survey showed that 89% of informally served women, and 79% financially excluded women, would like to open a bank account. Together this represents 21 million potential account holders with a keen interest to save. However, market research undertaken by Diamond Bank in collaboration with Women’s World Banking, Visa and EFInA found the women to be more risk averse and harder to convince to get banked.
Photo Credit: Anjali Banthia
While most of these women are familiar with the products and services of banks, many do not consider them appropriate for their needs. And even if they have a bank account they often prefer the agility and convenience of informal mechanisms that are widespread in Nigeria, like savings collectors (e.g. alajo, akawo) or savings groups (e.g. Esusu). In partnership with Women’s World Banking, Visa and EFInA, Diamond Bank developed a simple savings product called “BETA” that borrows some features from these informal services: the service is provided at the doorstep by a service team, there are no minimum balances or hidden fees, and weekly prizes are awarded. “BETA” offers a low cost banking service without requiring the usual paperwork, ID and references. Account opening is instant. With a photo and basic data captured through a mobile phone application clients receive their account number and PIN via SMS and a starter pack with ATM card.
Diamond Bank uses multiple channels to serve clients including its own branches and ATMs. But probably the key selling point of “BETA” is the network of “BETA Friends” comprised of a sales and service team. “BETA friends” visit potential clients in the market and at home to promote “BETA”, open accounts and manage all transactions. The “BETA Friends” team members are recruited from within the community among the clients’ peers. The service builds on the fact that more than 80% of Nigerian women take financial advice from their friends or family members, according to the EFInA survey. Diamond Bank had to tweak its marketing to make sure women really connected with the product and felt it was something for them. Initial advertising campaigns were perceived to be too male-oriented. Nevertheless, it’s interesting to note that while the bank’s female client base is growing, more men are signing up for “BETA” too. This is not unusual: products designed for men often do not reach women but those that are attractive to women will usually appeal to men, according to Women’s World Banking. To continue targeting female clients Diamond Bank introduced the "Focus on Women" incentive to reward staff signing up new female clients.
In the past six months, 21 of Diamond Bank’s 240 branches have piloted the new “BETA” savings account service and 127 “BETA Friends” are operational. More than US$1.5 million has been collected in savings into more than 38,000 new bank accounts, 41% by women and quarter of the accounts have been opened by previously unbanked customers. The accounts that are opened are active, with 74% of them of them showing more than one transaction a month. The accounts do not have a monthly fee, nor deposit or withdrawal fee and earn interest on the balance so they are really set up to optimize usage and benefit for the client. The savings product itself does not generate sufficient revenue to cover its costs. So what’s in it for Diamond Bank? The business case is geared towards maximizing the growth of low-cost retail deposits for on-lending. Diamond Bank sees “BETA” as an entry product to expand its footprint in the retail market and to establish the basis to cross-sell other products later. The bank clearly has a long-term vision and commitment and is set to roll out the service nationwide. Its performance over the years will have to tell if this is paying off.
This is just one of the examples we see of mainstream commercial players discovering the market potential of women at the base of the pyramid, many of whom have either been only accessing informal financial services or none at all. Other examples include Equity Bank and Family Bank in Kenya. I believe that solutions like “BETA”, that are designed to respond to female preferences and needs, and that are marketed through channels that appeal to women, can, once successfully rolled out, trigger other banks to follow. For the female clients getting a bank account opens up an array of opportunities to access other financial services that can help them improve their livelihoods. With globally more than 1.3 billion women outside of the formal financial system solutions that respond to their needs and reach them in a commercially viable manner are crucial to fill the gap.
Antonique Koning is a Microfinance Specialist at CGAP.
While the blog explains the Beta account campaign very well and thus makes a case for special products for women under financial inclusion, it raises a few questions about our approach to financial inclusion of women.
1. In my views the success of Beta shall come from the dedicated delivery channel of Beta friends, rather than the account features- which to me mostly seem gender neutral.
2.For a full service bank to continue such a campaign on regular basis, commercial viability of the endeavour must be protected. Providing access and reach after nearby areas are covered will cost much more.
3. In the world bank data, when asked why they do not have a bank account. around 20% say, a family member already has a bank account. Thus the 1.3 billion unbanked women can be grouped into(a) those whose family members in the household already have a bank account, and (b) those whose family members do not have a bank account. It is the latter which may need targeting first. However women engaged in economic activity shall need a bank account urgently.
4. With limited resources with many countries, it may be more appropriate to first cover all households with a bank account, and generally account of the head of the household who may also be responsible to run it as an economic unit - whether man or women- should get our priority.
5. We also know that there are a large number of women headed households- and such women of course need priority.
6. In my views, FI efforts must concentrate on first universal coverage of all households instead of entire adult populations. This target will be much smaller and achievable within foreseeable time with much less costs.
7. Special FI efforts for women may concentrate on women headed households and economically active women.
8. Financial literacy for women should be attempted universally so that they are made aware of the benefits of financial products and start demanding the same. Targeting younger women shall prove more beneficial in the long run.
World financial inclusion efforts for the excluded sections of society also depend upon the funds society can spare and thus targeting women selectively may prove more beneficial at the present juncture.
(ex GM Financial Inclusion a govt bank India)