Catalyzing Women’s Financial Inclusion: The Role of Data
Despite increasing awareness among international agencies, donors, governments and the private sector of the benefits of women’s full financial inclusion, the gender gap in financial services persists: the Global Findex found that women are still 15 percent less likely to have a bank account than men globally, while the IFC estimates that women-owned businesses have up to US$320 billion in unmet financing needs worldwide.
It is clear that business as usual is no longer enough. Understanding these gaps is the key to closing them, and more and better data on women’s access to and use of financial services is critical to this.
For the private sector, GBA/McKinsey & Company research has found that more granular data would motivate more involvement by shedding light on the commercial viability of the women’s market as well as increase understanding of customer behavior. Finding growth opportunities is a big challenge for banks and yet, because many do not have the data that proves the business case for serving women, the number of banks considering targeting this segment is limited. Sex-disaggregated data is the cornerstone of building this business case.
The GBA and its members have made great strides in this area, producing data that enables bank managers to understand that if women are served well, they are very good customers. In aggregating data from 15 banks across 5 continents, the GBA found a clear business case for serving women: they save more relative to their total income than men do, pay back their loans at a higher rate, buy more products per customer and are more loyal to their banks if they are served well.
Governments have a strong role to play in closing these gaps, but they, too, need more and better data on the supply and demand of financial services by sex. This could allow them to measure where and why financial inclusion policies are succeeding or failing.
For governments, the collection of sex-disaggregated data begins a virtuous cycle, where its availability informs stronger, evidence-based policymaking and helps regulators evaluate the effectiveness of policies intended to promote financial inclusion. This enables successful regulation, reinforcing the utility of sex-disaggregated financial data and thus willingness to make it available.
Using data to make a difference: the case of Rwanda
In 2008, just 21 percent of the population of Rwanda had bank accounts, according to the Bank of Rwanda. The Central Bank set a bold target to increase that number to 80 percent by 2017. Requiring that the country’s bank data be disaggregated by sex allowed the Central Bank to see that the share of commercial bank loans to women was 20 percent. The government therefore developed plans to strengthen the reach of savings and credit cooperatives, and modified rules to allow for more agent banking in rural areas — where exclusion levels were particularly high. The result was a doubling of the percent of formal inclusion to 42 percent by 2012 (72 percent if informal channels are included). Noting that the percent of women with access to bank accounts stubbornly remained at 21 percent, the Central Bank is now working on a more granular data scorecard for bank reporting that will enable it to understand product, channel and geographic reach by sex, so that more tailored policies can be devised to get banks into the market.
Three steps to gender-inclusive financial systems
Globally, efforts to close the gender gap in access to financial services are gaining momentum, but without sex-disaggregated data on women’s financial inclusion, it will be impossible to tell how far we’ve come and how far we still have to go. With this in mind, Data2X, the Global Banking Alliance for Women (GBA) and the Inter-American Development Bank (IDB) joined forces to map the current state of sex-disaggregated data in the financial sector. Our research suggests that regulators could take three basic steps to start promoting more gender-inclusive financial systems:
1. Build Awareness – The most commonly cited impediment to collecting and using sex-disaggregated data was a general lack of awareness of its value, both within regulatory agencies and the banks they oversee. The Bank of Zambia increased awareness both internally and externally, conducting a series of gender sensitization trainings for staff to help them understand the importance of focusing on women, and in parallel asking banks to conduct a self-assessment of how well they were serving women-owned SMEs using the FAMOS Check Tool.
2. Set Gender-specific Targets – National financial inclusion plans that had specific gender targets were most successful in ensuring that women were reached. In the Solomon Islands, for instance, the Central Bank set specific gender targets for new account openings in 2010 and simplified Know Your Customer requirements for opening accounts. This had a positive impact on women, as they have disproportionately less access to certain paperwork that the former system required as well as lower education levels. In 2014, the data showed that the Central Bank had more than achieved its targets for women, by 46 percent.
3. Create Reporting Incentives –A majority of banks that understand the market opportunity of reaching women actually want to generate more data in this area, but have to balance that with other reporting requirements. This is where creating incentives across the data supply chain is important. In Chile, the regulator has been collecting and publishing sex-disaggregated supply-side data reports annually for the last 14 years. Spearheaded by the Women’s Ministry, which coordinated gender initiatives across government actors, targets were set to systematically collect sex-disaggregated data and, crucially, tied to staff performance, which ensured that the data was collected and analyzed.
The world is in the midst of a data revolution, with an enormous amount of data being collected globally. Inequalities among who and what is getting measured right now have the potential to create further gaps in the long-term. The above three steps can put countries on a path that will prevent the women’s market from falling even farther behind and will generate sustainable economic benefits the world over. Indeed, governments can play a catalytic role in promoting these outcomes by ensuring that the right data is available – and ensuring that their financial inclusion policies use this data to place women at the center.