When will we have women-friendly financial products?by Opinion Express March 12, 2019 0 comments
Banks as well as other service providers will have to develop products specifically for them to service one-half of the population
TIt is now universally acknowledged that India has shown spectacular performance in financial inclusion and is now a candlelight for the developing world. Most international surveys and studies vouch for this. They also highlight the impressive gains for women.
According to the World Bank’s Global Findex Survey (2017) 80 per cent Indian adults now have a bank account — 27 points higher than the 53 per cent estimated in Findex 2014 round. In respect of women, 77 per cent now own a bank account against respective 43 per cent and 26 per cent in 2014 and 2011. On this basic measure of financial inclusion, females are more financially included than before. India has cut its gender gap in financial access from 19.8 percentage points in 2014 to 6.4 in 2017.
However, a more granular analysis shows that gender gaps is still worrying. While more women have been enrolled for bank accounts, a larger gender gap persists in their usage. And beyond account ownership, in terms of credit and insurance usage, the gender gap remains high. For example, female account owners show an 11-percentage point gap against men in terms of account usage; 54 percent of women with an account made no deposit or withdrawal in a year as compared to 43 per cent of men. The credit gender gap is still more stark. Distribution of outstanding credit in small borrower accounts shows 24.5 per cent share of female account owners against 72 per cent by men as on March 2017.
Women often face several barriers which limit their financial inclusion, other than the universal constraints that low-income communities face: limited access to mobile phones, lower literacy levels, less confidence in using technology and restrictions on travel or social interaction. We need to address them through behavioural and reformist approaches, instead of the usual hardware-based approach, so that demand and supply-side barriers that women face in accessing finance are eliminated.
Women’s participation in the financial system can have significant benefits in terms of economic growth, greater equality and societal well-being. When women are empowered as economic actors, the benefits touch everyone. They have more child-centered preferences than men. Access and usage of financial services are levers for increasing women’s participation in the economy. They enhance their self-confidence and place financial decision-making power in their hands resulting in large development pay-offs.
Women are a low-revenue segment but prove to be loyal and profitable clients when treated with respect and served with appropriately-designed products. Women are more risk-aware than men and take longer to make decisions but they make firm decisions and when they do, they tend to be more trustworthy and reliable customers than men. Financial service providers need to ensure that the fees are not prohibitive and the design tools which are used make their engagement with financial service providers friendly, safe, affordable and convenient.
Professionals and practitioners have distilled some salient features of financial products and services that foster women’s active participation in formal finance. They find that women don’t have a straight financial journey and have more interruptions and life-stages in their financial lives due to withdrawal from employment during pregnancy and in medical emergencies for nursing sick family members. They may remain active users of the accounts during these periods. Women should be able to reactivate their accounts without much hassles or penalties. Women are also more price-point sensitive and expect affordable fees.
The single best way to increase account use would be to more fully digitise government transfers. Women without accounts frequently interact with governmental offices to make payments (P2G) or to receive payments from them (G2P). Fees paid to access public services and payments for public utilities are still made mostly in cash in the developing world, and if payment was required to be made through electronic means it could help a first interaction with a digital payments system. Many state governments in India have adopted the default savings options by mandatorily delivering all wages to participants of government schemes and programmes through formal saving accounts. For example, the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) states that at least one-third of its beneficiaries should be women and their payments should be delivered via electronic transfers to bank accounts
Providers will need to deepen their understanding of the unique needs of women consumers and develop products and customer experiences tailored to these needs. This doesn’t sound like rocket science and it isn’t, except that the financial products currently available to women are clones of regular products and do not match their distinct income, expenditure and savings patterns. For example, income, which is mostly from their casual employment, tends to be more irregular and unpredictable, often cobbled together from various sources. Savings are limited; often taking the form of small amounts saved daily that need to be banked quickly to prevent them from being spent. Formal credit histories are virtually non-existent. There is heavy reliance on informal networks like friends and family for financing big-ticket needs.
Women clients, particularly in rural areas, find interacting with male staff at banks an intimidating experience and may not trust banks as they are not considered part of their trusted service providers. To overcome such psychological barriers, financial institutions can increase women staff, and appoint dedicated ones to serve women customers because most of them have a preference for a non-intimidating environment. Women customers are likelier to entrust such a retailer with their finances. They look for a consistently high-quality experience, and the qualities they look for in these experiences include: ‘trustworthiness’, ‘understanding’, ‘dependability’ and ‘accessibility’. In failing to develop client experiences rooted in men and women’s fundamentally different perspectives on finance, monetary services institutions are missing a very significant business opportunity.
Employing more women as bank tellers or mobile money agents can make it easier for more from the sex to board financial services. Women want financial services delivered to them by someone who is experiencing the same issues as them. The country has only 5 per cent women as Business Correspondents (BCs). India has 8.7 million Self-Help Groups (SHGs) comprising more than 100 million women members. The number of SHGs in the BC space needs to be stepped up.
To make financial inclusion for women more relevant and meaningful, we also need to sensitise men to the peculiarities and needs of their female gender. The inadequacies of focussing on women in isolation have long been recognised: women live in communities, they live in families, and they live with men. Abstracting women from their social realities distorts our understanding of the relational nature of gendered power and the interdependency of women and men, and that has a strong bearing on women’s motivations, choices and possibilities.
At the same time gender disaggregated data is extremely essential for designing of suitable financial products that can appropriately address women’s needs. We can use time series data to better understand women’s lives and their needs, and accordingly address supply side disparities to create customised, affordable, convenient, and reliable financial products for women.
Greater women’s financial inclusion doesn’t necessarily require gender-specific policies or making finance pink, but rather policies that work for women. Some banks ‘feminise’ the name or brand colour of the product. These sales tactics may not work. We need an enabling environment that incorporates women’s perspectives. They are different from men, due to their gender-diverse life cycle needs and associated risks, resulting from constraints imposed by society and laws and biological differences. Women spend, invest, borrow, manage and protect, and money differently than men. They prioritise services based on preferences including safety, security, easy access, low cost, privacy from friends and family and husbands and trust in providers.
Similarly, the insurance needs of women are different from those of men as they are more at risk of losing their income because of pregnancy, divorce or separation, as well as cultural norms and socio-economic patterns. The insurance industry can play a major role in increasing financial protection for women through approaches that target their specific needs, particularly coverage for their illness, pregnancy, various life-cycle transitions, while protecting their savings to cope with financial challenges.
In short, what is needed for a broader, deeper and more relevant and meaningful financial inclusion is a nuanced approach that tackles the underlying, interconnected barriers that women face in accessing and using financial services.
(The writer is Member, NITI Aayog’s National Committee on Financial Literacy and Inclusion for Women)
Writer: Moin Qazi
Courtesy: The Pioneer