Women in Fintech: Unlocking Economic Empowerment Through Digital Services

The "Her Fintech Edge: Market Insights for Inclusive Growth" report by IFC, funded by the Women Entrepreneurs Finance Initiative (We-Fi), highlights the potential of digital financial services (DFS) to enhance women's financial inclusion and economic empowerment. Despite the barriers, fintech firms can strategically serve women to unlock substantial market opportunities.

CoE-EDP, VisionRICoE-EDP, VisionRI | Updated: 13-06-2024 17:22 IST | Created: 13-06-2024 17:22 IST
Women in Fintech: Unlocking Economic Empowerment Through Digital Services
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Digital financial services (DFS) hold transformative potential for women's financial inclusion and economic empowerment. However, women still face significant barriers to accessing and adopting these services. According to the "Her Fintech Edge: Market Insights for Inclusive Growth" report, an effort by IFC’s Banking on Women team, funded by the Women Entrepreneurs Finance Initiative (We-Fi), fintech firms are uniquely positioned to bridge this gap.

Despite their potential, many fintech firms are not fully tapping into the women’s market. The report, based on a survey of 114 fintech firms across 17 countries, reveals that women constitute less than 25% of customers for many of these firms, particularly in business and lending-focused sectors.

The Business Case for Serving Women

Fintech firms that intentionally serve women report notable benefits. Women tend to have higher customer lifetime value (CLV), greater loyalty, and lower default rates compared to men. These advantages make a compelling business case for investing in the women's market. Yet, only a fraction of fintech firms strategically target women, with less than a third tailoring their products and services to meet women's specific needs.

One critical finding is that while 59% of fintech firms collect sex-disaggregated data (SDD), few use it effectively. Utilizing SDD can help firms understand women's financial behaviors and preferences, enabling them to design tailored products and marketing strategies that resonate with women.

Strategies for Inclusion

To better serve women, fintech firms need to adopt several strategic approaches. First, collecting and utilizing SDD is essential. Gathering detailed gender-specific data helps fintech firms understand and cater to women's financial needs more effectively. For example, Indonesian neobank Koinworks uses data analytics to comprehend the drivers behind women-owned businesses' adoption and retention.

Second, targeted marketing is crucial. Customizing marketing materials and channels can foster trust and relatability among women customers. For instance, the Ugandan platform Pay24 increased its share of women customers by featuring female influencers in its marketing campaigns.

Third, leveraging partnerships can significantly expand reach. Collaborating with other financial and non-financial organizations allows fintech firms to access a broader network of women customers. Partnerships with local cooperatives, aggregators, and e-commerce platforms can facilitate this. For example, in India, Bike Bazaar partners with local online platforms to market loans to women gig economy workers, helping them purchase two-wheelers to increase their productivity.

Fourth, fintech firms need to focus on tailored product design. Developing products that address women's unique financial needs and barriers is crucial. Examples include Colombian digital lender Juancho Te Presta, which offers better loan terms for women, and Egyptian fintech firm Wizall, which developed a digital group savings product bundled with insurance for informally employed women.

Lastly, providing support services can make a significant difference. Offering non-financial support services such as financial literacy training and business coaching can enhance women's ability to use digital financial services effectively. For example, Crowde, an agriculture and financial technology firm in Indonesia, offers training in budgeting, financial literacy, and agricultural techniques to women farmers, increasing their awareness and demand for financial services.

Opportunities for Ecosystem Support

The fintech ecosystem can play a vital role in accelerating progress by providing tailored support based on market conditions and the maturity stage of fintech firms. This support includes conducting market-specific research to understand women's needs and pain points, offering patient capital, concessional debt, and competitive grants to fintech firms focusing on underserved segments. Providing technical assistance in product design, data collection, and gender intelligence can help firms tailor their offerings for women. Promoting policy and regulatory reforms can create a supportive environment for fintech firms serving women.

The "Her Fintech Edge" report underscores the immense potential of fintech firms to drive financial inclusion for women. By adopting intentional strategies and leveraging ecosystem support, fintech firms can unlock the full potential of the women’s market, contributing to inclusive growth and economic empowerment. As the world continues to embrace digital transformation, the time is ripe for fintech firms to lead the charge in closing the gender gap in financial services.

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