In honor of International Women’s Day this month, Erin Pham Steinhauer, vice president of financial inclusion at Visa International, speaks out about the gender gap in banking services and what financial institutions can do about it.
Nonprofits, banks, and researchers have made progress, but the data still shows far fewer women than men own a bank account or use formal credit. Why does the gender gap in this area prevail?
Access to finance barriers generally impact men and women, but disproportionately women. These barriers include when a woman can’t enter into a contract or become a property title owner, or when she cannot open a savings account, gain credit, or gain proof of equity to gain a loan. Without education, she remains oblivious to the financial tools available to her. Not having an ID, limited mobility to a bank, and her business being in her husband’s name also prevent this access. Social and cultural barriers also prevail – without a woman’s family valuing her power or work, women often feel undeserving of financial services. Yet women are often superheroes at home, and once they start a small business, they thrive. We need more research, therefore, to understand how to help this market.
Are financial institutions doing enough to help narrow this gap? What can financial institutions do differently, or better?
The financial services industry has failed to develop appropriate and relevant solutions for women. Banks and financial services companies should research the context in which women are living, alongside the multiple levels of exclusion discussed earlier, to help design financial inclusion programs. Any program should notice that women typically run small to medium vs large businesses, and different types of businesses to men. Also, providing their children with a better education is top priority for women entrepreneurs and business owners. Therefore, banks and financial services companies should design a program allowing women to earn money, followed by an education-savings product connecting their earnings and their ultimate goal to send their children to school.
And currently financial programs don’t do that?
Our industry is fragmented. We look vertically at product lines. We give customers a particular credit, savings, or insurance product. Some microfinance institutions are now combining credit with savings, but the industry must look more holistically at women. Once we show women the value in participating in the formal financial system as it relates to their everyday life and aspirations, we become more convincing.
Can you share an example of this approach?
My cousin owns a small camera shop in Ho Chi Minh City, Vietnam, that she started through a family loan. She grew her business and with no collaterals, took a loan from the black market – no other options existed. The high interest rates meant she had to work harder to repay the loan sharks and to keep the camera shop going. Those outside the financial system are constrained to these situations. But my cousin is clever. She worked until 10 every night, growing her business with the goal of educating her children. In 10 years, she bought her own car, an apartment and now has collateral for a formal bank loan and debit card. Once you empower her with the right financial tools, she can significantly grow her business and her family’s livelihood. Now she’s sent her first-born to college – I’m proud of her and of women like her. Despite the challenges against them, they succeed. If we can reach those women with passion and drive and help them to rise by giving them tools, help and support, they can go far.
Explain your passion for closing the gender gap in financial services.
Women must empower other women. As an Asian American, I think of the Asian term for women, which is “bamboos” – the strong, flexible, beautiful and graceful plant providing sustenance through the bamboo shoot. Many Asians view women in the same light – no force equals a woman determined to rise. Yet cultural and regulatory forces beyond their control often prevent women’s access to finance. Therefore, addressing the gender gap in financial services is appropriate this International Women’s Day. We want to help empower women economically so they can rise.
Describe your current work on closing this gender gap.
The G20 report recognizes that continually excluding women from financial services will affect the overall economic development in countries. Visa will continue working with Women’s World Banking, CARE, the Cherie Blair Foundation for Women and other programs to magnify our investment in this area. We’re excited and proud to work with Janalakshmi, a microfinance organization in India connecting digital payment platforms for 1.5 million customers with microfinance services – both credit and savings. Women are 99% of their customers and the group plans to add 100,000 more customers every month. We helped Janalakshmi create a pre-paid card platform integrated with a mobile point-of-sale device (mPos.) We plan to scale out our financial education programs and incentives for more adoption and usage. We’ve seen rapid growth, in spite of India’s low usage of bank accounts. The World Bank reports roughly 35% of Indians have a bank account compared with 56% in Brazil and 64% in China. Yet in 2011, just over a fifth of Indian adults saved money and only half used a savings account – most don’t see the relevance for (and therefore don’t use) bank accounts or financial products.
Why are these numbers so low?
Poorly designed products and services created this problem. The gap shows that banks don’t understand the complexity of their customers’ lives. Think holistically. Market your delivery, your operational aspects of these products, and what they can offer your customer. For instance, these customers might need a transport benefit, because traveling to a bank branch is unsafe, versus a concierge service.
How is Visa celebrating International Women’s Day this month?
In many ways. One exciting effort was bringing Visa women leaders from different countries and regions to San Francisco to discuss their financial inclusion work. Our government program in the Dominican Republic reaches almost one million people, provides recipients with an electronic account to receive government social benefits, and invests in micro and small convenience stores to strengthen the local communities. In 2004, we helped the Dominican Republic government issue a prepaid credit card to bank account owners. Now women like Maria and Santaisidra can access the funds to buy basic supplies like food, medicine and gas directly from local merchants safely and conveniently, versus using cash, which always makes women vulnerable to crime. Also, by equipping local stores with the ability to accept cards, we helped grow the local economy.
What comes next?
Visa will continue championing financial inclusion and financial capacity building programs around the world. We will also continue researching women’s adoption of financial services, particularly mobile services because we know mobile financial services can help address many proximity, mobility and security issues and barriers for women. We plan for more impact measurement work – for example, building a measurement metric within each program to address the resulting impact. When we give someone a house loan, what results from that? Can the woman send her children to school? Can she grow her income and gain better healthcare? Closing the gender gap is beyond financial inclusion. We must help women connect each day’s work with the tools and services available to help them achieve their goals.
D G McCullough is a branded content writer, editor and writing professor based in North Carolina.
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