The Gender Gap in Finance


Moin Qazi - TRANSCEND Media Service

Women represent half the world’s population ~ and half of its economic potential. A society cannot have sustained economic prosperity and well-being until the central role of women is recognized and their financial health is used to shape policy. Women are crucial to ending poverty when empowered with the right resources and tools. A great opportunity is wasted when women are isolated from the economy. It is now widely surmised that we’ll never truly have equality until they are financially literate and empowered around money. In many societies, women face discrimination and are disproportionately vulnerable. Unequal gender roles have implications for the most essential aspects of self-determination, dignity and freedom, which influence financial inclusion.

Women play critical roles in their homes, communities, and businesses. Women’s participation in the financial system can significantly benefit economic growth, greater equality and societal well-being. When accessible finance reaches women, the benefits are particularly sustainable. Improving financial health for women is increasingly an area of interest for influential foundations and NGOs ~ who recognize that better financial health and savings behaviour amongst women can positively impact educational, health and nutrition outcomes for children in low-income families. Financial inclusion of women enhances their self-confidence and places the power of decision-making in their hands, resulting in significant development payoffs. Women channel money into solving more fundamental issues.

The persistent gender gap in financial inclusion reveals the need for action, especially given growing evidence of such inclusion’s ability to reduce exposure to income shocks and promote more sustainable and equitable development. While efforts to advance women’s inclusion have taken many forms, technological innovations ~ including digitized social payments from governments, mobile money, and innovations in the design and delivery of financial products and services ~ hold particular promise. When more people have access to affordable and good-quality financial services, they have more opportunities to thrive. This is especially true for women, whom traditional financial institutions often under-serve. Every client is unique, and women seek privacy and flexibility when choosing financial products and services.

Access and usage of financial services are levers for increasing women’s economic participation. We must study the social and behavioural impediments impacting women and use this knowledge to design customized financial product offerings. Banks are missing a significant business opportunity in failing to develop client experiences rooted in men’s and women’s fundamentally different perspectives on finance. Women often face several barriers that 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 must address them through behavioural and reformist approaches instead of the usual hardware-based process. It’s not that the barriers are necessarily different for rural and urban women. But the same walls are greater for rural ones. Successfully building women’s financial capability must account for the systemic barriers women face.

Women are not a single market segment; a deeper understanding of the lives of women – for example, their livelihoods and the social norms that shape their lives ~ will help inform providers of their financial service needs and how the sector can better serve them. Instead of disguising male-focused products as gender- neutral, we need specific products tailored to their unique needs. Incorporating women’s perspectives and experiences into the design of new and existing products would increase the likelihood of resonance with the women’s market. For example, offering women a pink checkbook does not substantively address their financial needs or provide real value. Most women-targeting focuses not on designing gender-smart solutions but on creating products that superficially target women.

Women make for a low-revenue segment but are loyal and profitable clients when served with appropriately designed products. Financial service providers need to ensure that their charges are not prohibitive and the tools are so designed that they make women’s engagement with financial service providers friendly, safe, affordable and convenient. Despite educational strides, the real issue is that many women aren’t as confident and knowledgeable about financial matters as men. This problem persists even when women handle many of their families’ routine money management duties. Giving women direct access to financial services might improve their chances of becoming more independent entrepreneurs and increase their participation in family and community decision-making.

There is also a critical insurance effect: Better access to credit, savings or insurance services reduces the need to use child labour as a buffer in case of seasonal income fluctuations and transitory income shocks and allows consumption. In the case of transitory income reductions resulting from health shocks, it also allows faster attention to health problems. It is now recognized that “the women’s market” represents varied segments of clients, from low-income salaried workers (factory workers, domestic help and so on) and low-income self-employed women in the informal sector to women who work in agricultural value chains and small and medium enterprises. Serving this market not only makes business sense, but it also positively impacts society as a whole by expanding economic growth and job creation. When accessible finance reaches women, the benefits are highly productive and sustainable. The positive economic knock-on effects are apparent. Savings rates are higher, repayment rates of family loans are remarkable, families are healthier, social cohesion is stronger, and business growth is stable. This shows that increasing the number of women bank account holders will reduce systemic economic risks.

Women have restricted mobility due to gendered social norms, are sometimes unschooled and are not the sole decision-makers of their households. There is a need to actively employ oral informational management tools so these women can transact independently. Women prefer to learn and work with peers. Bankers must build trust in this segment by using women agents in frontline financial operations. Behaviourally, female customers take more time developing trust in a new product or service. The same holds for finance; building confidence and trust in them requires more interaction. In all societies, however oppressed women may be or their low literacy level, they remain the stewards of household savings. Women investors have greater patience for long-term returns and show greater self-control, which results in less impulsive and risky decisions.

Women are usually tasked with stretching the family budget during financial hardship. Providing micro-credit or a minor affordable and account-linked overdraft could help them cover their day-to-day contingencies in managing household finances. A woman’s financial needs and responsibilities require bundled savings, credit and insurance solutions because they are more relevant to her circumstances. Several barriers constrain the full inclusion of women in formal finance. Product-driven financial literacy is necessary to ensure that poor women are not short-changed. The financial inclusion community must foster the philosophy that engagement creates knowledge, and knowledge builds confidence. One of the most promising ways to close the stubbornly persisting gender divide is technology. For low-income women, digital financial inclusion offers an opportunity to upend entrenched gender inequalities. Financial services delivered via mobile phone can bridge the last-mile gap, bringing financial tools and services directly to women where they work and live. The significant gaps in mobile subscriptions and ownership mean that if digital financial services will deliver on their promise to women, these gaps need to be considered. Mobile phones are an inspirational and practical item that most women long for. The key to harnessing mobile technology will be to make sure women have equal access to phones in the first place.

The overall gender gap in mobile phone ownership in the developing world is wider than the bank account ownership gaps. The onus is now on mobile providers to make products more suitable and affordable for women. One reason for the technological divide is that smartphones are not marketed as an empowerment tool. Making gadgets available will surely help, but we have to bring about a change in the overall outlook.

Women are intuitive savers, prudent investors, and responsible re-payers. They are loyal customers and do not frequently switch financial service providers (FSPs).

Compared to enterprises led by men, women-led MSMEs face more significant barriers in terms of limitations on time, mobility, and resources, along with substantial cultural and social constraints. Fewer opportunities for networking and mentorship are available to women. They face disproportionate challenges due to caregiving responsibilities, greater vulnerability to financial shocks, and restricted access to information and technical skills. Women are also less likely to have access to smartphones or digital financial services. They may find it daunting to apply for loans, make payments, and purchase insurance, and are usually not discovered by lenders. Except for a handful of companies that have focused on creating solutions for women, the finance industry has overlooked the needs, preferences, and obstacles unique to women.

Women entrepreneurs primarily point to the lack of access to credit as a challenge. Due to this lack of access to credit, their interactions are often informal, home-based, small in scale, and concentrated in the sectors traditionally assigned to women. Women tend to run micro-businesses—too big for microfinance institutions (with a loan requirement of greater than INR 50,000) and too small for banks (with a loan requirement of less than INR 10 lakh). Consequently, women-led small businesses form just 10 per cent of the gross loan portfolio of most financial service providers.

Typically, a loan application goes through multiple stages. At every step, there is potential for biases to seep, mainly when lending to women—they are twice as likely to be rejected for a loan than men. Women continue to face the consequences of historical beliefs and cultural practices and have fewer assets in their name, which means they don’t have collateral security. This causes women-owned businesses to be denied bank credit more often, so they do not feel encouraged to apply for bank credit, are less reliant on it, and receive inferior terms on granted loans. Another reason for loan rejection is that women are more likely to be ‘thin file’ customers, lacking a formal credit score and credit history. Such credit product requirements may not work for women.

Gender dynamics, however, can and do change over time. The financial services industry can be both a catalyst and barometer of gender equality. On its own, financial inclusion will not result in gender equality. However, only with equal access to the full range of needs-based financial services – savings, credit, insurance, payments – and the accompanying financial education do women stand a chance of social and economic empowerment.

Whether they work in the home or outside of it, whether employed or self-employed, financial inclusion provides women the tools for accumulating assets, generating income, managing financial risks, and fully participating in the economy.

Five criteria need to be at the core of a successful women-inclusive strategy: Positioning products as solutions to problems; positioning information, education and networking as core products; building the financial capability of women customers; establishing an intelligent, no “pink marketing” zone; and training staff to listen to women rather than sell to them, creating a relationship-based business model that sustains their loyalty. In short, a nuanced approach is needed for a broader, deeper, more relevant, and meaningful financial inclusion that tackles the underlying, interconnected barriers that women face in accessing and using financial services. We cannot overcome poverty until men and women have equal rights and opportunities. This approach makes economic sense for everyone. By recognizing women’s multi-faceted roles and considerable market potential, FSPs can create an impact far beyond their top and bottom lines. In doing so, they will not only be able to improve access for a segment that has been traditionally under-served but can also help reduce the widening of the gender gap.


Moin Qazi, PhD Economics, PhD English, is a member of the TRANSCEND Network for Peace Development Environment and a member of NITI Aayog’s National Committee on Financial Literacy and Inclusion for Women. He is the author of the bestselling book, Village Diary of a Heretic Banker. He has worked in the development finance sector for almost four decades in India and can be reached at

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This article originally appeared on Transcend Media Service (TMS) on 18 Sep 2023.

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