Financial Inclusion

Women are less likely to have a bank account than men, and the gap in male and female account ownership is not closing. Programs that target gender discrimination are most likely to help women’s financial inclusion.

For most people, being economically independent means having access to a bank account. Yet there are 2 billion people worldwide who lack this very basic service. The majority of these people live in developing countries. They are known as “the unbanked.” The World Bank’s financial inclusion index shows that while 94 percent of people in high-income countries have access to an account, only 54 percent of people in the developing world do.

Underlying this geographic gap is a persistent gender gap: Women are less likely to have a bank account than men. Globally, 42 percent of women do not have bank accounts, compared to 35 percent of men; 74 percent of women do not have any formal savings; and 90 percent do not have access to formal credit. And while overall the number of people with bank accounts is increasing – 700 million more people gained an account between 2011 and 2014 – the gender gap has not decreased.

The global gender gap in account ownership has remained at a stubborn 7 percentage points since the World Bank began collecting financial inclusion data. But this figure conceals wide regional variations. In high-income countries, the gap is virtually nonexistent. But in the Middle East, women are half as likely to have an account as men, while in South Asia, the gap stands at 18 percentage points.

Without access to a bank account, women face difficulties in saving their own money, earning their own income and, by association, lifting themselves out of poverty.

Why Women Don’t Have Accounts

Why do these women remain “unbanked”? A World Bank survey has found that only 4 percent of people who don’t have bank accounts say they wouldn’t want one. The majority of people say the reason they don’t have an account is because they don’t have enough money to open one. With women more likely to be poor than men, it’s no wonder they are less likely to be able to open an account.

But it is not just lack of money that prevents women from getting their own bank accounts. Women are less likely to have the identification documents required to open an account; the extra burden of unpaid care work they carry out in the home makes it harder for them to travel to a bank to open or maintain an account and in some countries women’s mobility is formally restricted by cultural pressures or by the law. Most often, the fact that women have an unequal say in how household finances are saved or spent means they’re even less likely to be able to manage their own money.

One of the driving factors behind women’s financial and digital exclusion is lower levels of literacy among women. Evidence from India shows that disappointing results from a financial inclusion program could be due to high illiteracy among the sample population.

Women are also harder to identify as being in need of financial services. Without gender-disaggregated data about households, and with women often lacking the social networks that men have, many remain invisible to development workers and banks alike.

Privacy and Control

Financial inclusion programs seem to work best when they address women’s bargaining power within a household. If women have control over their own accounts, rather than sharing accounts with men in the household, they are able to invest their money how they see fit. Depositing salary or government transfers into a woman’s personal account can also increase her employment prospects.

A recent financial inclusion program in the Indian state of Rajasthan required women to be designated head of household when it came to receiving government benefits. This led to 66 percent of women who did not have a bank account prior to the program being signed up to a financial institution.

Rather than working around restrictive traditions that prevent women from acting independently, some financial inclusion programs address these traditions head-on. Working with both men and women to change attitudes on whether women should be able to leave the home to work, for example, can have a positive effect on women’s overall independence, as well as providing them with access to basic financial services.

Digital Technology

Mobile technology has dramatically increased the potential for financial institutions to reach more people in the developing world. Services such as the mobile payment system M-Pesa have allowed many financially excluded people to make non-cash payments for the first time, particularly women.

But, crucially, women are much less likely than men to own a mobile phone in the first place. There are 200 million fewer women with mobile phones than men in middle-income and low-income countries. In South Asia, women are 38 percent less likely to own a phone.

Having access to digital banking services overcomes many of the physical barriers that prevent women from signing up for bank accounts. But in situations when men control women’s access to mobile phones, it remains impossible for those women to gain financial independence.

It’s as important to lower barriers to access mobile technology as it is to lower barriers to access financial accounts. The same lack of identification documents that prevents women opening a savings account can also present significant problems in signing up for a mobile phone. Indeed, in some countries it can be more difficult to get a SIM card than a traditional bank account.

Digital banking apps also need to be designed with women’s specific needs in mind. Evidence from Myanmar shows that women are more likely to say they don’t need to use technology, probably due to a lack of gender-sensitive app development.

What Financial Inclusion Can and Can’t Achieve

International organizations and development NGOs have taken up the cause of financial inclusion with enthusiasm. And for banks the world’s 2 billion “unbanked” represent an untapped market of potential new customers.

But research shows that financial inclusion is not as simple as merely signing women up for bank accounts. The underlying factors that prevented them from accessing accounts in the first place must also be tackled. Without a strategy to take on wider gender discrimination, there is even a risk that financial inclusion programs end up funneling more money to men.

A bank account alone does not magically make a woman financially independent, nor does it protect her from prevailing cultural and social norms that restrict her autonomy. It may not even lead to her having any more money. But financial inclusion can lead to better educated children, better resilience in times of emergency and better access to formal employment.

As with so many issues of gender equality, the evidence suggests that successful financial inclusion programmes are those that are designed to change damaging gender norms rather than work around them.