International Women’s Day 2018! Financial inclusion key to close India’s gender gap: Mary Ellen Iskenderian

Digital tech widens the divide between men and women, as only 44 per cent of women in India own phones and less than 2 per cent have mobile accounts, explains Mary Ellen Iskenderian

Gender parity has taken its rightful place as a global development priority. By setting ‘Gender Equality’ as a standalone Sustainable Development Goal, the United Nations recognises the economic and social imperative of closing the gap. In fact, a growing body of research indicates that without a sustained global effort towards gender equality, none of the other 16 goals will be achieved.

India’s in WEF ranking

While India is ranked an impressive 15th out of 144 countries in political empowerment, it is ranked 112th for education and 141st for health and survival. The economic participation ranking is 139th out of 144 with a 66 per cent gender gap. While examining the indicators used to measure economic participation, it was found that Indian women are significantly behind in labour force participation (65 per cent gap) and earned income (77 per cent gap).

There is also an 85 percent gap between women and men serving as legislators, senior officials and managers. According to WEF, closing the economic participation gaps in the US (24 per cent) and Japan (45 per cent) could add an additional USD 1,750 billion and USD 550 billion respectively to the countries’ GDPs.

The role of financial inclusion

One of the most effective accelerators of economic participation is financial inclusion, particularly in regions like South Asia, which has the largest gender gap in bank account ownership in the world.

Women make up more than half of the 1.3 billion Indian population, a majority of whom live on under $4 a day. There remains a 7 per cent gender gap in bank account ownership according to the 2014 Global Findex, and a 14 per cent gap in account usage according to Omidyar Network.

The financial inclusion landscape in India shows mixed promise. The Pradhan Mantri Jan Dhan Yojana programme is a government initiative to bring all Indians access to financial services. However, the programme requires one bank account per household, which is likely to be opened in the man’s name.

Another initiative is the self-help group system in which commercial banks open accounts for groups with 15-20 members, usually low-income women, using their pooled savings.

However, our research shows that 10 times more women than men in India belong to informal savings groups (not linked to a bank), demonstrating the great value that women place on setting money aside.

Digital technology presents powerful opportunities to close the overall financial inclusion gap. India’s Aadhaar biometric identification system, represents a significant accelerator for inclusion in the formal economy. Lower costs of mobile phones and the explosion of financial technology companies (facilitated by the information and access made available by Aadhaar) are also opening up new paths to bring people into the formal financial sector. However, digital financial services have shown that while effective in closing the financial inclusion gap, they can actually widen it due to lack of identification required for most banking services.

Much of the increase in India’s overall financial inclusion was driven by mobile technology. However, only 44 per cent of women in India own phones and less than 2 per cent have mobile accounts. So, rather than serving as a fast track to financial inclusion for everyone, digital actually widened the divide between men and women.

Additionally, India’s demonetisation in 2016 also had a profoundly negative impact on women’s financial inclusion. This abrupt move away from cash, compounded by their more limited access to mobile phones, was felt disproportionately by women who are more likely to operate their businesses in the informal, cash-based sector.

Untapped market

We know that low-income women in India are regularly borrowing and saving through informal means, so how do we create a demand for formal products that can provide more secure and effective financial tools? To start with, financial service providers must approach women as individual clients with complex financial needs, instead of focusing on women through the more limited lens of microcredit, group loans or payment platforms.

At Women’s World Banking, we utilise behavioural and women-centred design techniques to develop, iterate and improve on solutions to help low-income women to engage with financial services and products. Financial service providers that are designing products to overcome these types of barriers are discovering that understanding women customers is critical. A nearby example is in Pakistan where Women’s World Banking is partnering with mobile network operator Jazz with support from the Bill & Melinda Gates Foundation. With their mobile wallet known as JazzCash, Jazz saw that only 15 per cent of their customers were women, but that once women had opened an account, they were avid, profitable users of the product.

In India, we are embarking on a new project with Ujjivan Financial Services, Pvt. Ltd. with support from the Visa Foundation. Formerly a microfinance institution that recently transformed into a small finance bank, Ujjivan can now serve the women’s market with savings and insurance products. We will conduct research to understand what women need from these products, leverage digital channels for delivery, and package the products together with digital and financial education services to help women grow small enterprises while making them more resilient. As we narrow the financial inclusion gap and move closer to the goal of gender equality, we will put in motion a chain of events that cannot fail to lead us to achieving all of the Sustainable Development Goals.

Iskenderian is President and CEO of Women’s World Banking, the global non-profit devoted to giving more low-income women access to the financial tools and resources.

Courtesy: India Development Review (idronline.org)