Gender-neutral fintech isn’t working for women 

Financial technology (fintech) has often been touted as a powerful enabler of financial inclusion. And over the past several years, the fintech industry has enabled important advances in access to financial services – including digital savings, credit, insurance, payments, and remittances – for previously underserved populations. But when it comes to women’s inclusion, we have a long way to go. 

To find out how fintech firms are delivering on the promise of women’s financial inclusion, and which practices work, we asked industry experts.

A new study by the International Finance Corporation (IFC), based on a survey of 114 fintech firms from 17 countries, captures what they had to say. The findings are telling. 

Although 59 percent of the fintech firms included in the study collect sex-disaggregated customer data, only 32 percent of firms use this information to tailor the design and delivery of financial services for women.

Instead, firms tend to take a “gender-neutral” approach, which does not directly address how to reach women at scale. Perhaps it should not be surprising, then, that for a majority of fintech lenders, women constitute less than 25 percent of their business customers. 

Paradoxically, the report also found that executives in the majority of fintech firms considered women to be valuable customers: more loyal, less risky, and with better repayment rates compared to men. The IFC study results affirm this assessment: while only a small percentage of the surveyed fintech firms tailor products and services to women, most of those who do (63 percent) said that women customers generate higher customer lifetime value than men. 

These firms can offer valuable models for others. Consider the Colombian digital lender Juancho Te Presta: recognising that women have higher loan-approval rates and lower delinquent-loan rates, the company began using data analysis to tailor products and credit conditions to meet women’s needs and preferences. For example, it piloted women-only credit products that cut instalment costs by about 15 percent. 

Similarly, mfarmPay – a fintech firm operating in Ghana and Kenya – noticed that women farmers display better loan-repayment patterns, and that their involvement in agriculture over time tends to be more consistent than that of men, who might switch to other activities. So, the company began to consider gender-related factors alongside geodata in credit scoring, thereby narrowing the lending gap between financial institutions and smallholder farmers. The strong presence of women in mfarmPay’s management team helps the firm to identify gender-related constraints and informs product design and features. 

There are also fintech firms that use alternate data sources to generate credit histories for women customers. Others are providing digital literacy and business training to women alongside financial services, hiring gender-diverse cohorts of agents, and working with telecoms companies to provide targeted financial services to women farmers. And yet, overall, the fintech industry is still missing the opportunity to accelerate financial inclusion for women. 

The business case for action is clear. Women comprise an enormous market segment with growing economic and social power. 

When it comes to understanding, valuing, and investing in women’s inclusion, the fintech industry is not moving fast enough. And speed is essential: without drastic acceleration of women’s financial inclusion, gender bias may become hard-coded into the digital financial-services industry. 

The good news is that, as a relatively nascent industry, fintech can still build gender inclusion into its design and delivery. 

-- Project Syndicate
This article was co-authored by Jessica Schnabel, the global head of the International Finance Corporation’s (IFC) banking on women business, and Emmanuel Nyirinkindi, the vice president of cross-cutting solutions at IFC