Closing the gender finance gap: Three steps firms can take
April 15, 2015 Editor 0Despite eye-opening market potential — women control a total of $20 trillion in consumer spending — they have somehow escaped the notice of the private sector as an engine for economic growth. Women are 20 percent less likely than men to have an account at a formal financial institution. Yet a bank account is the first step toward financial inclusion.
Why is it important for the private sector to help with this first step?
In increasingly competitive global markets, companies are searching for ways to differentiate themselves, to deepen their reach in existing markets and to expand to new markets. Greater financial access for women would yield a growing market opportunity with phenomenal profit potential for companies. The size of the women’s market, and the resulting business opportunity, is striking:
- Business credit: There is a $300 billion gap in lending capital for formal, women-owned small businesses. Of the 8 to 10 million such businesses in 140 countries, more than 70 percent receive few or no financial services.
- Insurance Products: The Female Economy, a study in the Harvard Business Review, reported that the women’s market for insurance is calculated to be worth trillions of dollars.
- Digital payments: Women’s lack of cellphone ownership and use means that millions cannot access digital-payment systems. Closing the gap in access to this technology over the next five years could open a $170 billion market to the mobile industry alone.
Greater financial access for women would yield a growing market opportunity with phenomenal profit potential for companies.
For the past several years at IFC, I’ve been working with the private sector, namely financial institutions, to address the supply-and-demand constraints that women face when trying to access the formal financial system. IFC tackles these constraints in three ways:
- Defining the size of the women’s market, female-owned and -led SMEs, and as individual consumers of financial services
- Showing financial institutions how to tap into the women’s market opportunity by developing offerings that combine financial products, such as credit, savings and insurance, with non-financial services such as training in business skills
- Increasing women’s access through convenient delivery channels, such as online, mobile and branchless banking
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Categories: World Bank PSD
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