Why we should rethink financial inclusion | The Daily Star
12:00 AM, April 30, 2018 / LAST MODIFIED: 01:43 AM, April 30, 2018

Why we should rethink financial inclusion

Financial institutions should ensure that their products are designed to better fit women's needs

The good news is that mobile phones and alternate banking channels such as agent banking are bringing millions of individuals into the formal financial system, meaning they have bank accounts or mobile money account for the first time. This is important because financial inclusion is crucial in helping people save money for emergencies, get loans to start businesses, and ultimately resulting in an improvement in their overall wellbeing.

The bad news, however, is that the financial inclusion gap between men and women in developing economies, especially Bangladesh, hasn't improved in the past six years; 65 percent of the unbanked in Bangladesh is women.

The Global Findex Database is the world's most inclusive dataset on how adults save, borrow, make payments, and manage risk and it has been published every three years since 2011. Based on more than 150,000 interviews around the world, the 2017 edition was released by the World Bank on April 19 and provides robust evidence of an increasingly inclusive financial world that is transitioning into a digital economy. For those who work for financial inclusion, this report is perhaps the most significant publication, giving the practitioners a lot to think about where we are and how the world's financial inclusion situation will evolve.

Universally, 69 percent of adults—that is 3.8 billion people—now have a bank account or a mobile money account. This is an increase from 62 percent in 2014 and just 51 percent in 2011. As per the Global Findex Database, 515 million adults have obtained an account from 2014 to 2017, and 1.2 billion have done so since 2011. While in some economies account ownership has risen, progress has been slower elsewhere, often held back by significant differences between men and women and between the rich and poor. 1.7 billion people around the world remain unbanked and 56 percent of the unbanked population is women. The gap between men and women in developing economies remains unchanged since 2011 at 7 percent.

In Bangladesh, the dialogue surrounding the financial inclusion gender gap has intensified over the past years as key stakeholders explore how best to engage prospective women customers in ways that meet the needs of both consumers and providers situated within different market contexts. Despite such efforts, the gender gap is nearly 30 percentage points. Development organisations and financial service providers have been focusing a lot on expanding women's capabilities, women's financial literacy knowledge and women's ability to use accounts. While this is a commendable and certainly necessary approach, there still needs to be a more critical and in-depth look at the way they are providing the financial services.

If financial institutions want to encourage higher adoption and greater usage of financial services among women then they need to ensure that their products are designed to fit their unique financial lives. They need to better understand the needs of women and create products that serve them. Studies have shown that when women obtain credit, they prioritise household responsibilities such as children's education and housing. Men prioritise business expenses and large investments such as land. Furthermore, women are more likely to work in the informal sector with lower and less consistent incomes, often interrupting their businesses to take on family responsibilities such as caring for sick children or the elderly. Loan repayments, therefore, can be more flexible and can have shorter durations to accommodate the women's life patterns.

Investing in financial innovations that work with existing informal networks in ways that enhance their benefits and reduce risk can help millions of women attain greater financial security and access other financial services including insurance, mobile banking services, and others.

And finally, financial institutions and other agencies working with women need to address the barriers that prevent women from benefiting from financial inclusion—whether it's gender norms that undermine women's ability to access financial services on their own right, lack of financial literacy, or lack of information.

At the end of the day, financial inclusion for women is not going to be achieved by trying to make women bankable, but by ensuring that financial services, products, and systems are women-focused. To narrow the gender gap and foster sustainable development, concrete steps that focus on enhancing women's financial inclusion are required.


Tasnuba Sinha works for FHI 360 (formerly Family Health International), a nonprofit human development organisation based in North Carolina, USA. Established in 1971, the organisation has long managed projects relating to family planning and reproductive health.

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