Skip to main content

Harnessing the transformative potential of women’s financial inclusion


Governments and private sector actors are intensifying efforts to foster financial inclusion in sub-Saharan Africa. Technological developments in financial services, mainly mobile money, has led to an increase in formal account ownership from 24% of the sub-Saharan population in 2011 to 34% in 2014, according to World Bank Findex data.

Much remains to be done to close gender gaps, however. For example, 70% of women remain financially excluded compared to 61% of men. Although financial inclusion is believed to be key to women’s economic empowerment, improving access to financial products and services alone may not have a meaningful impact on their lives. Rather than focus exclusively on access, there is a need for a more transformative approach to financial inclusion that involves deconstructing underlying socio-cultural norms and gender barriers involved in financial markets.

IDRC funded a series of background papers to explore whether and under what conditions financial technology, behavioural interventions, and social norms can lead to transformative change.

The impact of financial technology on women

New digital technologies are revolutionizing the financial services industry around the world. Africa has been an innovation hub in this area due to its rapid adoption of mobile communication networks. The nature of banking is therefore shifting, with these new players disrupting traditional financial modes to create new innovative service.

The scoping paper Exploring fintech solutions for women identifies five reasons why women have less access to financial services:

  • lack of consistent income
  • lower levels of financial literacy
  • legal and societal restrictions
  • low mobile phone ownership
  • lack of decision-making power in the household.

Technology-driven financial innovation has the potential to close the gender gap by targeting women with alternative products. Solutions include, for example, products that combine a mobile wallet micro-savings account with health insurance to increase women’s access to health services. There is also great potential for innovation in strengthening institutions that  women depend on — co-operatives, savings groups, and microcredit institutions — by offering information technology and management information systems that these smaller players in the financial system can use to improve their business.

So far, most financial technological innovations in the region have been gender-blind, in the sense that few have targeted women specifically. Going forward, there should be an increased focus on solving challenges in critical sectors and services that are key to women.

Using behavioural science to influence the financial decisions of women

One way to bridge the gender gap in financial inclusion is to understand and influence how women interact with financial service providers and their products. 

The IDRC-supported review What can behavioural science tell us about the financial decisions of women? identifies how the design of financial products can influence women’s decisions. Financial service providers can encourage certain behaviours by, for example, providing  default settings for  financial products, such as automatic deposits to a savings account, unless the client opts out. This design can have a progressive and positive effect on the amount that women save.

Commitment is another area of intervention that can influence women’s financial decisions. The simple act of asking women what their goal is, how they intend to meet this goal, or when they intend to make a payment toward this goal helps to clarify the client’s intentions and increases their likelihood of achieving the goal.

Client communication such as text-message alerts and reminders can also affect women’s decisions. Communication that elicits emotional reactions can shape the way people act. For example, a soap opera in South Africa with a storyline about financial management and avoiding debt traps (such as gambling and buying goods with installment plans) led to a 9% increase in borrowing from a formal bank among the people who watched it.

Financial service providers can also vary pricing and financial benefits to increase women’s use of bank accounts. Discounts and incentives, including waiving fees and minimum balances, have proven effective to attract women clients.

There is sufficient evidence that behavioural interventions in many instances do not have a uniform impact on the financial decisions of men and women. These interventions can either widen or reduce the gap between men’s and women’s use of financial products. Future research is needed on how to structure and design financial services to best suit the needs of women, including those from underserved populations.

Looking at financial services from women’s perspectives

A third review, Demand-side review of financial inclusion for women in entrepreneurship and smallholder agriculture, looks more closely at why financial inclusion fails to significantly improve women’s productivity, income growth, and empowerment.

The review found that women in agriculture and entrepreneurship are more affected than men by family care responsibilities, lack of time, restricted legal rights, physical security concerns, and less education and access to information. Women in agriculture face more constraints to productivity than their male counterparts due to less secure land rights, less personal time for labour, less access to other people’s labour, fewer inputs like seeds and fertilizers to do the job, and mobility constraints. Although entrepreneurship provides more attractive options for some women, it has its own set of constraints including the fact that women have less business experience, concentrate in sectors with low start-up costs, and have less access to basic financial services such as credit, savings, and insurance, than men.

These barriers point largely to underlying socio-cultural norms that regulate how and where men and women fit into the societal structure. Women are typically less willing and less able to take risky investments in business or agriculture, and are less likely to succeed in their business or agricultural ventures. For women to use financial products on a continuous basis, they need to match their low and unstable incomes and their propensity to invest in household needs such as health and education.

Along with accessibility issues, financial inclusion programs need to involve other methods, like financial training and education programs. Technology offers the opportunity to reach women more cheaply and effectively — allowing them to access products from the privacy of their mobile phones and providing more flexibility around the size and scale of the product. Although there are promising advances, further research is needed on how financial services can be designed to meet women’s needs based not only issues of access, but rather the underlying and systematic challenges that  restrict access and uptake in the first place.

Read the background papers to learn more:

Read the related article Transforming gender relations to achieve financial inclusion.