Fully one-third of the world’s adults do not own a bank account or mobile money account and, as a result, are shut out from all formal financial services. Without an account they are effectively denied the ease and efficiency of making and receiving payments, having a safe place to accumulate savings, and, perhaps most impactful, borrowing through the formal financial system. But there has been a sea change in the effort to bring this excluded population into the formal financial system as the concept known as financial inclusion has emerged in recent years as a fundamental, evidence-based underpinning for a broad range of economic, social, and development goals. Financial inclusion is now widely perceived not so much as an end in itself but as a means for people to own the skills and the tools they need to bring about change in their own lives. The idea of financial inclusion as an essential enabler of broad-based change is best captured in the context of the UN’s Sustainable Development Goals. In 2015 the United Nations General Assembly established a blueprint to achieve a better and more sustainable future for all by 2030, dubbed the 17 Global Goals, although the term “universal financial inclusion” was notably absent. And yet eight of the goals—including Goal 1, “End poverty in all its forms everywhere,” and Goal 5, “Achieve gender equality and empower all women and girls”—expressly require the achievement of financial inclusion as a necessary condition for success.
While the term “financial inclusion” is relatively new, the importance of delivering financial services to people who do not otherwise have access is not. To understand the current landscape, it’s critical to review how the field has evolved. Although this is not a comprehensive history of informal financial services or an exhaustive critique of microfinance, there are invaluable lessons to be drawn from these efforts. It’s also essential to appreciate the ingenuity local communities have applied to meet their own financial service needs long before commercial financial services were available to them. From this point of view, there are important insights to be gained when designing successful financial solutions and considering how best to engage this population. This is especially true when taking into account the enduring value of group-based solutions, particularly regarding the needs of women, coupled with tightly held beliefs that inhibit trust building with formal financial service providers such as banks. Microfinance, for its part, provides equally constructive lessons about serving the needs of low-income women customers as well as a cautionary tale about transforming a development model into a sustainable, mission-focused business.
These lessons couldn’t be more relevant now as digital financial services are accessible through cell phones, at a dramatically accelerated pace of change that represents only the latest stage in the evolution of financial inclusion. This drive to provide safe, affordable, and convenient financial services to underserved people has made exponential progress in the last half century. While the impact of digital technology on financial inclusion has been profound, the benefits have not been evenly shared, with women representing well more than half of those who remain financially excluded. Financial inclusion cannot and will not fulfill its potential as a driver of economic change unless the inclusion of women is made an explicit priority. It is therefore crucial to lay out the current state of play for women’s financial inclusion, both in terms of the persistent lag in women’s access to cell phones (particularly internet-enabled smartphones) and in terms of the outsize benefits that accrue to women and their families once they are able to take advantage of digital financial services.
The barriers and challenges women face in gaining access to financial services are different from—or sometimes just higher than—those encountered by men, so it is important to keep those challenges in mind when designing solutions to address the differences. While low-income men face many barriers to inclusion, such as a lack of access to identification documents and the need for greater financial and digital literacy, those same barriers are often more difficult for women to surmount because of prevailing gender and societal norms. That particular obstacle course is magnified by the persistent lack of gender-disaggregated financial data: regulators fail to require financial institutions to report information on product usage and behavior by female clients, while even the financial service providers that do collect these data often ignore them when making business decisions. This uniquely female barrier of data invisibility, combined with a dogged belief on the part of both policymakers and financial service providers that policies and products are gender neutral, leads to defaulting to solutions that meet men’s needs, preferences, and lived experience. There really is no such thing as a gender-neutral solution.
Once a woman makes it past these barriers to inclusion, the way she spends, saves, and invests has a direct and measurable benefit on her entire family, and on children in particular. But what about the women themselves? What happens to a woman when she has full and unfettered access to a bank or mobile money account and other financial tools such as loans or insurance? Part I closes with a look at how women’s agency is affected through their interactions with formal financial services and whether—and in what way—they are empowered by them. A framework is introduced that tracks how various changes affect the ways a woman might experience empowerment through financial inclusion, from changes in her material well-being and knowledge base to changes in her relationships with others around her, and even in her own self-esteem.
There is now wide-ranging confirmation that financial inclusion enables, accompanies, and accelerates the achievement of many economic, commercial, and personal goals. Making deliberate efforts to ensure that women are included will result in achieving those goals faster, more equitably, and probably less expensively than clinging to the false idea that gender-blind finance exists. An oft-quoted proverb advises, “If you want to go fast, go alone. If you want to go far, go together.” Women’s financial inclusion would suggest that if you want to go faster and go farther, go with the women.