Gender-Neutral Fintech Isn’t Working for Women

WASHINGTON, DC – 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, based on a survey of 114 fintech firms from 17 countries, captures what they had to say. The findings are telling.

Although 59% of the fintech firms included in the study collect sex-disaggregated customer data, only 32% 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% 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%) 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: recognizing 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 installment costs by about 15%.

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.

The India-based firm Indifi developed short-term small loans to help women-led micro, small, and medium-size enterprises to build credit histories. An Egyptian fintech firm has developed a mobile wallet solution that enables the secure and instant delivery of monthly social transfers, thereby helping women to save time and travel costs – and avoid possible harassment.

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. Moreover, they tend to show higher customer loyalty, more financial discipline, better loan performance, and stickier deposits. Women’s financial inclusion leads to job creation, higher productivity, and faster GDP growth. There are even links between women’s inclusion and climate-conscious business and investment decisions.

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. As our study shows, a number of fintechs have already discovered the potential of gender-inclusive design. That must become the norm, not the exception.