Empowering Women Through Digital Financial Solutions

Did you know that in addition to offering many economic benefits, bank account ownership -  which can be achieved through digital financial solutions - can make you happier?  Researchers found this to be true when looking at data from the Gallup World Poll surveys compared against Global World Findex data.  

At the February 4th Marketlinks event, Dr. Ruth Goodwin-Groen of the Better Than Cash Alliance (BTCA) and Dr. Leora Klapper of the World Bank Group highlighted the benefits of digitizing financial solutions to advance women’s economic participation.  In addition to happiness, these include:

• Bridging the gender gap in account ownership and increasing women’s formal financial activity
• Offering privacy, safety, confidentiality, control over their finances, and financial decision-making power
• Increasing women’s labor participation
• Improving the performance of women-owned businesses

Some developing economies, such as Kenya, have proven successful in mainstreaming an array of digital financial services.  But other parts of the world are lagging behind, particularly where network and banking infrastructure is insufficient and/or the right enabling environment isn’t in place.  As Dr. Goodwin-Groen and Dr. Klapper highlighted, there are numerous challenges to expanding digital financial services in developing countries. For women in particular, the lack of phone ownership remains a large barrier to accessing digital financial services: 1.7 billion women in low- and middle- income countries do not own a mobile phone. Other challenges mentioned during the event included: inadequate network infrastructure, low financial literacy, low digital literacy, lack of formal identity cards, and legal barriers.

What role then can we play as donors, practitioners, and proponents to help overcome these challenges?

In her post, Digital Finance, the View from USAID,  Kay McGowan states that although donors will never be in the business of providing financial services, they “often have a critical role to play in setting the conditions so that the private sector can fill the void that has left some two billion people globally without access to safe, affordable basic financial management tools.” 

Donors can help expand women’s access to digital finance opportunities by working with governments to create an enabling regulatory, policy, and tax environment that will incentivize service-providers to invest in scalable services and will also allow financial services to thrive. Additionally, donors can work with the private sector to help fund market infrastructure, foster institutional demand across sectors, and help businesses expand digital payments acceptance.

So what does this look like in practice? 

In recent years, USAID partnered with GSMA to help bridge the gender gap in mobile access and usage. If women have ownership of mobile phones, they can privately and securely access digital financial services. A report by GSMA found that not only can a woman’s ownership of a mobile phone increase her use of digital financial services, but digital financial services can also be a catalyst for women’s phone ownership, as with M-Pesa in Kenya. USAID also partnered with the UN World Food Program, the mobile network operator Econet, and Steward Bank to pilot the first mobile money food assistance initiative in Zimbabwe. 

By working together, donors, governments, development organizations, and the private sector can address the many challenges and barriers to expanding digital financial services and can bring more women into the global economy. Countries such as Kenya demonstrate the tremendous benefits that come with ensuring that digital financial services are available to everyone, particularly women. Although there are impressive early examples where digital finance is succeeding, our work is far from over--especially because digital financial solutions can lead to a happier world.