Using behavioral data, new report provides insights on how financial services providers can help close the financial gender gap in India
MUMBAI, India, (October 6, 2016) – BFA (Bankable Frontiers Associates) today released “A Buck Short: What Financial Diaries Tell Us About Building Financial Services That Matter to Low-Income Women”. The research report, which was sponsored by Omidyar Network, explores why women in emerging economies don’t access and use formal financial services to the extent of their male counterparts. Through the analysis of behavioral data from deep engagements with low-income, economically active women, the report identifies leveraging women’s social networks, tailoring tools to manage day-to-day transactions, and creating new digital, branchless platforms as some of steps needed to better cater to the 280 million women who are currently excluded from India’s formal financial system.
Even though the PMJDY (Pradhan Mantri Jan-Dhan Yojana) government program has helped reduce the financial gender gap by 20 percent since its inception, in 2015, India still registered an 8 percent discrepancy in access to financial services between men and women and a 14 percent difference in usage[i]. Estimates show that closing the gender gap could help financial services providers in the country unlock INR 280,000 crore–about $40 billion—in savings balances alone[ii].
“India has made strides to narrow the gender gap in access to financial services in the past few years; however, it is still significant, with one out of four excluded women in the world being Indian,” said Roopa Kudva, partner at Omidyar Network. “Understanding the barriers holding women back and designing financial products that help address them is not only the right thing to do, but also a good business opportunity for financial services providers.”
“The reality is that traditional bank accounts just aren’t that useful for a lot of women who move in and out of the workforce, earn very little money, and are typically managing day-to-day cash flows rather than big, long-term investments with their savings,” explained Julie Zollmann, senior associate at BFA and co-author of the research. “For financial service providers, this means building even lower cost tools to solve women’s money problems.”
Between 2013 and 2015, the financial gender gap in ownership of savings accounts has reduced from 17 to 11 percent in India. But more can be done, as women’s exclusion persists across income and education levels in the country, with 50 percent of women who earn more than INR 167—$2.50—per day and 45 percent of women with a college education being still financially excluded. Understanding the reasons behind this disparity is exactly where the behavioral insights brought by “A Buck Short” can be helpful to financial services providers.
Following the Financial Diaries methodology, the data analyzed in “A Buck Short” include both rich stories and detailed cash flows over time, offering a more nuanced view of surveyed women’s financial behavior, highlighting key differences from men’s, and uncovering compelling product design recommendations. Among the findings and recommendations provided in “A Buck Short” are:
The behavioral insights uncovered by “A Buck Short” also hint interventions policymakers looking to promote financial inclusion in India can carry forward, such as mandating that direct benefit transfers be deposited into women’s accounts and that providers better track gender-specific financial data.
[i] Usage is defined at a low bar of one banking transaction in 90 days.
[ii] Data compiled by Dalberg through analysis of public available sources, including: Intermedia FII (2015), Reserve Bank of India Basic Statistical Returns of Scheduled Commercial Banks in India Vol. 44 (2015), and PMJDY Progress Report (2016).
Omidyar Network India invests in bold entrepreneurs who help create a meaningful life for every Indian, especially the hundreds of millions of Indians in low-income and lower-middle-income populations, ranging from the poorest among us to the existing middle class. To drive empowerment and impact at scale, we work with entrepreneurs in the private, nonprofit and public sectors, who are tackling India’s hardest and most chronic problems. We invest in the areas of Digital Society, Education, Emerging Tech, Financial Inclusion, Cities & Innovation and Property Inclusivity. Omidyar Network India is part of the Omidyar Group, a diverse collection of companies, organizations and initiatives, supported by philanthropists Pam and Pierre Omidyar, founder of eBay.