Fin Tech Industry: Bridging the Gender Gap

By: Mona Ayman Shah

Management Sciences student at SZABIST.

In order for economies to grow and prosper, it is essential to have equal access to financial services. Technology can be a great equalizer to help remove barriers and change the financial landscape, specially in developing countries. Fin Techstartups all over the world have used have technology to their advantage to lower transaction costs and reach underserved populations.

One of the most underserved population segments when it comes to Financial services is women. Globally, there is a gender gap in access to financial services but it is even more significant in the developing world. According to research by McKinsey & Co. andGoldman Sachs, lack of financial inclusion of women in developing countriesis one of ten “impact zones” that is hindering growth and is causing the lack of gender parityat workplaces.

FinTech can help expand financial services to women, who are often excluded from formal financial services. The COVID-19 pandemic has made it even more critical to address gender inequality as research shows that women have been disproportionately impacted by the economic impacts of the virus. According to a report in 2021, in least developed countries, the financial inclusion for women is less by 9% and women are less likely to own a mobile device than men by 7%.

Pakistan has the third largest unbanked adult population globally with about 100 million adults without a bank account, according to the World Bank.While financial inclusion in general and digital inclusion in particular has been slow to take off in Pakistan, it has been particularly slow for women due to a number of different reasons.

In 2017, 34.61% of males over the age of 15 had an account at a bank or another type of financial institution in Pakistan, compared with 7.03% females. Similarly, 13.54% males over the age of 15 own a debit card whereas the number of women for the same is only 2.70%. One of the reasons for this is a culture which restricts women to home-based activities while only men engage with institutions outside of home and carry out all money related matters.

In terms of formal savings products at financial institutions, only 11% of women save in bank accounts(including mobile wallets). Women are more likely than men to lack credit history information, which restricts their access to get financing from financial institutions to start or grow their own businesses.The reasons citedby women in Pakistan for not saving in formal institutions include a lack of awareness of the benefits, lack of information about different products and institutions and the lack of trust infinancial institutions.

There is a huge potential to expand and grow as the market is largely unserved with low levels of women’s financial inclusionin Pakistan, even when compared to the country’s regionalpeers. Enabling women to have easier access to financial institutions through financial literacy and ease of use, will lead to economic growth and development in the country and FinTech can help shape that growth. Targeted policy initiatives can be taken which take into account the genders and leads to innovation that fits the needs of all. Fintech alone probably cannot bridge the gender gap. It is definitely a long road but Fintech can surely strengthen financial inclusion, which has far reaching benefits for the economy and the society.