Empowering Women: Bridging the Digital Finance Gap

Howard Davidson Headshot - Global Banking | FinanceBy Howard Davidson is the CMO of Almond FinTech

There is a troubling issue within digital finance. Historically, women have faced all sorts of barriers socially and economically. Unfortunately, even in our modern time, the reality is that women aren’t getting their fair share of opportunities.

Women’s path to financial independence and inclusion is hindered because they need access to digital finance. We can change this, but it will take a lot of work. The destination will be worth it.

There lies a gap in digital finance known as the digital gender divide. This disparity isn’t just about statistics; it’s about systemic barriers preventing women from accessing financial services.

Digital finance is the key to convenience and opportunities in our modern lives yet, many women are sidelined and aren’t able to fully participate in these modern conveniences. Globally, women have a significantly reduced chance of accessing financial services. Financial services include bank accounts, credit, and even digital payment methods.

It’s easy to forget that behind the numbers are real people and stories of women who have missed opportunities and untapped potential. There are many issues at play when it comes to this digital gender divide. It isn’t just about a lack of technology access but also socio-economic factors, cultural norms, and, unfortunately, even legal restrictions that overwhelmingly affect women.

For example, On average, women have 77 percent fewer legal rights than men do around the world. More alarming is in 2022, reforms targeting legal gender equality hit a 20-year low. It doesn’t matter if the woman is from a rural village or an urban center; women everywhere are facing uphill battles when it comes to getting access to financial services, and it only keeps the cycle of inequality and economic dependency going.

It’s not just about leveling the playing field and making things equal for women. It’s about helping to empower women so they can take control of their financial futures. Let’s further examine the digital gender gap and explore how we can reach better equalization of access and empowerment for women.

Let’s dive into some numbers. Globally, 74% of women have access to an account at a financial institution, as opposed to 78% of men. While this isn’t a huge gap, it’s more glaring in developing countries. In such countries, this is where most people with no bank accounts live. Take Sub-Sahara Africa as an example. 61% of the men have a bank account compared to 49% of women.

The World Bank recognizes that getting money into a bank account is integral to saving, borrowing, and keeping money safe. These factors make it obvious why narrowing this gap in digital finance is critical to helping women thrive. Getting paid for a job, receiving funds, or receiving a subsidy through digital banking is the key for women to participate in the financial system.

There are other reasons why women are adversely impacted by digital finance. Women statistically have jobs that pay in cash. Women are also bound to local cultural conventions, which enforce rules about who gets a job, who has to take care of children, and who does unpaid domestic household duties.

Another example of the disparity between men and women regarding the gap in digital finance is in Latin America. Studies have shown that gender affects interest rates. A 2021 Columbia’s Central Bank report disclosed that men routinely get lower interest rates than their female counterparts. Despite the fact, the men had higher profile risks. The study’s conclusion is backed by five years of stats from microcredit, mortgages, and other consumer loan items.

An example of how digital finance has liberated women is Liberia. In Liberia, teachers had to travel for up to 10 hours on a round trip to get cash from their wages. When teachers had to travel to get their money, they would often be unable to show up to work. On top of traveling to get their cash, they spent as much as 15 percent of their wages on the trip. Now that the teachers get paid digitally, they gain, on average, 13.5 hours every two weeks. Digital payments also helped to ensure a 90% reduction in obtaining their money. The time saved is half a day every two weeks, better spent either in the classroom or with their family.

When women have access to digital finance, they have more control over their lives. For example, in Bangladesh, the majority of the workforce in garment factories is made up of women. As discussed above about cultural norms, women in Bangladesh routinely have to give their wages to their parents or if they are married to their husbands.

They have no control over their money despite being the ones who earned it. Research from the Better Than Cash Alliance showed that when garment factories pay their women workers digitally, the vast majority of women, 69%, report that they can control their own money because their husbands, parents, or family members can’t take the cash they get paid.

Beyond some of the issues discussed above, another problem that is an obstacle to women is needing help to prove their identity. The World Bank has recently highlighted this I.D. issue and its far-reaching consequences on women. This I.D. issue prevents access to any available financial services and impedes the woman’s ability to build up a credit history and gain entry into legitimate employment opportunities. These factors, unfortunately, lead to the continuity of the poverty and marginalization cycle, which traps women in financial insecurity.

Addressing the I.D. issue is critical to helping women have economic growth.

We must recognize policy changes must be balanced with financial institutions’ profitability and equity for women. It’s not a tiny barrier. Fintechs, banks, and the public and private sectors can’t individually resolve digital finance issues.

Cooperation is required to have equitable financial access for all women between those in governmental powers and the private sector service providers who can give deep insight into what can be changed and how.

Lawmakers must actively work on creating gender-relevant laws, regulations, and policies to help women. Additionally, they must work to ensure women can gain access to financial institutions through other means than simply an I.D. Conversely, they can make it simpler for women to obtain an I.D.