closing the gender gap in financial inclusion through fintechbased money transfer, financing, and...

Erica Paula Sioson, Research Associate, ADBIChul Ju Kim, Deputy Dean, ADBI

Closing the Gender Gap in Financial Inclusion through Fintech

briefpolicy

Key Points • Whilethepercentage

ofwomenowninganaccountinAsiaandthePacificincreasedfrom2014to2017,thegendergappersists.

• Forwomenlivinginruralareasindevelopingeconomies,anumberofbarriersmayhinderthemfromaccessingservicesatfinancialinstitutions:thedistancefromthebank,havinginsufficientdocumentstoopenabankaccount,familyorworkresponsibilities,orthemindsetandcertainattitudestowardsfinancialinstitutions.

• Fintechmayhavearoleinbridgingthegendergapinfinancialinclusion.Easeofaccessandusecanincreasetheformalizationofwomen’stransactions,protectingandeducatingthemagainstfraudandunfairtransactionsandempoweringthembymakingthemagentsoftheirownfinancialfutures.

No. 2019-3 (April)

© 2019 Asian Development Bank InstituteISSN 2411-6734

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

The Persisting Gender Gap in Financial Inclusion

According to 2017 data from theGlobal FindexDatabase published by theWorldBank,womenarestilllesslikelythanmentoownanaccountatfinancialinstitutions(Demirgüç-Kunt et al. 2018). In Asia and the Pacific, this is particularly true forBangladesh, India, and Pakistan, where the gap between the percentage of menand women owning an account is almost 30%. In other subregions, the resultsseem to vary. Countries in the Southeast Asia and Central Asia subregions showinteresting outcomes—data from the Philippines, the Lao People’s DemocraticRepublic(Lao PDR),Indonesia,Kazakhstan,andMongoliashowthatwomenaremorelikelytohaveaccountsthanmen.InVietNam,Thailand,andtheKyrgyzRepublic,thegapsseemrelativelysmallercomparedtoothercountries.

In 2017, compared to 2014, thepercentageofwomenowning an account inAsiaandthePacificincreased.NotableincreasesincountriessuchasTajikistan,SriLanka,India, and Indonesia have contributed to reducing the gap between men andwomen.IncreasesinthepercentageofwomenowningaccountsinthePhilippines,Indonesia,Kazakhstan,andMongoliahaveclosedthegapandevenreversedit.Mostcountrieshavemadeconsiderableprogress,exceptfora2%declineinVietNamandasurprising51%declineintheLaoPDR.

Whileoverall,morewomenarebeingfinanciallyincludedthroughhavingaccountsatfinancial institutions,thegendergappersists.Giventhecomplicatedrolesmanywomen continue to play in their households, opening an account andmanagingtheir financesata financial institutionmaynotbeapriority. Especially forwomenlivinginruralareasindevelopingeconomies,anumberofbarriersmayhinderthemfromaccessingservicesatfinancialinstitutions:thedistancefromthebank,havinginsufficientdocumentstoopenabankaccount,familyorworkresponsibilities,orthemindsetandcertainattitudestowardsfinancialinstitutions(MurataandSioson 2018).

ADBI Policy Brief No. 2019-3 (April) 2

Lao PDR = Lao People’s Democratic Republic, PRC = People’s Republic of China.

Source: Demirgüç-Kunt et al. (2018).

Figure 1: Share of Men and Women Owning an Account in Selected Countries in Asia and the Pacific, 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

AfghanistanBangladesh

PRCIndonesia

IndiaKazakhstan

Kyrgyz RepublicCambodiaLao PDRSri LankaMyanmarMongoliaMalaysia

NepalPakistan

PhilippinesThailand

TajikistanViet Nam

Female Male



Figure 2: Percentage of Women Owning an Account in Selected Countries in Asia and the Pacific, 2014 and 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


PRCIndonesia

IndiaKazakhstan

Kyrgyz RepublicCambodiaLao PDRSri LankaMongoliaMalaysia

NepalPakistan

PhilippinesThailand

TajikistanViet Nam

2017 2014

Closing the Gender Gap in Financial Inclusion through Fintech2 3

“Transaction costs remain high at many financial institutions, and strict requirements for personal identification can discourage many women from opening accounts.”

Data from the Global Findex Database 2017 show thatnothavingenoughfundstoopenandmaintainaccountsis a major reason why people do not have accountsat financial institutions (Figure 3). Admittedly, in manycases, financial institutions require a certain amount foropening and maintaining a bank account, which canintimidate possible clients. Apart from this, transactioncostsremainhighatmanyfinancialinstitutions,andstrictrequirements for personal identification can discouragemanywomen fromopening accounts. According to theWorldBank(HanmerandDahan2015),oneinsixwomenaged15 yearsorabovereportnothavingabankaccountbecause of a lack of documentation. Other subjectivereasons, suchas cultural and religious factors, trust, andmindset,contributetothelowratesofinclusionofwomenintraditionalfinancialinstitutions.

Harnessing Digital Payments to Reach the UnbankedFinancial technology is argued to be a tool that canfacilitate the closing of the gender gap in financialinclusion. According to Ozili (2018: 330), digital financepertains to financial services “delivered through mobilephones,personalcomputers,theinternetorcardslinkedtoareliabledigitalpaymentsystem”.Whiledigitalpaymentsarenotnecessarilynew,rapidadvancementsintechnologyinthepastdecadeandincreasesinfinancialflowsallovertheworld have put the focus on financial technology inrecent years. Global investments in fintech have risenrapidly in recent years, and by the beginning of 2018,investmentsroseto$41.7billion,surpassingthe2017valueof$39.4 billioninglobalinvestments(FintechGlobal2018).

Lao PDR = Lao People’s Democratic Republic.


Figure 3: Reasons for Not Having an Account at a Financial Institution (% of respondents)

0% 10% 20% 30% 40% 50% 60% 70%

Bangladesh

Indonesia

Cambodia

Lao PDR

Sri Lanka

Myanmar

Nepal

Pakistan

Philippines

Viet Nam

Insufficient funds Religious reasons No trust No documents Expensive Too far


According to Lauer and Lyman (2015), the relationshipbetweendigitalfinanceandfinancial inclusionisbasedonthepremisethatalargeamountoftheunderservedandexcludedpopulationowns(orhas)amobilephoneand that the provision of financial services throughmobilephonesandrelateddevicescan improveaccesstofinancialservicesforthissegmentofthepopulation.Thiswasbolstered inaUnitedNationsbriefreleasedin2016, which highlighted the role of digital finance inpoverty reduction and in increasing financial inclusionratesindevelopingeconomies(UnitedNations2016).

Thecontinuingincreaseinremittanceflowstodevelopingeconomieshasputthespotlightonfintechandhowitcanbe leveraged to channel remittances intodevelopment(RilloandLevine2018;MurataandSioson2018).Fintechinnovationscanfacilitatethefasterandsafersendingandreceivingofremittancesandlowertransactioncosts,whichcantranslatetoanincreaseintheamountofremittancesbeingsentandreceived.Loweringtransactioncostsalsoincludes lowering other costs related to sending andreceiving, such as transportation costs to reachmoneytransfer institutions,which canbe expensive, especiallyforhouseholdscutofffrommainroadnetworks.Further,newerinnovationsfacilitatevarioustypesoftransactions,which include more than sending and receiving andallow fordeposits and savings.With the ability to carryoutthesetransactionsonline,timecanbefreeduptobeinvestedinmoreproductiveactivities.

The role of mobile money and its potential forexpandingfinancial inclusionwasexploredasearlyas2009 in a studyby theWorldBankon thePhilippinesandtheuseofmobilemoneybytheunbanked(Pickens2009).The study’sfindingsshowedthatmorethanhalfof active users of mobile money are unbanked andthatabouta thirdof theactiveusers are livingbelowthepovertyline.Inthe2009study,themajorityoftheactiveusersreportedusingmobilemoneytechnologiesto receive domestic remittances. Since 2009, thenumber of clients using digital payments has beenrapidlyincreasing.Astechnologyadvances,moreuser-friendly and integrated digital payment technologiesarebecomingavailable.

Data from theGlobal FindexDatabase show that from2014to2017, formostof thecountries inAsiaandthePacific, therewere increases in thesharesofuserswhoreceived or made payments using digital payments.Significantincreasesintherangeof20%–40%areshownby Tajikistan, Thailand, Mongolia, Sri Lanka, KyrgyzRepublic, Kazakhstan, the People’s Republic of China(PRC), and Bangladesh. However, one notable findingis that for Cambodia, the data show a decline in thepercentageofusersofdigitalpaymentsfor2017.

Looking at Figure 5,we see thatwhile the percentageof digital payment users may have increased, the gapbetweenmenandwomen indigitalpaymentspersists.Countriesthathadsignificantchangesintheproportionof users using digital payments still show a relativelysignificant gender gap. India, Bangladesh, Tajikistan,and Pakistan still show large gaps, while Sri Lanka,Nepal,Malaysia, thePRC,andAfghanistanwereabletorelatively reduce the gaps between men and womenwhenitcomestotheuseofdigitalpayments.

Financially Empowering Women through Fintech More work needs to be done to leverage fintech toaddress the gender gap in financial inclusion. Asfinancial technologies become more advanced, easierto use, and more readily accessible, the impact theycan have on addressing the gender gap is becomingmoresubstantive.Evidencefromearliermobilepaymenttechnologies is just coming in,and the resultspoint totheroleoffintechinbridgingthegendergapinfinancialinclusion.

M-PESAisonesuchtechnology.M-PESAisamobilephone-based money transfer, financing, and microfinancingservice launched in 2007 by the largest mobile phonenetworksinKenyaandTanzania.Itallowsuserstodeposit,withdraw, and transfer money, and pay for goods andservicessimplyandeasilywithamobiledevice(SuriandJack2016).By2017,M-PESAspanned10countrieswithabout10millionusers.A recent studyon itsuptakeby

“As financial technologies become more advanced, easier to use, and more readily accessible, the impact they can have on addressing the gender gap is becoming more substantive.”


PRC = People’s Republic of China.


Figure 4: Difference in Share of Digital Payment Users between 2014 and 2017

–20% 0% 20% 40%


PRCIndonesia

IndiaKazakhstan

Kyrgyz RepublicCambodiaSri LankaMyanmarMongoliaMalaysia

NepalPakistan

PhilippinesThailand

TajikistanViet Nam



Figure 5: Share of Men and Women Who Made or Received Digital Payments, 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


PRCIndonesia

IndiaKazakhstan

Kyrgyz RepublicCambodiaLao PDRSri LankaMyanmarMongoliaMalaysia

NepalPakistan

PhilippinesThailand

TajikistanViet Nam

Female Male


SuriandJack (2016) shows that ithas liftedasmanyas194,000Kenyanhouseholdsoutofextremepovertyandthatwomen, inparticular, show thegreatest gains.ThefindingsshowthatwithM-PESA,femaleusers increasedtheirconsumptionandtheirprospects in theworkforce(Suri and Jack 2016). They estimate that because ofM-PESA,about185,000individualwomenmovedbeyondsubsistence farming into business or retail sales. Thestudy shows that rather than livelihood or jobs-relatedintervention, the introduction of such products thataddresstheirfinancialexclusionatamorebasiclevelcanimpact their financialbehaviorandmindsetas itputsarangeofoptionsdirectlyintotheirhands.

Newrisingfintechinnovations,suchasTencent’sWeChatWallet and Alibaba’s Alipay, to name a few, can beleveragedtobridgethegendergapinfinancialinclusionin Asia and the Pacific and around the world.WeChatWallet andAlipayhaveamassiveuserbase in thePRC;India’smovetowardsacashlesssocietyhasfacilitatedthegrowthofsuchfintechasPaytm,andIndonesia’sAkulakunowoperatesinthePhilippines,Malaysia,andVietNamandprovides various financial services including onlineinstallmentsforpurchases(FintechnewsSingapore2018).

Such fintech has the capacity to address the barrierswomen face in being financially excluded. The use ofsmartphonesisbecomingmorewidespread,permeatingintothemostremoteandeconomicallyunderdevelopedareas. Fintech canhelpbridge thegap in a number ofways. First, less stringent documentation and lowerfees for opening and maintaining accounts are pointswheremost fintech innovationsdepart fromtraditionalfinancial institutions. Lowering costs for openingaccounts encourages users, especially those that areunderserved, to open and maintain accounts and toregularlyconducttransactions.

Second, these innovations integrate various services—fromdeposits andwithdrawals to payments for goodsandservices—makingiteasierforwomenwho,betweenworkingandcaring for a family,maynothaveenoughtimetogotoabank.Sucheaseofdoingtransactionscan

freeupresourcesthatwouldhavebeenotherwiseusedfortransportationtogotofinancialinstitutions.

Third, the ease of using these innovations can helpwomen better manage their time, freeing up time formore productive activities, as evidenced by Suri andJack’s2016studyonM-PESA.Theintegrationofvariousfinancial services in fintech also encourageswomen toengageinotherfinancialservicesthatpromotesavingsand investments. Savings are a very important bufferfor households, especially those that are consideredvulnerable and at risk of sliding into chronic povertyin times of financial crises and various shocks. Ouma,Odongo,andWere(2017)findevidencethattheuseofmobile phones to provide financial services promotesthe likelihood of saving at the household level. Theyfurther find that the ease of saving also boosts theamountsaved.

Fourth, and most importantly, the ease of access anduse provided by fintech innovations can increase theformalization of women’s transactions, protecting andeducating them against fraud and unfair transactionsandempoweringthembymakingthemagentsoftheirownfinancialfutures.

Leveraging Fintech to Bridge the Gender GapAcknowledgingtheroleoffintechinclosingthegendergap in financial inclusion also requires acknowledgingthe possible negative impacts digital finance couldbring.Ozili (2018)notesthat itshouldnotbeforgottenthatprovidersoffintechareprofit-seekingcorporations,which can translate tobeing selective about their userbase,preferringhigh-andmiddle-incomecustomersoverlow-incomecustomers.Further,providerscanchoosetowithdraw or discontinue the provision of services tohigh-riskareas if there isnoexisting infrastructure thatcan sustain digital finance. Third, educational bias canimpact the choice of clients as providers may choosetofocuslessonthedeliveryofservicestocommunities

“The ease of access and use provided by fintech innovations can increase the formalization of women’s transactions.”


“Financial education may be key to encouraging more underserved communities to engage further in digital finance.”

with low financial education, as thiswould translate tolowerprofitsandhighercosts.

Toaddressthesechallengeswhiletakingadvantageofthe possibilities fintech offers, especially with regardto closing the gender gap in financial inclusion, itis critically important to ensure fintech services areeasily accessible, affordable, and relevant for women.To facilitate this, better dialogue targeting andassessment of the needs of the underserved sectorsof the population, including women, should befurther promoted. Financial education may be keyto encouraging more underserved communities toengagefurtherindigitalfinance.Giventheimportanceofsavingsandinvestments,informationonthedifferentwaystosaveisvaluablefortheunderservedsectorsofcommunities.

How to measure financial inclusion should be furtherdiscussed. Arun and Kamath (2015: 271) in theirextensive review of policies and practices on fintech

and financial inclusion argue that there is a need to“effectivelymeasure theprogress countries havemadeinenablingaccesstoanddrivingusageofthedifferentfinancial products—payments, lending, long-termsavings/investments, and insurance”. Measuring accessshouldlookatthedepthofpenetrationofthesedigitalfinanceinnovationstounderservedcommunitiesandtothedegreetheproductsareusedandhowtheproductsarebeingused.

Finally, targeted policy interventions by governmentscan play an important role in leveraging fintech toaddress thegendergap in financial inclusion. Relevantpolicy responses should take into consideration thefollowing:(i)theneedforrobustandbroadinfrastructuresfor digital finance to thrive and survive; (ii) tailoredand innovative fintech services for the underservedwith a particular focus on women; (iii) flexible andcomprehensiveregulatoryregimestoensureaccess;and(iv) active coordination among the relevant ministriesandinstitutionstoenhancefinancialeducation.


Asian Development Bank Institute

ADBI, located in Tokyo, is the think tank of the Asian Development Bank (ADB). Its mission is to identify effective development strategies and improve development management in ADB’s developing member countries.

ADBI Policy Briefs are based on events organized or co-organized by ADBI. The series is designed to provide concise, nontechnical accounts of policy issues of topical interest, with a view to facilitating informed debate.

The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of ADBI, ADB, or its Board or Governors or the governments they represent.

ADBI encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADBI. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADBI.

Asian Development Bank InstituteKasumigaseki Building 8F3-2-5 Kasumigaseki, Chiyoda-kuTokyo 100-6008JapanTel: +813 3593 5500www.adbi.org

ReferencesArun,Thankom and Rajalaxmi Kamath (2015). Financial inclusion: Policies and practices. IIMBManagement Review 27 (4),

pp.267–287.Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, SaniyaAnsar, and JakeHess. 2018.TheGlobal FindexDatabase 2017:

MeasuringFinancialInclusionandtheFintechRevolution.WorldBank:Washington,DC.Fintechnews Singapore (2018). Top funded fintechs in Asia by country. Fintech Singapore. http://fintechnews.sg/26399/

funding/top-funded-fintech-asia-by-country/.FintechGlobal(2018).2018isalreadyarecordyearforglobalFintechinvestment.FintechGlobal.https://fintech.global/2018-

is-already-a-record-year-for-global-fintech-investment/.Hanmer, Lucia andMarianaDahan (2015). Identification forDevelopment: Its Potential for EmpoweringWomen andGirls.

Voices. The World Bank. https://blogs.worldbank.org/voices/identification-development-its-potential-empowering-women-and-girls.

Lauer, Kate and Timothy Lyman (2015). Digital Financial Inclusion: Implications for Customers, Regulators, Supervisors,andStandard-SettingBodies.ConsultativeGroup toAssist thePoor (CGAP)Brief.https://www.cgap.org/sites/default/files/researches/documents/Brief-Digital-Financial-Inclusion-Feb-2015.pdf.

Murata, Akira and Erica Paula Sioson (2018). Financial literacy programs for remittances. Migration and Remittances forDevelopmentinAsia.ADB-WorldBankCo-Publication.

Ouma,ShemAlfred,TeresaMaureenOdongo,andMaureenWere(2017).Mobilefinancialservicesandfinancialinclusion:Isitaboonforsavingsmobilization?ReviewofDevelopmentFinance7(1),pp.29–35.

Ozili,PetersonK.(2018).Impactofdigitalfinanceonfinancialinclusionandstability.BorsaIstanbulReview18(4),pp.329–340.Pickens,Mark(2009).Windowontheunbanked:MobilemoneyinthePhilippines.ConsultativeGrouptoAssistthePoor(CGAP)

Brief. https://www.cgap.org/sites/default/files/researches/documents/CGAP-Brief-Window-on-the-Unbanked-Mobile-Money-in-the-Philippines-Dec-2009.pdf.

Rillo,AladdinD.andJudahJ.Levine(2018).LeveragingremittancetechnologiesforfinancialinclusioninAsia.LaborMigrationinAsia:IncreasingtheDevelopmentImpactofMigrationThroughFinanceandTechnology.ADBI-OECD-ILO.

Suri, Tavneet andWilliam Jack (2016). The long-run poverty and gender impacts of mobile money. Science 354 (6317),1288–1292.

United Nations (2016). Digital financial inclusion. International Telecommunication Union Issue Brief Series. http://www.un.org/esa/ffd/wp-content/uploads/2016/01/Digital-Financial-Inclusion_ITU_IATF-Issue-Brief.pdf.

closing the gender gap in financial inclusion through fintechbased money transfer, financing, and...

Documents