Can electronic registration forms help bridge the gender gap in financial inclusion?
This article was originally written in January 2020 to commemorate the 25th anniversary of the Beijing Declaration and Platform for Action, where gender equity in economic opportunities is a major focus.
“Rejected.”
Selina was confused; she was told opening a mobile money account would be free. Yet, here she was — on her second visit to the agent’s shop, an hour away from her home. She had travelled by boat in the early morning, leaving her two children at a neighbour’s home. On her previous visit, she had been turned away by the shopkeeper agent: “You need to bring a colour photo and copy of your ID.”
These things cost money, for her more than half her day’s earnings — a colour photo 50c, a photocopy 20c, boat roundtrip $1. This rejection meant she would have to spend that money on documents again, and another trip to the bazaar. Perhaps it’s not worth it.
Two weeks ago, in a village group, Selina was told of the benefits of having a free mobile money account — she was promised finally being able to receive remittances more easily from her husband, keep her money safe from floods and thieves, keeping monthly savings in the NGO’s deposit scheme for higher returns. These financial literacy meetings are one of the many ways NGOs in Bangladesh are fostering financial inclusion.
Globally, 1.7 billion adults remain unbanked, 980 million or 56% of whom are women without access to formal banking. For countries like Bangladesh, one of the seven developing economies with the highest population of unbanked adults in the world, investments in digital finance have resulted in an increase in the percentage of adults with financial accounts from 31% to over 50% since 2014. The country is also home to one of the largest mobile money providers in the world, bKash.
Founded by Bangladeshi-American Kamal Quadir in 2011, bKash was one of the first mobile money platforms in Bangladesh. Operating through a simple USSD-based menu of options, the provider gained ground quickly through a franchise-model of shopkeeper agents across the country. bKash is currently running a network of over 180,000 agents in rural and urban areas, with over 30 million registered accounts.
These impressive gains, however, are shadowed by a persistent gender gap. Despite the growth in financial inclusion, the gender gap in Bangladesh remains at 29 percentage points, one of the largest in the world. The global average is 9 percentage points.
Women face high barriers to entry to digital services, often lacking documentation or confronted with cultural norms discouraging them to interact with banking agents. Among the unbanked, there are lower rates of mobile phone ownership by women (74% to 84% for their male counterparts in developing countries). There are also lower levels of literacy, with more than 36% of rural women over age 15 in Bangladesh illiterate. Hence, women need more hands-on training and time to master commands and processes, more effort to trust new services and offerings.
This degree of care and attention is lacking with the current model where shopkeepers serve as mobile money agents and run operations through small stores in busy market places. Mobile banking services reliant on interaction with agents and self-directed learning are more difficult for women to access and use. Further, a lack of female agents combined with socio-cultural context means that women are less likely to transact in the marketplace and less likely to travel from remote, hard-to-reach areas to maintain accounts.
For many, the first interaction with a mobile money service is during registration. Know-your-customer (KYC) forms are the first step in registering users onto a mobile money or banking service. In Bangladesh, mobile money providers process new users through paper forms hand-filled at agent locations, usually in busy bazaars or shopfronts. Interested clients are requested to submit a copy of their National ID card and several copies of coloured photographs — producing which is a significant cost for rural and poor clients. On top of this, when filled in a hurry, paper KYC forms have a high decline rate which adds to clients’ frustration, contributes to a lack of trust in the service and increases costs.
For mobile money providers like bKash, compliance issues run deeper still. “We were seeing rejection rates of up to 50%, because agents were making many mistakes in filling out the forms by hand. There were also greater opportunities for fraud and risks to client privacy with paper forms,” explained Nur, NGO relationship manager at bKash. “There were further delays as the entire process was dependent on when the client would return with necessary documents to continue registration. This slowed initiation and created breaks in their service experience.”
Demand from clients
In Bangladesh, the pressure for change came from NGOs investing in digital finance ecosystem expansion for last-mile clients.
BRAC started its journey in digital financial services in 2015. With support from the Bill and Melinda Gates Foundation, the organisation designed unique use cases for their female clients, enabling them to pay school fees for their children, create premium-based savings, and repay microloans from their home using a bKash wallet. To further support their female clients, BRAC created financial literacy courses with workshops where clients filled out KYC forms together. Customer service assistants were hired from these same communities to help clients troubleshoot mobile money.
“When BRAC began helping clients open mobile wallets, they soon noticed that their community staff too were making errors on the forms,” said Nur. Repeated rejections resulted in clients losing faith and confidence in the service and technology. This was a major issue for BRAC whose main clients were women. “So, BRAC urged us to revamp the system to serve women better.”
Better access through digital registration
This problem is not unique to Bangladesh nor limited to rural women or the financial sector. Digitising identity documents and improving ease of registration through biometrics are some ways countries and organisations are responding to hard-to-reach or vulnerable clients.
In 2009, the Indian government launched Aadhaar, a unique identification number that residents and passport-holders can voluntarily request and use to receive government transfers and sign-up for financial services. Using only biometric and demographic data, Aadhaar enables residents without formal ID documents to access and navigate government services and a host of other platforms. In 2012, the government of India began transferring direct subsidies, unemployment benefits and connecting other benefit schemes to clients with Aadhaar.
In Jordan, Syrian refugees use free Ministry of Interior (MoI) cards to apply for jobs open to internationals. Refugees moving to host communities are able to report themselves and their new address at a local police station to receive an MoI card, free of cost.
These electronic documents are a step towards including people and communities left behind due to poverty, displacement or lack of access to formal systems.
In Bangladesh, an answer to the gaps in women’s financial inclusion is the electronic know-your-customer (eKYC) form. bKash introduced eKYC to mobile money registration in 2019, setting up trial locations across the country and now has scaled to all agents.
Using a phone or tablet to collect client photos and images of their national ID cards, agents can now open accounts instantly, reducing opportunities for errors and saving clients time and money. Clients are able to use their accounts immediately, as their ID information is verified in real-time with the Election Commission’s database.
Another level of accessibility is ensured by clients who can open accounts for others on their own phones if these devices meet minimum device requirements.
Bringing eKYC to the poorest users
For BRAC, this technology meant reducing the burden on their clients and improving access to mobile money much more quickly. The microfinance programme began piloting eKYC at their branch offices in 2019 together with bKash, empowering their customer service agents to more accurately complete client registration.
In January 2020, the Bangladesh Financial Intelligence Unit passed guidelines on electronic KYC for all account opening in the country. The guidelines currently target low-literacy clients who can register for accounts with biometrics, enabling them access to accounts and products with limited scale transactions. Bangladesh Bank’s pilot involved testing this technology in 19 banks, one non-bank financial institution and a mobile money service provider.
Weaving technology for financial inclusion can bridge the gender gap if it intervenes at key moments. For women, elderly and less literate clients, it may be more useful to adapt technology earlier in the process. “We must trust that clients will adopt technology faster than we expect them to. For true financial inclusion, we must think of enabling clients with technology sooner, rather than later,” shared Nur on the growing mobile use among rural clients.
These insights are promising. Yet, access can be made easier still. Digital finance providers and traditional banks can partner with telco registration points so clients are able to access multiple services from the same trusted space — renewing SIM cards, checking bank balance and initiating CICO from one agent instead of three. Consumer protection and data privacy concerns are on the rise, and so better scam tracking and fraud awareness is crucial as we digitise financial services for the poor.
If designed right, mobile technology and industrial collaboration can help leapfrog financial inclusion into the future for last-mile clients.
Raiya Ashraf is Innovation Ecosystem and Partnership manager at BRAC Social Innovation Lab.
