How fintech can help women overcome the financial inclusion gender gap in developing countries

According to the World Bank, in 2014, 62% of adults worldwide had bank accounts, a 20% jump from 2011. Much of that growth was driven by an increase in account ownership in developing countries due to the spread of mobile banking, which has seen huge increases in adoption. In some sub-Saharan African countries, more adults have mobile bank accounts than traditional ones. While this is good news, only 58% of women worldwide had bank accounts compared to 65% of men, and in developing countries the gap between men and women was 9 percentage points. These gaps were unchanged from the 2011 survey, so while more women have bank accounts overall, there has been no improvement in the number of accounts relative to men.

This gap is a problem because bank accounts are an important factor in reducing poverty and increasing prosperity. Having a bank (or mobile money) account is safer than cash, can encourage savings and allows for cheaper and more secure transfers of funds. Other financial products such as loans or insurance can be more easily layered on top of a bank account, allowing women to weather unexpected difficulties and grow a business. Digital banking can also make it easier for women to make or receive government payments or accept payments in their businesses. The latter of which is important as women are much more likely to work in the informal economy and receive payments in cash. Women are also more likely to invest their money in their family’s wellbeing. All of these factors increase financial stability, which empowers women and leads to better health, education and economic outcomes for communities down the road.

However, women face several kinds of barriers to accessing bank accounts. Banks may be physically too far away from women in rural areas, and even with local access, women may not have time to visit a bank or make bill payments in person due to family or work responsibilities. Women often face legal barriers to inclusion as well. A recent World Bank report finds 943 legal gender differences across 173 economies, including 10 where women may have unequal access to obtaining a national ID and 2 where women cannot open bank accounts. Women are less likely to have an ID, which can prevent them from being able to open traditional accounts. In some countries, women may also be legally unable to own or inherit property that can be used as collateral, hindering their abilities to get loans. Even in countries with no such barriers, women may still have difficulty accessing loans because of irregular credit history. Lastly, there may be cultural barriers that prevent women from accessing traditional financial services. In some cases, women may not be comfortable or feel welcome in a traditional bank, or interacting with a male agent, in which case mobile services can help them avoid those situations.

Fintech solutions offer ways to overcome these barriers. To address the identification barrier, a new program in Tanzania that allows parents to register births, and request birth certificates, via mobile phone will improve this going forward. Biometric IDs, which are being introduced in countries like Pakistan, insure that women can receive payments directly, rather than through male family members. To mitigate collateral or credit history issues, fintech can help by using alternative data to help determine creditworthiness and issue loans, helping women build credit. Companies such as M-Pesa’s M-Shwari, Mexico’s Konfío, and Kenya’s FarmDrive are just a few examples. To help women who may feel uncomfortable in traditional bank settings, Diamond Bank in Nigeria has established the BETA program, which allows women to set up accounts, transact and even receive loans via mobile phone. They also have a “BETA Friend”, an agent who will visit women where they work to help them with the program. To address the physical barriers, mobile banking services like M-Pesa in Kenya and bKash in Bangladesh can be incredibly helpful by allowing women to pay bills and send money conveniently and safely. In fact, an MIT study shows that M-Pesa is particularly effective at raising female-led households out of poverty.

Fintech is not a perfect solution for the gender gap in financial inclusion, true parity will require change on many levels, and there are still disparities in mobile phone ownership, internet availability and literacy which will continue to prevent women from accessing financial services. However, as traditional financial institutions have been slow to adapt to the changing needs of their customers, fintechs have been able to step in to provide necessary services, providing new opportunities for women to increase their participation in the economy and invest in themselves and their families. The World Bank should be releasing their new Global Findex for 2017 this spring and it will be interesting to see how much progress has been made in those three years.


If you’re interested in the World Bank’s findings in 2014, I recommend looking at their website here as you can sort through the data using over 100 indicators.

The McKinsey Global Institute also put out a great report in 2016 regarding the potential of digital finance to improve financial inclusion in emerging markets here.