A Seven Hundred Billion Dollar Opportunity
A study by consulting firm Oliver Wyman puts the global gap between use of financial products and services by men versus women at up to 700 billion dollars. Women’s World Banking, an organization dedicated to improving access and inclusion for women in financial products and services, estimates that there are over one billion women globally that are underserved by existing Fintechs and banks. Women’s World Banking, puts this untapped market opportunity at more than 300 billion dollars globally.
Across the world, women show lower levels of financial literacy and confidence than men. They not only score themselves as being less knowledgeable across all age groups, but single and widowed women, for whom financial knowledge is even more important, and even women in higher socio-economic groups “know little about concepts relative for day-to-day financial decisions” or rate themselves as being less knowledgeableabout financial matters than men. Buzz India, an organization dedicated to bringing women out of poverty in India, estimates that eighty percent of women in India are financially illiterate. Even in the United States, there is a persistent gap in levels of financial literacy between women and men with single women especially showing lower levels of financial literacy than those in Germany and The Netherlands for example. Women are less likely to consult with financial advisors and they are less likely to invest in the stock market with 41% citing “not knowing what they are doing” as the main fear that holds them back.
The challenges that women face during their lifetime journeys to achieving financial security are real. Lack of confidence in making financial decisions coupled with lack of financial literacy affect economic outcomes. As reported by investment bank Merill Lynch, women are more likely to fill part time jobs, face financial loss as a result of divorce or the death of a spouse, spend more time out of work bearing and caring for children and retire early to care for parents or a spouse. As an educated successful C-Suite executive who has started companies in industries as various as cosmetics, transportation, security and food and beverage, I have run up against these challenges myself. I have seen thousands of women entrepreneurs struggle to support themselves and their families with little or no help from financial institutions.
Improving women’s financial literacy is crucial to helping them improve their financial well-being and security. Higher levels of financial literacy are linked to making positive decisions about retirement planning, saving and investing which are all important for wealth accumulation. Women’s life expectancies are longer than men’s and they spend more time in widowhood and retirement so their needs for savings are even greater. A study by bank UBS found that worldwide, a “majority of women defer long term financial decisions to their spouse. Upon becoming widowed or divorced, seventy four percent of women received “negative financial surprises.” Adult women are more likely to live in poverty at every age with some studies showing that in the United States women are 80% more likely to live in poverty than men after age sixty five.
According to World Bank consultant and former investment banker Elizabeth Paris, who is deeply knowledgeable about women’s financial literacy and inclusion, while men view their relationships with banks and financial institutions from a transactional perspective, women typically approach it from a relationship perspective. That is, their view is not that they are just conducting a financial transaction, but that they are entering into a relationship. While it may take more time to establish this relationship, once it has been established, women are likely to buy three to four products versus one or two for men. Women report that 85% of marketing that targets them misses the mark, further exacerbating their participation with financial institutions.
The ravages of Covid have hit women particularly hard. Traditionally, they are the ones who cut back or give up on work outside the home when lock downs force children into remote learning and someone has to stay home and look after them. This has affected all parents, but women especially. A study by the Boston Consulting group found that on average, women were spending 15 hours more per week than men taking care of unpaid domestic household matters. When you consider that that is almost enough hours to hold down another part time job, it’s no wonder that on average, women make less than men at every age.
There is no question that this is a large problem. But where there is a problem, there is also an opportunity for a solution. This opportunity is why we are founding She Banks, a personal finance fintech for women that will focus on increasing financial literacy and confidence in investing.
The larger the problem, the large the opportunity. In future issues of this newsletter, I will delve more deeply into various aspects of women’s lower levels of participation in the financial products and services industry and solutions for how to address it. Join the She Banks LinkedIn page to receive regular updates and support our Mission and sign up to be eligible to beta test our personal finance app which is launching this September. Find out how you could win a weekend getaway to the Caribbean.
