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The majority of the world’s unbanked population are women. The World Bank puts that at over 1.1 billion women globally – a staggering number. Fintech will change the lives of unbanked people, but it is not a panacea: Technology solves one issue, only to reveal others, and unless we are realistic about the problems it will not tackle, we can never safely say what it can achieve.
The industry can help promote financial inclusion, particularly for women. But challenges remain on both the industry and client sides. Here are the most significant ways fintech can enable women, and the most pressing challenges it will reveal.
Fintech cannot phone it in
Access to a bank account has significance besides the financial services it provides: It brings social stability, status, and a sense of personal dignity. Women’s World Banking, an organisation dedicated to enhance female financial inclusion globally, states that financial exclusion is particularly harmful for women, since it compounds other structural inequalities; financially unbanked men still have some social privileges, unbanked women do not. Fintech has an opportunity to enable unbanked women to gain unprecedented control over their financial lives. Since financial control enables greater self-determination, fintech poses a real threat to old structures of financial exclusion and gender discrimination.
Challenges remain however, with fintech reliant on mobile penetration – in South Asia, women are 38 percent less likely than men to own a cellphone. Suffice it to say, women need access to get access – you need to be in the driver’s seat to drive the car. The technology exists – now mobile phone technology needs to move towards women in particular.
Fintech must remain blind
Research shows that women are less likely than men to be given loans, when they apply in-person. Noreena Hertz, economist and author, identified that over a two-year period, over 200 women in the UK were denied a mortgage due to them being pregnant; their child-bearing capacity being seen as a definitive obstacle to them making regular repayments. Women are also more likely to be denied business loans – again interpersonal factors and prejudice come into play, but also the kinds of industries women tend to work in affect this outcome. In the USA, female entrepreneurs are 32% more likely to be in the retail industry than men – and the retail industry is 5% less-likely to succeed in business loan applications than other industries.
Fintech will not eliminate prejudice or stupidity, but the fact that it relies on data and technology to execute its functions means we can expect fewer cases of sexism and ignorance skewing decision-making. Furthermore, fintech tends to rely on different kinds of measures and data than traditional financial institutions; Meaning old structural inequalities such as the one against the retail industry will be redressed.
Fintech can boost entrepreneurialism
American women make 85% of all consumer purchases in the country. Globally, when women can save, they save on average 15% of their income – 3% more than men. Yet, women are underrepresented when it comes to entrepreneurship, according to a study by the United Nations University. Interestingly, rates of female entrepreneurship tend to be higher in developing countries than in developed ones. This can be explained by entrepreneurialism being a necessity in developing markets (as a way out of poverty), and a life choice in developed ones. Given this level of financial savviness, it makes sense for financial services to capitalise on these figures, and help women into entrepreneurialism.
But to do so, fintech has to work within social structures; It cannot simply change society in one go. For example, organisations like KashF in Bangladesh work with fintech companies to help teach women about financial management, so that they can not only better manage their financial lives, but also start businesses, without having to depend on men for access to banks. Moroku, a fintech in Australia, seeks to make banking more community-focussed, tapping into the general social structures of its target market, and increases financial literacy amongst its clients, as well as boost entrepreneurialism among women. Fintech will have to work with governments, Civil Society and local communities to identify the social structure in which the technology can operate.
Fintech has to attract female talent
There’s a scene at the end of the film, the Social Network, where Mark Zuckerberg, played by Jesse Eisenberg, is isolated and friendless, using Facebook; the irony being that the essential friend-site was designed by a person with limited social skills. In the same way, we have to think about how tech suffers from its notoriously male-dominated staff; Biases will be built into the technology, if not corrected. Fintech is the big new kid on the block in the tech scene, and as such, has an opportunity to show-up the entire industry for its shortcomings.
But the challenge is straightforward: Fintech is currently worse than the wider tech industry at employing women in leadership positions. According to a recent Innotribe report, only 4.95% of leadership positions in fintechs are filled by women – against the 15% of the broader tech industry. Fintech’s novelty puts it in a position to address inequalities in the wider industry, and it should not miss this opportunity to become known as a fair tech-industry. The industry moves quickly: Women In Fintech is an organisation dedicated to getting the industry’s shortcomings redressed, as well as the more specialist organisation, Girls Who Code. Furthermore, there have been some high-profile appointments in the industry, such as Eileen Burbidge as the UK’s ambassador for fintech – but much more work in leadership positions has to be done.