“Digital financial services contributed to increasing financial inclusion of women, but in some countries, it has been disproportional. Even though access to finance for women is rising, the gender gap is still persistent”, AFI Executive Director Dr. Alfred Hannig said during the Women 20 (W20) Roundtable on Financial Inclusion in Riyadh, Saudi Arabia on 4 June 2018.

Opened by W20 Chair Susana Balbo, the roundtable focused on barriers that exclude women from the financial world, while considering financial inclusion gender gap of 9 percentage points in developing countries with only 44 percent of wage earning women reporting to receive their salaries via bank deposits.

As an example of disproportional financial inclusion, Dr. Hanning explained that in Bangladesh, where the Global Findex database indicated that overall financial inclusion gender gap widened to 29 percent, despite women’s account ownership rising to 36% (from 26% in 2014) and digitalization of payments also increasing by almost 5 times (from 4% of women adults in 2014 to 21% in 2017).

“This suggests that DFS alone may not be the panacea for closing the financial inclusion gender gap and holistic approach and complementary set of policies may be needed. At AFI, efforts are taken to better understand barriers faced by member institutions in bridging the inclusion gap”, he said adding that the network has adopted a target to halve the gender gap in each country by 2021.

Dr. Hannig told the roundtable that 28 AFI members made at least one Commitment on gender and women’s financial inclusion under the Maya Declaration, since the Denarau Action Plan (DAP) on women’s financial inclusion and gender equality was endorsed by the network in 2016,

“Most gender commitments made by AFI members relate to the collection and use of sex-disaggregated data, as a crucial first step to inform policy decision”, he highlighted.

Lack of sex-disaggregated data, supply-side barrier, affects the ability of financial institutions to make well-informed decisions to promote women’s access to finance. Evidence suggests that women are more prudent borrowers and typically have lower default rates than their male counterparts. However, without data, financial institutions cannot have a clear understanding of the female market and demonstrate the business case for serving low-income women.

“Some members have also made commitments relating to digital financial services (DFS) to advance women’s financial inclusion. Rwanda has made commitments to increase the number and membership of saving groups by 20% by 2020, and link 64% of them to formal channels through DFS and Fintech by 2020.”, Dr. Hannig highlighted.

“Based on a survey conducted by AFI in 2016 on Women’s Financial Inclusion, financial literacy was the top perceived barrier to women’s access to finance. Almost 75% of surveyed members identified financial literacy as constraint to women’s access to finance, but only 22% of respondents noted that they had a financial literacy strategy with an explicit focus on women’s financial inclusion”, Dr. Hannig said.

The survey also showed that 25% of the respondents perceived know-your-customer (KYC) requirements as a barrier to women to have access to finance. KYC verification requirements are important part of anti-money laundering and countering the financing of terrorism(AML-CFT) regimes, but overly stringent requirements can be a major barrier.

According to the same survey, almost 63% of AFI surveyed members identified socio-cultural environment as a barrier for women’s financial inclusion. Women’s access to financial services is limited when laws disproportionately favor men, such as inheritance and family laws. Women are perceived to have an abundance of family responsibilities, limited free time, lack of mobility, lower levels of education and precarious health situations (including maternity-related risks and women placing their own health needs after others).

As a policy leadership Alliance, AFI’s 104 policymaking and financial regulatory institutions from 91 developing and emerging countries, are working through financial inclusion to unlock the potential of the world’s 1.7 billion unbanked, out of which 1 billion are women.

Gender is mainstreamed in all six AFI working groups covering complementary areas and gender topics are also incorporated in AFI regional initiatives, public private dialogue, as well as capacity building activities.

In her opening remarks, W20 Chair Susana Balbo emphasized the importance of ensuring access to financial products, adding that “having access to opportunities and bank and financial services is crucial in all sectors to enable women to grow their businesses and grant them economic autonomy. Thus, women can be economically independent.”

AFI co-chairs the W20 Financial Inclusion Group under the Argentinian presidency of the G20, alongside the Global Banking Alliance for Women (GBA). As a co-chair, AFI supports the content development to inform W20’s policy recommendations as well as advocacy, and outreach on gender and women’s financial inclusion.  

The distinguished W20 roundtable panelists included Sabrine Rahman, Head of Corporate Sustainability MENA at HSBC Bank; Sarah Foustock, CEO at Lazard Gulf Ltd Middle East and Inez Murray Chief Executive Officer at Global Baking Alliance for Women (GBA).

Topics discussed by W20 delegates and experts, together with Co-Chairs, partners and sponsors discussions will be part of the draft document that will give recommendations to improve financial inclusion of women. The document will be published as the Financial Inclusion Communique and presented at G20 leaders at the W20 Summit in October 2018. The Communique will specify actions and indicators and ask G20 Governments to demonstrate concrete commitment and address women’s financial inclusion.