SEATTLE – Digital financial services through mobile phones are a crucial tool for introducing low-income communities to formal banking, especially women. According to the World Bank, 1.1 billion women globally do not have a bank account.
Throughout developing regions women are less likely to open a bank account and benefit from secure savings, investment opportunities and financial autonomy.
In an article in the New York Times, Melinda Gates, co-founder of the Bill and Melinda Gates Foundation, writes: “In ways big and small, life without access to financial services is more difficult, expensive and dangerous,”
A lack of banking services, “constrains a woman’s ability to plan for her family’s future,” Gates says. “At the community level, it traps households in cycles of poverty. More broadly, it limits the economic growth potential of developing countries.”
Giving women access to digital financial services is considered crucial for effective development. In addition to being significant (and often untapped) economic actors, women spend money differently. Gates says that women are more likely to invest in their family, prioritizing health and education, which are building blocks for prosperity.
Two reports released in 2015 shed light on the opportunities, and the hurdles, that arise when connecting women with digital financial services. The first, the World Bank’s Global Financial Inclusion database, shows men are significantly more likely to have an account than women. South Asia has the largest discrepancy; 55 percent of men have an account compared to only 35 percent of women.
The second report, entitled Digital Financial Solutions to Advance Women’s Economic Participation, was prepared for the Turkish G20 Presidency by several leading development organizations including the Bill and Melinda Gates Foundation. The report sheds light on the role of digital financial services in women’s’ lives and how to increase accessibility.
These reports are part of an investigation by the development community as to why such discrepancies exist and how to effectively address them. Additionally, governments and NGOs are already working to overcome obvious barriers including affordability and access to mobile devices and bank accounts.
Contributors to the report for the Turkish G20 Presidency, Leora Klapper and Ruth Goodwin-Groen wrote in a World Bank article, “In rural Malawi and Nigeria, women have started using mobile phones through a network of agents to make deposits and withdrawals. They find it cheaper, more convenient, and more efficient than using cash.”
Accessing digital financial services through a mobile phone provides solutions to many common financial hurdles. For women without the appropriate documentation to open an account, a mobile phone history may serve to establish credit.
For women living too far from a bank branch, their account remains accessible and private via their mobile phone. In short digital financial services contribute to women gaining greater financial autonomy.
In her article, Gates calls not only for increased access to financial services for women, but for those services to cater to women in the challenging circumstances of developing countries. “When women are empowered as economic actors, the benefits touch everyone.”