Compared to men, women are far less likely in Pakistan to own a bank account, let alone use one on a regular basis. In 2014, a mere 5 percent of women were directly involved in some form of official banking. The large population of illiterate women fares even worse when it comes to financial inclusion in Pakistan. But improvements to digital services are providing greater access for women in the developing world and Pakistan in particular.
Pakistan has been addressing its persistent gender gap in bank account ownership over the last decade by digitizing an existing welfare program tailored specifically to women. Equally as promising is Pakistan’s attention at helping illiterate women take advantage of such programs. With the help of photographic instructions, digital banking is becoming ever more accessible to illiterate Pakistani women, growing their confidence and independence.
The State of Financial Inclusion in Pakistan
As of 2017, nearly a quarter of Pakistani adults had opened a bank account, compared to a mere 13 percent as recently as 2014. However, accompanying the spectacular rise in overall accounts has been a sizable discrepancy in newfound financial freedom based on gender. While overall accounts, and mobile phone banking specifically, have been on the rise, women have been largely left behind.
Not unique to Pakistan, this gender gap in account ownership varies across levels of economic development. On average, however, developing economy’s banking systems are only marginally over-represented by men, with an average difference of 8 percent. Pakistan, meanwhile, has an almost 30 percent gender gap in account ownership, according to the World Bank’s most recent report on financial inclusion.
Pakistan’s efforts to digitize the Benazir Income Support Program (BISP) — a welfare program in Pakistan directed at women — highlight the opportunities and possible hurdles associated with minimizing this large gender gap.
Initiated in 2008, the BISP distributes money to millions of Pakistani families living in extreme poverty. While the payments are fairly small, at about $12 a month, the program promotes women’s active involvement in the banking system. Finding out how to withdraw the BISP transfers offers women an introduction to account ownership.
Security From Digital Banking
It also promotes a more secure form of savings. The switch to electronic payments allows households a reliable and safe location for BISP payments and any savings that might remain from them. Money lying around the house under mattresses or buried in the backyard could be a thing of the past with increased access to electronic finance.
But understanding electronic accounts, whether ATMs or mobile banking, is still a massive hurdle for women’s financial inclusion in Pakistan, especially for those with limited reading skills. Finding better ways to serve the poor and overcoming barriers for illiterate women, rather than broader financial access, are the primary objectives of the Consultative Group to Assist the Poor (CGAP).
The CGAP, in a 2013 study, looked at various solutions for illiterate women’s interaction with electronic financial services such as ATMs. Instead of the use of icons or verbal instructions, the study found that photographs were they key for illiterate women’s understanding of the electronic BISP payments.
Simply providing step by step instructions via photographs greatly improved the women’s confidence in using an ATM to withdraw or transfer funds received from the welfare program. CGAP also provided a guide for banks in Pakistan to better communicate the novel system with its customers.
Wider Benefits for Families
Encouragingly enough, leveraging the system already in place in Pakistan should provide more than just greater financial independence for women. Women are more likely to spend their earnings on the wellbeing of their family — as much as 10 times more than men — through healthcare, education and family nutrition. Even more telling, in a household where the woman controls the finances, a child is 20 percent more likely to survive.
The benefits of greater financial inclusion in Pakistan for women, therefore, go far beyond providing access to bank accounts. The efforts in Pakistan and other developing economies are critical to women’s financial independence, their ability to plan for the future by providing secure savings as well as their family’s health. Closing the gender gap in account ownership today could pave the way in Pakistan for future prosperity for poor households.
– Nathan Ghelli