The Key to Successfully Banking the Poor: Start with Women
By: Mary Ellen Iskenderian, President and CEO, Women’s World Banking
“That would make us feel very proud and our lives would be very happy every day.”
You could probably make several well-reasoned guesses about what life-altering experience this woman from Malawi was referring to and still not guess that she was describing how she would feel if she could open a bank account in her own name. As we approach International Women’s Day, we’ll hear many stats and figures about the lives of women around the world today. Here’s one that may surprise you: over one billion women don’t have access to the most basic of financial tools, a savings account. For this woman, and millions of other low-income women throughout the developing world, having a bank account is aspirational, representing safety, security and the opportunity to be treated with dignity.
With no access to financial institutions, low-income families are forced to conduct all of their daily transactions in cash; cash is literally hidden under the mattress, subject to theft or within easy reach of family members asking for a loan that won’t be paid back. A cash-only society means traveling long distances to transact business, taking time away from school or a job that puts food on the table. Carrying cash puts women and girls in particular at greater risk.
While cash-based societies face these challenges, there is growing evidence around the world that an increase in the number of commercial bank depositors correlates with a growth in GDP per capita. So if the low-income market is so eager to join the formal financial sector and the benefits of economic growth are so clear, why aren’t more financial services companies responding? In most cases, the answer is actually quite simple – banks either don’t recognize the economic benefits or have no idea how to serve the low-income population. But the solution is clear – start with women.
Why women? It’s just smart business. Women are generally better clients, manage the majority of household finances and invest back in their families’ health, housing and education. In almost any country, women are 20 percent less likely than men to have an account at a formal financial institution. However, when given access to a full range of financial products and services, women typically employ them in ways that have a multiplier effect on their families and communities. Our research at Women’s World Banking shows that women typically save 10-15 percent of their monthly earnings. Commercial banks that offer savings to a low-income population will reap the benefits of this growing market segment.
Women’s World Banking, is working with a bank that recognized this savings opportunity. Diamond Bank, a large, primarily corporate bank in Nigeria, developed the “BETA” savings account for unbanked women and men in urban centers across the country. Customer research indicated that opening a bank account was deeply aspirational for these potential clients – having an account signified achievement, success and an opportunity to be treated with dignity. But, as much as they aspired to a bank account, these clients wanted the bank to have a “human face” as well. So Diamond created a cadre of agents called “BETA friends” who go into the markets to open accounts, collect deposits, transact other business and just as importantly, educate the clients. To date, more than 44,000 accounts have been opened across 25 bank branches. The Bank is now expanding the product to all of its branches in Nigeria.
The business case is clear – for commercial banks that are savvy enough to recognize the tremendous market potential of serving one billion women, the opportunities are boundless. Inclusive banking, particularly banking for women, benefits all – the client and their families, the institutions serving them, the business community, and the country. On International Women’s Day, let’s agree that, for over one billion women, financial access should not be an aspiration. It can and should be a reality.