India has made huge strides in terms of financial inclusion and is prominently placed on the global map, given its early investments in Digital Public Infrastructure. What began with the digitization of identity through the Aadhaar, and the launch of the Prime Minister’s Jan Dhan Yojana (PMJDY) in 2014, India’s efforts at financial inclusion are becoming models for replication across the globe. As of December 2022, there were about 478 million PMJDY accounts with an aggregate balance of INR 180 trillion and 320 million RuPay Cards. In effect, India’s GDP could grow by double digits consistently if every Indian adult is financially included, and having a formal savings account is a foundational step that sets the customers, in particular women, well to benefit from other financial products and services such as insurance, pension and credit.
However, despite these gains, women as a segment, continue to be overlooked or often seem less attractive to formal financial institutions for sanctioning loans. Being less digitally savvy than men, women are less likely to enjoy the fruits of digital financial services. Women are more likely to have an inactive PMJDY bank account and may find it harder to raise emergency funds. There is a massive opportunity for commercial and human impact if banks, financial institutions (FIs), and financial service providers (FSPs) were to become gender-intentional and unlock the potential of bringing in more women customers to avail banking services.
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Financial inclusion can increase incomes, resilience, and transparency, especially for women. The World Bank Findex 2021 report suggests that households where women use savings accounts report greater control over household decisions and increased spending on things they need, and that savings and insurance help households meet unanticipated expenses. Women’s empowerment, through financial inclusion and participation in the digital public infrastructure is key to India’s agenda in our term of the G20 Presidency. In that step, financial inclusion is not just a ‘good’ thing to do but an imperative for India’s economy to achieve the USD 5 trillion mark.
Why design for women
Women need a little bit more attention in overcoming several socio-cultural and mental barriers that exist in their availing of banking services. Their financial needs are unique and hence, the financial solutions and products targeted to women should be as unique.
While this idea has been talked about for some time, it is only recently that the financial inclusion community has started to evaluate products based on whether or not their design facilitates increased use with greater ease from a perspective of gender, which is widely known as “gender-intentional design”.
For FSPs, there are clear benefits to utilizing the women-centered design. It allows providers to gain a better understanding of where women customers are on their financial journey, which makes it easier to build products that empower women to take control of their financial lives (human impact), with the added benefit of boosting product adoption and usage rates (commercial value).
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As per Women’s World Banking’s estimates, banks can potentially unlock an estimated inflow of Rs 25,000 crore in deposits, while disbursing Rs 10,000 crore in overdrafts to 20 million beneficiaries, if 100 million low-income women initiate a habit of small-scale savings.
How to design for women
Women in India, especially from low-income groups and rural areas, haven't benefitted from formal banking services. From a savings perspective, they need to feel welcomed to the bank, be assured any amounts of savings will be serviced, be counselled on the various products and services and their benefits. It is essential that banks have gender-sensitive people down the value chain, to the business correspondent, so they can boost women’s trust and confidence in banking.
From a credit perspective, women, being thin-file customers (lacking bank or credit histories) don't make it into the lending funnel and in many cases are unaware of the different products available to them. Credit organisations must re-engineer to recognise and address the biases that keep women out of the credit ecosystem.
From a payment perspective, women often have limited knowledge of digital financial services, may not own a mobile or may not have internet access, which prevents them from benefitting fully from the promise of digital payments. Building the capacities of women in digital literacy is just as important as ensuring that these services are designed for keeping their needs and capabilities in mind.
Banks, FIs, and FSPs need to invest in gender-intentional solutions across their processes to ensure that women are not left behind. UPI123 could be such a promising solution
In conclusion
Financial inclusion is not just a social impact mandate to be fulfilled only through government programmes or non-profits. Financial inclusion becomes an outcome when any product or financial service is gender-intentional while also having commercial value, leading to substantial gains for the economy, as cited in many reports. For any FSP to improve their portfolio, have stickier customers, have an improved customer lifetime value or have lowered NPAs, investing in women makes commercial sense and every FSP should reap these benefits that they are currently leaving on the table.
Developing a Gender Intentionality Index as a subset of FINDEX or the RBI Index can serve as a purposeful benchmark to gauge an organization’s intent towards women’s financial inclusion - this could be similar to policy reforms and ranking around Ease of Doing Business. The index for FSPs could help drive gender-intentionality in the true sense. Stakeholders with good GII could be recognized by the Government for their good practice for the inclusion ecosystem.
For India to achieve the target of becoming the world’s third largest economy by the end of this decade, it is imperative to have more women fully embrace and participate in formal financial services and contribute to the economy. Finally, in the face of uncertain geopolitics, rising prices, and a climate crisis which is likely to displace millions, building women’s resilience through gender-intentional banking is not only the good, but also the smart thing to do.
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