Financial Inclusion Is Going Digital. Can Women Follow?

While digital finance has gained market share for years, it is possible no single catalyst has been a greater accelerator than COVID-19. Today, the financial services community has an opportunity to consider which market segments this growth benefits, and which are left behind. Are women -who are less likely to own a mobile phone, less likely to have a smartphone, and less likely to access the internet - participating in these digital solutions? In this post, we show the evidence of growth in digital finance and consider the implications for women.

Fintech is up

In the face of lockdowns, closed branches, and social distancing, consumers are turning to digital finance and fintech. Data show that after the COVID-19-related lockdowns began, daily app downloads in the finance category of mobile apps on Android devices jumped by about 30 percent above their pre-lockdown baseline.

Figure 1: The Impact of COVID-19 on the Adoption of Fintech Mobile Apps
This figure depicts the daily number of downloads for finance category mobile applications across the iOS and Android platforms from 74 countries. The sample data covers the period from 1 January 2019 to 20 April 2020.

Source: Fu, Jonathan and Mishra, Mrinal, The Global Impact of COVID-19 on Fintech Adoption (22 April 2020). Swiss Finance Institute Research Paper No. 20-38. 

The size of this increase in downloads differs by region and country. Aggregated at the regional level and based on a sample of 74 countries (from which 40 are classified as developing economies), North America and Asia saw the largest increases in adoption in both absolute and relative terms. However, the data suggest that Africa, South America, the Middle East, and Oceania also exhibit sizeable increases as well, with respect to their pre-COVID trends. At the country level, demographics (i.e., younger populations and market size), rather than income, are more predictive of country-level increases. In other words, both developing and developed economies have shared in this movement towards financial service digitization. Risks of exclusion may lie elsewhere (e.g., older populations) at the subnational level.

Consumers and institutions are driving change

For those of us working in financial inclusion, this is good news. In the midst of a global pandemic and economic uncertainty, the need for financial tools holds steady and new digital providers have met this demand.  The accelerated shift towards digital offers benefits at the household, firm, and macro-economic levels, although caution will be necessary to mitigate possible adverse consequences (e.g., consumer protection and data privacy issues, risks of exacerbating household indebtedness and credit market instability).  

Across Women’s World Banking’s network, institutions are adopting digital channels to engage with customers. This shift indicates growth is not only consumer- but also institution-driven. For example, Lead Foundation in Egypt was piloting a digital loan repayment system with e-payments network Fawry when the crisis hit. The institution accelerated the system’s launch, shifting its payments to digital channels while also putting into place a new in-person repayment schedule to allow for social distancing. Our advisory solutions team is working with institutions across our network to help them figure out the logistics of transitioning to digital as an operational imperative.

Where does this leave women customers?

To understand the prospective impact of digital on women, we can consider women’s preparedness for engaging with digital channels. From the recent GSMA Mobile Gender Gap report, these contextual factors are important:

• Women are 8 percent less likely than men to own a mobile phone in low- and middle-income countries. This gap varies by market. In India, the gap is 20 percent and in Nigeria it is 7 percent.
• Women are 20 percent less likely than men to own a smartphone, and 20 percent less likely to have access to the internet. Southeast Asia is the region with the highest gap at over 50 percent.
• Literacy and skills are top barriers to women engaging with digital channels.

Under ordinary circumstances, financial capability research advises intentionality in customer engagement alongside product adoption. Trainings must be short, keeping the attention of customers. They must also be delivered when recipients need the training, so that customers can practice what they have learned. Following these principles is challenging if not impossible in a COVID-19 context.

Safe ways to assist women with digital tools

Even in the absence of perfect conditions, financial institutions can think strategically about improving women’s engagement with digital financial services. There are safe ways to combine digital with human engagement, for example:

1. Financial institutions can train and assign staff to help women troubleshoot their problems. Institutions are repurposing their loan officers to provide health information and check up on customers. These same staff can help customers mitigate challenges to digital adoption.
2. Financial institutions can build in assistance points as they design digital tools. Chatbots, call centers, and easy-to-use instructions get new digital users help when they need it.
3. Institutions can establish high-touch back-up plans. G2P programs are creating schedules for in-person pickup to space out disbursement. Financial institutions can follow this model, offering the option for in-person engagement when digital fails.

Our financial lives are shifting toward digital channels - and this is a very good thing. As we make this shift, let’s be thoughtful about customer readiness and engagement. Together our industry can ensure this adjustment to our COVID-19 world will not mean greater exclusion for women.