Catalyzing Women's Bank Account Use Through COVID-19 Relief

In March 2020 as the COVID-19 pandemic spread worldwide, the Indian government undertook one of its largest relief initiatives to date. From April to June 2020, women customers in the government’s financial inclusion program, Pradhan Mantri Jan Dhan Yojana (PMJDY), received a cash transfer of INR 500 (~ $6.85) per month. The initiative sought to mitigate potential loss of income as a result of the pandemic and bolster the overall financial security of women and their households.

Direct government transfers to women beneficiaries can contribute significantly to women’s financial inclusion by increasing access and usage of financial services. To see if this was happening in India, Women’s World Banking partnered with a leading public sector bank in India to assess the effect of COVID-19 relief payments on the account activity of approximately 318,000 women customers during lockdown. In this blog, we reflect upon key findings from our study and propose solutions which could help build women customers’ financial resilience amidst a global pandemic.

Finding 1: Account activity for women customers increased significantly during the months when relief payments were made.

Inactivity in women-owned accounts has been a key challenge for engaging women customers with the suite of financial services offered by the PMJDY accounts. Prior to the COVID-19 transfers, from January to March 2020, only 23 percent of women customers used their PMJDY accounts on a monthly basis. During April to June 2020, this percentage doubled to 46 percent, driven by withdrawals associated with the government transfers made during these months. Similarly, the percentage of inactive accounts decreased by 33 percent during the period of the COVID-19 transfers.

We might expect this – if money is available, then an increase in account usage to access it is normal. However, a doubling of account activity is a massive change and provides strong evidence that cash transfers into women-owned accounts act as a trigger for greater account engagement. In addition, analysis of the account activity from January to June 2020 showed a modest growth in the percentage of customers who made a deposit, meaning they were starting to use their accounts for saving as well, not only to withdraw the cash transfers. There was also increased engagement with other bank touchpoints, including business correspondents and digital channels. While this increased activity is a positive trend, we believe it will remain a short-term impact unless public sector banks leverage initiatives that enhance women’s engagement with the bank.

Monthly account activity trendline of PMJDY women customers during the period of lockdown as a result of COVID-19 relief payments per Women’s World Banking’s research. We define account activity as accounts with a customer-initiated credit or debit during a given month.

Finding 2: Women were more likely to open new accounts during the period of COVID-19 transfers.

The announcement of relief payments triggered a significant growth in account opening, indicating the impact that cash transfers can have on women’s account ownership, especially for low-income women. At our partner bank, new accounts opened by women on a monthly basis surged from less than one percent in the first quarter of 2020 to five percent in the second quarter, when the COVID-19 transfers were made. This trend was also reflected at an overall level, across India’s PMJDY program, with almost 16.4 million PMJDY accounts opened during April to June 2020, compared to 2.5 million in the previous three-month period.

Finding 3: Business correspondent networks emerged as the channel with the most pronounced growth in serving PMJDY women customers.

While ATMs and digital channels also experienced an increase in usage, the business correspondent (BC) network witnessed the most pronounced growth. The percentage of women customers using business correspondents for withdrawals more than tripled from the first to the second quarter of 2020, increasing from 6 to 21 percent. This growth reinforces the importance of business correspondents as a critical engagement channel for women customers.  

How can these learnings translate into actionable insights for financial service providers?

Increased account activity rates among women customers, driven by the disbursal of COVID-19 relief payments, provide an important opportunity for women to interact with bank staff and agents.  Financial service providers can capitalize on this in the following ways:

1. Seize the moment. While banks have women customers’ attention due to the cash transfers, they should use this opportunity to position relevant use cases. PMJDY accounts offer a suite of additional features, such as savings, overdraft protection, payments and insurance, but usage of these products remains low. Banks can take advantage of the increased interactions with women customers to demonstrate how the other services they offer can help make women’s lives easier. Savings are particularly important to promote at this time, as helping women rebuild their financial cushion can strengthen their resilience.
2. Invest in building women’s financial capabilities. Introducing new services for women customers should go hand-in-hand with creating ways to build their financial capabilities which are inclusive of customers with limited literacy and financial experience. Women’s World Banking has developed a framework of five principles for developing digital financial capability initiatives which guide us in using our women-centered design process effectively. They help us identify who we are designing for, what behaviors we are driving toward, when and where the initiative can reach women, and how initiatives should be delivered to optimize women’s knowledge and skills in using financial services.
3. Leverage business correspondent channels to increase women’s ease of access and usage. Business correspondents are the prime drivers of financial inclusion in India. While Indian banks have been using the BC model since 2006 to improve financial participation among low-income people, the industry now has an opportunity to strengthen this channel to serve nearly 200 million women’s accounts in the future. Female business correspondents, or Bank Sakhis, have been shown to be a catalyst to bridge the financial inclusion gender gap in India. They help ensure last mile delivery of financial services to women customers in remote locations and turn their formal banking interactions into positive experiences. Financial service providers can correct the current under-representation of women BCs by designing a gendered recruitment strategy to attract more women, including specific targets for their staff and corporate BCs, and training and incentivizing corporate BCs to identify potential women candidates.

The lessons from India’s experience with COVID-19 relief payments show us how government transfers can be leveraged to drive financial inclusion by helping women customers deepen their relationships with formal financial institutions.