We hear this question from a lot of financial service providers. After researching the financial lives of low-income households through Financial Diaries studies in Kenya, Mexico, and India, we answered this question in A Buck Short, a paper published last year with support from the Omidyar Network.
Low-income men and women in the studies are typically on the same team; they have the same end goals and want what’s best for their families. However, each plays a different role in the household. Men play offense, looking for opportunities for higher income. Women play defense, juggling household expenses and financial products to keep cash flowing and family assets safe. Our Financial Diaries also found that women have a stop-start pattern to earnings, limited mobility and geography, and horizontal, instead of vertical, financial networks. These differences leave women with limited access to financial products, invisible credit histories, and few formal financial relationships. Our research, as well as this paper by Women’s World Banking, found that although their financial lives differ from men’s, women don’t necessarily want different financial products, but they do want to be served differently.
How do the findings from our research translate into insights providers can actually use? Here are a few recommendations for providers – traditional or fintech, start-up or incumbent – that want to better serve women with tailored financial services.
1. Grow your capability to obtain and model alternative data
If you want to serve more female customers, you cannot rely solely on traditional metrics for credit scoring, such as land ownership, possession of large assets, and market credit scores. These traditional metrics can obscure women’s abilities and resources, leaving them disadvantaged relative to men. For example, in the Kenyan Financial Diaries, the median value of physical assets for women-headed households was only US $168, while it was US $2,443 for other households.
To serve women better, pay attention to the types of transactions women typically make at small stores, in savings groups, and while paying bills in order to generate alternative credit histories and scores. Using these records to generate credit scores will help women to enter the formal financial credit stream, not just for the large microfinance loans they can sometimes feel pressured to take, but for the smaller bite-sized chunks they actually need. These are exactly the type of financial products women need to play defense in a household: lots of little opportunities like loan windows and savings tucked away for every plan and eventuality.
2. Design products that fit women’s life patterns
If you want to encourage higher adoption and greater usage of financial services among women, you need to ensure that your products are designed to fit their unique financial lives.
If you want to encourage higher adoption and greater usage of financial services among women, you need to ensure that your products are designed to fit their unique financial lives. For example, compared to men, women in the Financial Diaries study had a stop-start pattern to their earnings. They stopped working during pregnancy, to prioritize childcare, or because their family had moved to follow employment opportunities. To better match women’s lives, financial service providers could, for example, design products with shorter durations to fit within women’s foreseeable planning horizons.
3. Gear your acquisition strategy toward tapping into social sharing
Another key finding of our study is that in the process of “playing offense,” men usually develop vertical financial networks of people who can “pull them up” by introducing them to great ideas, new jobs, or sources of credit. In contrast, women’s financial networks are horizontal, often comprised of extended family members and women like them. These networks mean that men and women can hear about products and learn how to use them in very different ways. When designing for women, consider using social sharing through groups that women are already a part of such as savings groups and virtual groups on Facebook, Instagram, or WhatsApp.
4. Think mobile-first
Getting mobile right can help overcome the geographical isolation that many women face. For example, we found that women in the Mexico City Diaries sample made 90 percent of their transactions within their own neighborhood, while men made only 40 percent of their transactions locally. These women are usually more geographically constrained than men. They sell items from home, or babysit nearby while the men work in another neighborhood, city, or country. Mobile outreach strategies can faciliate key transactions from the home and nearby places of work to those located outside immediate vicinities.
For more on these and other findings, read A Buck Short. In this talk that our CEO Daryl Collins gave at the third annual Financial Inclusion Forum in Mexico, she reflects on the evidence presented in the paper.
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