European Microfinance Week 2019

INTRODUCTION

Enrico PINI, from the European Investment Bank (EIB), opened the session by highlighting EIB’s involvement in financial inclusion and its strong focus on gender equality. Pini detailed that the EIB recently launched SheInvest, a new initiative to boost gender equality and female economic empowerment. Gender equality is one of the founding values of the European Union, and a key objective of the Sustainable Development Goals. He added that it is also about smart economics, since empowering women is key to enhance business productivity and to catalyse economic growth, social cohesion and social justice. 

Pini commented that the inclusive finance sector has come a long way to embrace new technologies, thus creating opportunities to reach scale and increase efficiency. He pointed out, however, that a recent UN report revealed that the gender gap in developing economies has remained at 9% since 2009, and the global Internet gender gap equals 31%.

He then noted that the session would explore the experiences of the speakers in gender inclusion via FinTech around the world. These will include the barriers holding back women to access and benefit from digital financial services and the lessons learned of institutions that have found solutions to overcome those barriers. 

PRESENTATIONS

Elisabeth BALLREICH, from Women’s World Banking, presented high-level findings concerning women’s financial inclusion in the past decade. Ballreich highlighted progress in account ownership for women, from 58% in 2011 to 65% in 2017. She noted, however, that 980 million women remain unbanked. Some obstacles include women’s illiteracy, lack of documentation, low time availability, and low mobility. Ballreich noted that the potential for digital inclusion is high: 3.4 billion women have mobile phones, including 61% of the unbanked women. Although women are less likely to own a mobile phone, they have a steeper adoption curve and stronger loyalty. 

Ballreich then described how Women’s World Banking designs successful financial services for women through actions such as minimising barriers to account opening with low or tiered KYC policies, taking the service to women through instant account opening in the field or door-step banking, bridging the emotional distance with relevant cases, visuals and language, as well as building trust and a positive user experience by training agents on how to adequately serve women customers. 

Yasser EL JASOULI, from MFI Insight Analytics, and Ronald EVERTS, from PHB Development, presented a case study from Jordan concerning the digitalisation and automation of the credit scoring process of the MFI Ahli Microfinance Company (AMC). El Jasouli detailed that AMC’s loan officers were given tablets to digitise disbursements and repayments via the use of mobile money. Once data started being collected, analysis showed that urban females aged 42 to 60 years were the least risk of default (< 3.5%) and scored positively in the ability and willingness to repay the loan. 

Everts stated that, although this very challenging project did not have a specific gender focus, analysis of the gathered historical financial data showed that women are a desirable market segment. Hence, social mission and economic viability can be perfectly well aligned. He emphasised the importance of incorporating digitisation into the MFI’s business strategy, and having clear business drivers from the start, gender aspects included.    

Bridget DOUGHERTY, from BRAC International, highlighted the organisation’s focus on women, at 97% of the client portfolio. She explained that BRAC has learned that the switch to digital, especially for women, would not happen automatically and would require deliberate and thoughtful action. Dougherty then elaborated on the organisation’s growth for impact and digital transformation strategy. She noted that digital products are contributing to improving efficiencies, but also to measuring social impact data via Lean Data surveys. 

Dougherty then shared some general findings of a research study in Uganda that looked at the client experience of 3,000 woman clients and the impact of disbursing a microfinance loan via mobile money as compared to cash. The study showed that moving towards digital payments can help women better control their money, and that they still prefer to receive the loan on their own sim card (even at a fee), thus choosing security even with the added cost of using the mobile channel. It also showed that women receiving their loan on a mobile account invest in 18% more business assets, with 15% higher profits. 

Dougherty also described the case of Myanmar, where BRAC is piloting a digital agri-credit project for smallholders, consisting of 3 disbursement cycles: 1) Agri-product with DFA; 2) Use of credit scoring; 3) Use of credit scoring-based decision, and mobile payment and disbursement. She explained that elements such as crop suitability data were included in the credit scoring. Results of the human centred product design phase showed that clients preferred high touch with high-tech products, which led BRAC to involve trained staff to assist the farmers. 

Njideka NWABUEZE, from Access Bank Nigeria, spoke about the Women’s World Banking-supported product BETA, meaning ‘good’ in the local language. She highlighted that women’s financial inclusion faces several barriers, such as low literacy rate and lack of documentation, their need to have easy access to funds, their distance to banks and impossibility to leave their trading spots during the day, as well as their scepticism that banks could provide a solution to their savings needs. 

Nwabueze then explained how BETA developed a better proposition for Nigerian women, as a savings account that uses mobile money but is delivered through agents, the “BETA friends”. Through a BETA friend, customers can open an account, and withdraw / deposit cash. Nwabueze detailed that, because the job of the BETA friends is centralised and trust-based, each agent can only serve up to 300 customers. She emphasised that the success of the product depends on the success of the BETA friends. To date, the bank has seen more than 1 million accounts being opened, 40% belonging to female customers. 

To close the presentation, Nwabueze mentioned that based on customer demand for additional services, the proposition has included other valued added services including longer term savings, fund transfer, bill payment, and microcredit. Other services such as microinsurance and pensions will be launched and rolled out soon by the bank. According to her, this goes in line with the positive customer feedback the bank received; customers appreciate the convenience of an informal system, but the security of a formal bank.

DISCUSSION

Pini firstly addressed the presentations of Dougherty and Nwabueze, and the reasons why convenience and proximity were not an actual barrier to clients for BRAC, whereas in Nigeria it was one of the key aspects preventing client uptake. Pini also asked all speakers to comment on the right approach to overcome barriers in FinTech adoption by female clients. 

Dougherty argued that the challenge in FinTech does not only lie in product design, but in the fact that the back-end banking systems are not good at adapting to technology from an infrastructure standpoint. This adaptation involves change management issues in the field. Investing in IT infrastructure and change management for staff is not a matter of if, but when to invest in the changes required. El Jasouli had a different standpoint, and argued that products are often not designed for women, which has a clear impact on the adoption phase. Nwabueze added that women’s access channel is crucial; for example, in some regions of Nigeria, providers need to offer door-step services by female agents.

According to Ballreich, challenges could often be very different from one market to another, and we can also learn a lot across markets. She called attention to the importance of customer research, which will reveal the adequate customer journey from initial outreach until they start using the product. Ballreich added that a human-centred design is crucial, not just concerning the implementation of technology, but in addressing real needs.

On the subject of policy, speakers discussed how regulation can either enhance barriers or improve access for women. Everts mentioned that the mandatory use of hand-written signatures to open accounts or use products in Jordan prevents uptake by female clients, since women have low mobility possibilities. Ballreich added that, in several African countries, regulators have taken a sandbox approach towards FinTech solutions. In a note of caution, Everts also commented that regulators should prevent gender-specific misuse of data, though big data can still be useful in analysing and developing better products. Ballreich reiterated Everts‘ point by mentioning the possible harm to clients when irresponsible lending practices prevent them from accessing other loans.