Overview

DFS allows women to access and use financial services remotely. This convenience provides women with a safe, private, and convenient way to save money, make payments, and even develop a credit score, ultimately empowering them economically. Mobile phones and agent networks in particular cater to women’s preferences for convenience, dependability, security, and confidentiality.

Key Definitions

Digital financial services (DFS) are financial services that rely on digital technologies for their delivery and utilization by consumers. These services leverage digital platforms, such as mobile devices and the internet, to provide convenient, accessible, and secure financial solutions. DFS encompass a wide range of financial activities and products, including e-money, digital wallets, and digital payment platforms, loans, savings, insurance, and investment. By harnessing digital technologies, DFS enable individuals and businesses to conduct financial transactions, access financial products, and manage their finances more efficiently and effectively. The use of digital technologies in DFS promotes financial inclusion by reaching underserved market segments and drives innovation in the financial sector.

Fintech (financial technology) is a broad term that encompasses the use of technology to innovate and transform various aspects of the financial industry. Fintech utilizes digital technologies such as data analytics, quantum computing, cloud services, machine learning, artificial intelligence, and distributed ledger technology to enhance financial activities.

A DFS provider is a financial service provider that delivers DFS to customers. In this guide, the term DFS provider excludes traditional financial-sector intermediaries such as banks and insurance companies unless stated otherwise. It can include e-money issuers, fintech firms, and other regulated entities delivering DFS.

The impact of DFS on women’s financial independence and economic engagement has been extensively studied. Research has shown that women’s increased economic participation and access to financial services contribute to financial stability and stronger economic growth (Women’s World Banking 2016). Empowering women to unlock their earning potential can lead to reduced income disparity, higher growth, and better development outcomes. At the household level, access to financial services enables better financial management, risk mitigation, employment generation, growth of small and medium-sized enterprises (SMEs), and wealth creation. For instance, in Kenya, access to mobile money services has enabled more women-headed households to move beyond subsistence farming and develop thriving businesses (Jack and Suri 2016), leading to a significant reduction in extreme poverty. Similarly, in Ethiopia, the usage of alternative credit-assessment methods, such as psychometric testing, has allowed collateral-constrained women-led SMEs to access much-needed credit (LenddoEFL 2021).

While DFS offer immense potential, evidence suggests that without deliberate and gender-informed policy making,¹ there is a risk of excluding women and girls. Past experiences with traditional financial services have demonstrated that gender-neutral regulations can have disparate impacts on men and women consumers. For instance, in 2022, women remained 7 percent less likely than men to own a mobile phone and 16 percent less likely to use mobile internet, meaning that 264 million fewer women globally are utilizing mobile internet than men (GSMA 2022). Therefore, any attempts to increase access to DFS for mobile users without taking gender variations such as mobile ownership into consideration risk inadvertently leaving behind certain segments of women customers. Women face various challenges that hinder their progress in accessing and utilizing financial services, stemming from lower literacy and numeracy rates, digital and economic exclusion, and limited access to technology.

Mobile Money Is Contributing to Closing the Gender Gap in Sub-Saharan Africa and Other Regions

Opportunities to serve groups better that have long been shut out of the official financial system have arisen as a result of the proliferation of mobile money accounts in some areas. According to Global Findex 2021, the use of mobile money accounts is assisting in closing the gender gap in access to financial services in Sub-Saharan Africa, one of the regions with the biggest access disparities. In 15 Sub-Saharan African economies in 2021, at least 20 percent of women have mobile money accounts as their only form of payment. In seven of these economies, women were as likely or more likely than men to exclusively have a mobile money account, suggesting that in these settings, mobile money may be a more appealing or accessible choice for women.

Source:

Demirgüç-Kunt et al. (2022).

By embracing DFS and implementing gender-inclusive strategies, we can build a more equitable and inclusive financial system that empowers women, unlocks their economic potential, and drives sustainable development for all.

The objective of this background paper is to help financial-sector authorities² establish a more effective approach to advancing women’s digital financial inclusion. This complements the higher-level brief and is divided into three main sections and illustrated with country examples where relevant. It synthesizes available resources and complements existing knowledge about women’s use of DFS and gender-intelligent policy making. It does not intend to offer definitive evidence or establish causality of concepts and approaches that are still in nascent stages.

Section 1: WHY

This section provides an overview of why DFS constitute important tools for advancing women’s financial inclusion and focuses on understanding the key barriers currently faced by women on both the supply and the demand side.

Section 2: WHAT

The second section provides five key practical actions that can help overcome the barriers outlined in section 1.

It covers the importance of the following:

1. Developing an enabling policy environment with a specific focus on gender-related aspects.
2. Harnessing data to understand gender-specific barriers to financial inclusion.
3. Improving education and literacy among users of DFS and within regulatory authorities.
4. Enabling gender-intelligent product design.
5. Developing accessible supporting infrastructures and networks.

Section 3: HOW

Section 3 provides insights on good practices for pursuing these strategies and key questions that authorities should be asking when developing a policy road map.

Intended Audience

The background paper is intended primarily for policy makers at both the executive level and the working/implementation level who seek in-depth knowledge and comprehensive details on gender-specific actions to support digital financial inclusion.

This document offers an overview of the necessary actions and recommended approaches to achieve gender-inclusive policies. For a concise summary of the key findings, policy makers are encouraged to consult the brief that accompanies this background paper.