What is the bank women services disproportion problem?
Banks are leaving women behind, and that costs them 700,000 million euros a year.
700,000 million.
That is the amount of additional annual revenue that banks and other financial service providers could generate if they provided financial services to women in the same proportion as to men.
By ignoring women, the financial sector is missing a business opportunity that could bring revenues that triple the estimated fortune of Elon Musk.
Bank women services disproportion
As I explain in my book, There's Nothing Micro about a Billion Women, this number of women around the world are excluded from the formal financial system, despite the fact that many of them exert considerable influence on purchasing decisions as household finance managers or business owners.
Why is this happening? Financial service providers, especially in the developing world, have been slow to design products that respond to women's needs, and as a result, money is not flowing.
This inertia does not benefit the banks. Women are loyal customers for financial service providers: A 2018 analysis revealed that, in the United States, 61% of women stayed at the same bank for more than five years, compared to 46% of men. The analysis also found that women typically have higher loan repayment rates than men and are less likely to file bad checks.
For most of the last 50 years, "banking for the poor" has largely been the province of microfinance institutions, but technology has dramatically reduced the cost that conventional financial service providers have to face to serve these customers.
Bank women services disproportion development
The expansion of financial services to underserved and unbanked women in the developed world represents a formidable untapped market opportunity: just under 2 billion euros in new deposits and about 65 billion in new net income from interest and commissions on mortgages and other retail loans.
It is estimated that there are 320 million micro, small and medium-sized enterprises in the developing world, contributing to two thirds of private sector employment and up to 40% of the GDP of their respective countries.
Although a quarter of these companies are run by women, many of them have difficulties in obtaining financing, which means almost some 1,700 million euros of unmet credit needs.
Giving women better access to loans and other types of financing would be a great help to the banks themselves and the economies of their countries.
Bank women services disproportion needs
The changes needed to close the gender gap in the access of small businesses to capital are too complex and interrelated, but they must be addressed by all the actors involved. Governments should develop policies that address the differences in women's access to technology and financial services.
For their part, banks and financial companies will have to start valuing women as valuable customers.
A more equitable financial system would not only mean a stronger global economy and more income for banks, but also more financial freedom for women around the world.