A bigger role for women in digital finance can improve performance and overall economic growth.
Digital financial services are transforming our lives, enabling more people to gain access to financial services, but not all parts of society benefit on the same level. Women continue to be significantly underrepresented in finance and technology. In traditional finance, studies have shown an association between more women on commercial bank boards and a higher level of resilience and stability in the banking system. Despite these findings, women hold fewer than 25% of board seats in traditional banks. Improving access for men and women to traditional financial services reduces income inequality, but reports show the increased benefits when more women have access.
Despite the significant improvements, gender gaps in financial inclusion continue. Worldwide, over 60% of women have an account with a financial organisation, compared to 72% of men, due to suggested socioeconomic, cultural and technological barriers to financial services. Greater inclusion of women as users and leaders in digital finance creates benefits beyond tackling gender inequality. Closing the gender gap in leadership would create better performance levels in the digital industry, which is vital for economic development.
Data from the IMF and Crunchbase suggests that women represent under 13% of leadership as founders and executive board members of fintech companies. Studies show that these figures have remained very similar for the last 20 years. The report presents a positive relationship between more women on executive boards, the revenue generated by the company, and the funding acquired for future investments. A 10% higher proportion of women on the senior team is approximately 13% higher in revenue and funding earned.
There is a positive relationship between gender diversity and overall business performance. Companies with more female executives earned higher and secured more funding. In contrast, studies show that companies founded by women tend to generate less revenue and receive less funding, compared to men. This could be related to greater risk aversion when making investment decisions or could be due to gender bias from investors.
In regards to women’s participation in using digital finance, evidence shows that increasing digital finance inclusion boosts economic growth, which benefits society. When more women access financial services, they engage more in business activities, and when more diverse talent enters the workforce, it’s likely to boost productivity and reinforce economic growth.
Fintech is narrowing financial inclusion gender gaps in various countries by removing barriers impacting women, such as mobility and time constraints, and providing access to financial accounts from home. In some countries, while digital financial inclusion is increasing for women, it is faster for men, widening the gender gap. A study suggests that 31 of the 52 countries surveyed had narrowed the digital gender gap, but 21 had experienced the opposite effect.
Financial inclusion for women is a critical factor that can improve gender equality and increase economic growth, financial stability and income equality. We cannot improve the situation without recognising the realities of women’s lives and what is contributing to gender disparity in the use of digital finance. In many regions, women lack the means to access digital services, such as mobile phones and the internet. Cultural factors can limit financial literacy for women. Women’s digital and technology-associated literacy, determined by the proportion of women in STEM fields, stands at about 15% worldwide.
The findings emphasise the need for higher inclusion of women as users and leaders in the digital finance sector. As we continue to accelerate the adoption of digital financial services, there is a risk of potential new areas of financial exclusion due to the digital gender divide. Investing in digital and financial literacy should be a top priority for governments. We also require further research and data to determine the conditions that impact women pursuing leadership roles in digital finance.
A higher level of representation by women in leadership positions in fintech is likely accelerating the development of financial services and products more targeted towards women. Further studies on this area could boost financial inclusion in the future.
