Women’s financial inclusion is hampered by male-centric data
In today’s world, many problems are rooted in the desire for power, often associated with the male ego. Power often leads to conflict, and these conflicts usually revolve around one man or a group of men seeking to exert control over others. However, power alone is not enough: money plays a crucial role in perpetuating this power dynamic. To understand how men maintain their power – intentionally or not, we need to follow the money.
This article is not an investigation into megalomaniacs and their financial dealings. Instead, inspired by a conversation with Mary Ellen IskenderianCEO of Women’s World Bank (WWB) and author of “There’s nothing micro about a billion women“I focus on why men have easier access to financial resources than women and how artificial intelligence (AI) can both help and hinder women’s financial inclusion.
One might assume that financial exclusion is primarily a problem in developing countries. However, a study by the Boston Consulting Group reveals that the financial services industry is among the least female-friendly in the world and is the sector where companies have the most to gain by changing their approach.
To illustrate this in a first world context, Iskenderian points out that “the presence of a woman on the venture capital investment committee is the most important factor in determining whether a woman-led company will receive funding” . However, this is not the case. purely a problem of male prejudice. experience in Turkey, involving 334 bank loan officers, showed that both male and female loan officers often conditioned loan approval for a woman-owned business on the presence of a guarantor, even when one loan application was identical to another application – except for the gender of the entrepreneur.
Obtain financial access
Access to financial services remains a challenge for almost a third of adultsdespite the rise in power alternative financial service providers and mobile banking services. In developing countries, women are almost 10% less likely than men to have a bank or mobile money account, often due to a lack of proper identification. 44% of womencompared to 28% of men, do not have an identity document to open a bank account.
The impact of AI on financial inclusion
Mobile phones and digitalization have opened up the possibility for the unbanked to access financial products. AI has added the ability to do this at scale. But offline gender discrimination in credit decisions is common, even though women have consistently higher credit scores and repayment histories (in both developing and Western countries). Therefore, with no other data available, the AI is trained on already biased loan data. While WWB is pushing for gender-segregated lending data to understand and overcome these biases, there are both legal and data collection issues. Goldman Sachs’ online bank Marcus already found to have gender bias because the data used was “gender blind” (as required by law), yet reproduced hidden gender biases from previous lending decisions.
Beyond identification and data bias, there is another problem: cultural and educational inequalities. As explained Roselyn Najjuma Thabit, Head of Banking Transactions at Standard Chartered Bank Uganda. “In emerging markets, there are cultural inequalities that unintentionally favor men for jobs that are more digital-friendly and therefore more suitable for scorecard lending. Even when behavioral dashboards are used, they often contain questions biased toward men, exacerbating the financial gender divide.
Why women are better customers than men
An internal study conducted by WWB showed that financial service providers with more than 50% female clients achieve higher returns on equity and assets. Women also have better loan repayment rates, are more consistent savers, and build higher savings-to-income ratios than men.
Gender bias in credit decisions is costly for banks and lenders. If women benefited from mortgages and personal loans at the same rates as men, this could generate additional annual income estimated between $32 billion and $65 billion.
Learn from history
Historically, women have managed their money differently than men, prioritizing the well-being of their families. When women control financial resources, they invest more than men in basic needs such as food security, health and education. Improving women’s financial access has a positive ripple effect, leading to better health outcomes, education and lifelong earning potential for the entire family.
Reversing the power dynamic
At the beginning of this article, I stated that to understand the roots of power, we must follow the money. But we can also understand the use of money if we understand who has the power. When we empower women to take charge of their financial futures, we tip the scales and this change holds the promise of a fairer world where power dynamics are more balanced.