How can fintech close the gender gap?

According to recent research by Kantar, financial services are missing out on nearly USD 800 billion in profits because they are not developing services with women in mind or marketing them directly. The Global Banking Alliance for Women reports that women make or influence 80% of purchasing decisions globally, yet 73% report being unsatisfied with their financial services.

Women are in a position to make or break companies offering new products on the market. Companies ignore women at their peril.

Designing and delivering financial services to women presents a double opportunity. First, it can help companies make bigger profits. Second, it can help overcome the very real gender gap that still exists between women’s and men’s financial health.

Yet apart from a few isolated attempts to tap into the “pink dollar”, such as feminised credit cards (think pink and Hello Kitty), most financial services have historically been designed according to a one-size-fits-all model. Whether we are male or female, old or young, our bank accounts, debit cards, mortgages, and insurance products are essentially the same.

Gender differences in financial behaviour

This oversight seems strange, given that we have known for decades that women use financial services differently to men. More than twenty years ago, sociologist Dawn Burton urged financial institutions to look more closely into women’s needs because women were increasingly making all kinds of financial decisions. In 2017, reporter Chris Metinko called women “the new CFO of the household.” In fact, most of women’s purchases are for their families, not for themselves.

While this sounds empowering, it has a negative side: although women are more likely to be in charge of the daily family budget, men tend to manage long-term finances. Women are less likely to seek financial advice than men, and rank lower on financial literacy scales in many countries, putting them at a disadvantage. The result is that men generally accrue more investments and retire with more money.

Women also manage their finances differently in other ways. For example, research in the US found that women feel less comfortable about using credit cards to pay for luxury services.

According to an EY study, women have different expectations of what they will get from financial advice and different ways of evaluating financial advisors. The same study reports that they also spend less time reviewing their finances. Women’s perceptions of brand also influence women’s choices, especially a brand’s aesthetics, appeal, and perceived social value.

Fintech and the gender gap

Until recently, financial service providers were not willing to tailor services or advertising to women’s needs, preferences, and lifestyle. It was simply not profitable for banks, insurance companies, and the like to invest in niche products.

Today, however, things have changed. The new generation of “fintech” services specialise in niche products and markets. Designing products specifically for women is more technologically and economically viable than ever before. Even better, uptake by women should not be a barrier. According to a 2016 Visa report, “pioneers”— people using digital financial services — are more likely to be female (60%).

Financial service providers are starting to respond accordingly. Early evidence suggests that advertising strategies are changing, with financial companies buying 20% more stock photos of women today than they were five years ago.

Products targeted strongly at women are also appearing on the market. Australian company Afterpay, which allows consumers to take their purchases home immediately and pay for them in instalments, clearly (and intelligently) targets women in their advertising. Some concerns have been raised that Afterpay may lead women into debt, but so far, the evidence is inconclusive.

Other products are targeted specifically at women, to the exclusion of men. Miss Kaya is a money management tool that helps women with a range of financial needs, from budgeting to saving to investment. Savings products for women include Joy App, and Nav.it, both of which help women save money for particular future purchases. Women wanting help with their investments specifically can try services like Ellevest or and Learnvest.

Understanding women in a fast-changing market

If ever there was a time to design for and market to women, it is now. However, while some companies are making progress, most are not.

A major problem that FSPs face is that while we know that women’s behaviour, values, and needs are different to that of men, we do not have a clear idea about exactly how this plays out in practice.

There are three major barriers to improving our understanding. First, “women” is a very diverse group of people, so we need to be careful about how we segment this market. Second, “what women do” is not stable. The market keeps changing — and so do women. Third, most research looks at how women use a single financial product or, at best, their behaviour in a particular area (such as how they save or how they budget). But in reality, our financial behaviours and practices are complex.

For example, our decision as to whether to use a credit card is highly influenced by the other payments tools we have in our wallets, and also on external factors such as whether this choice is technologically possible (a shop may not accept credit cards) or culturally acceptable (attitudes to credit differ from place to place).

To clarify this point, in research with Gawain Lynch on payments in the Netherlands, we witnessed women especially juggling multiple payments methods and tools (such as cash, cards, apps, etc.) to make their daily financial management a success. Mobile banking and payments were especially critical to women as they undertook daily financial management “on the run”, and cash still played an important role even though our participants overwhelmingly used digital financial tools. What mattered was not any individual product, but how they were used together to meet women’s goals and needs.

How, then, can we adapt financial services and marketing to women? I suggest we:

Stop assuming that what women need is the same as men.

Resist the urge to guess what women need.

Be aware that women’s needs will differ depending on many factors, including culture, profession, family life, personality, and more.

Ask women what they need, paying attention to women’s use of products in tandem and in context.

Use the appropriate research methods to collect data.

Using evidence, design services that fit with what women have told us.

Engage with women in ways they request.

The emergence of niche, personalised financial services holds a great deal of promise for women. But we do women no favour when we design for them in the dark. Well-designed research and implementation is the key to enabling fintech to close the gender gap.

About Dr. Erin B. Taylor

Erin is co-founder and Research Lead at Canela Consulting, The Hague. Canela specialises in research into “messy human problems” in finance and technology. Erin has done research on payments in the Netherlands, financial service design in Haiti, financial service use across the Haiti - Dominican Republic border, and is co-author of the Consumer Finance Research Methods Toolkit. Email: erin@canela-group.com

About European Women Payments Network (EWPN)

The EWPN brings women in payments together through networking events and workshops dedicated to women in the industry. Our new EWPN Research Network brings together payments researchers working in industry, academia, and not-for-profit organisations. We work together to connect, create, and collaborate on research projects and activities. Our goal is to improve the quality of payments research and advance our knowledge of the role of payments in society and industry. The Research Network is led by Dr. Anette Broløs and Dr. Erin B. Taylor. Contact us at research@ewpn.eu.