Women control more than US$216 trillion in wealth (World Bank) and are responsible for up to 89% of purchasing decisions globally (Neilson). They’re also strong savers and loyal customers. Yet, this market remains largely underserved. Only 65% of women have access to a bank account, compared to 72% of men (Global Findex). Unmet demand for business finance among female-owned MSMEs in emerging markets is estimated to be US$ 1.7 trillion (IFC). And, of those women who do access financial services, 73% are dissatisfied with their bank (BCG).
The fintech sector is uniquely poised to close the gender gap and respond to women’s distinct needs and behaviours. Doing so represents a revenue opportunity worth billions. But are founders and investors aware of this?
To answer that question, the Financial Alliance for Women – the leading members’ network of financial institutions dedicated to championing the female economy and a partner of findexable – conducted a survey of fintech founders, investors and other ecosystem players. The survey found that the fintech sector has so far largely overlooked the opportunity to serve women professionals, entrepreneurs, investors and more (also known as “the female economy” opportunity). And it revealed why fintechs – with their wealth of data, agility, and ability to deliver high-value services efficiently – have exceptional potential to tap into this opportunity. These results were published in a 2020 report, How Fintechs Can Profit from the Multi-Trillion-Dollar Female Economy.
A Strong Business Case for Serving Women
Fintechs that view their data through a gender-lens will find a strong business case for targeting women. In the Alliance’s survey, 64% of fintechs that collect sex-disaggregated data found that female customers had similar or higher usage rates than men – debunking the myth that women are not early adopters of technology.
Additionally, the majority of fintechs with sex-disaggregated data found similar or higher life-time values (LTV) and similar or lower customer acquisition costs (CAC) for women, as compared to men.
When asked why the LTV for female customers might be higher, fintechs reported that women are more loyal, have better repayment rates and refer more customers. However, fintechs often leave these factors out of their LTV calculations, thus undervaluing women customers’ potential return.
An Overlooked Opportunity Why are women customers widely undervalued by the sector? One major reason is that sex-disaggregated data often goes unused. While 80% of fintechs in the study can identify consumers by sex (far higher than in the incumbent financial services sector), most do not integrate sex-disaggregated data to inform decisions at any stage in the business lifecycle. Of the B2C fintechs that the Alliance surveyed, just 11% use sex as a criterion to segment their market.
This results in a self-reinforcing cycle, as the lack of use of data on female customers, paired with a tendency to rely on assumptions about consumer behaviour, enable products and services to continue to be designed with the archetypal (male) customer in mind.
How Fintechs can Tap into the Women’s Market
The path to taking advantage of the multi-trillion-dollar female economy opportunity begins with incorporating sex-disaggregated data into strategic decision making.
The next step is for fintechs to research women’s needs, preferences and behaviours as relevant to the problem they are seeking to solve. The Financial Alliance for Women’s study found that 58% of B2C fintechs do not conduct any market research on female customers; however, we know that doing so is key to building a gender-intelligent customer value proposition.
The Gender Diversity Imperative
Incumbent financial institutions with gender diverse teams and inclusive cultures are more successful in the women’s market, and this will be the same in the fintech space. Yet we know that fintechs are no different from the incumbent sector in that they are heavily male dominated, with women making up just 7% of founders internationally (Deloitte).
The pervasive lack of women in these types of key roles in fintechs likely leads to unconscious biases during the business modelling and product development processes.
Building a gender-diverse and inclusive organisation should be a priority for fintechs and investors alike. Making progress on this front will almost certainly better position fintechs to reach women customers.
This is why findexable is launching the Fintech Diversity Radar – the world’s first global platform gathering progressive data on women in fintech. The FDR will provide a snapshot of women in the fintech industry to understand their impact and contribution to the digital economy.
For the fintech sector as a whole, more diversity and representation will undoubtedly make it more innovative and profitable. And for all of us, fully financially including more women will help build more resilient economies and societies.
Fintechs, get involved! – take the Fintech Diversity Radar now https://bit.ly/FDRNetNews
To find out more about findexable’s Fintech Diversity Radar, visit: https://findexable.com/diversity-radar