Welcome to DFS Lab’s first podcast! In Episode 1, our own Ben Lyon sat down with Meghan Flaherty of Women’s World Banking to discuss principles for designing digital financial services for women. Some key takeaways from the interview:
Ben: Hello and welcome to the inaugural DFS Lab podcast. My name is Ben Lyon, one of the Entrepreneurs in Residence at the Lab, and I’m glad to be joined today by Meghan Flaherty, a Project Manager at Women’s World Banking. Meghan, thank you for joining us today.
Meghan: It’s great to be here.
Ben: So some context here, and why we wanted to start the podcast, was to get some important conversations happening in the fintech community, especially related to our work supporting startups in emerging markets where we predominantly early-stage startups in Africa and Asia. One of the things we try to do in our accelerator is try and prepare startups to get their products to market quickly and really identify a path to scale that enhances financial inclusion. What we’ve recognized, and why we wanted to start this podcast and specifically have this episode, is that we are not doing it exactly correct, and so when we think about financial inclusion and wear our technology hats, we often just dive straight into the product — we carry the assumptions that we brought with us — and one of those assumptions that I know you, Meghan, have an opinion on and are going to share here momentarily is that we can just take a gender neutral lens when we’re developing products for women, and that if we just assume that we don’t put in one pronoun or another everything’s going to be fine and we can extend financial services to men and women equally. That’s wrong, and it’s a stance that I’m really excited to hear more about. So, our goal today is to introduce you and to have a quick conversation about what we can do as practitioners — and what can startups do, and product managers in startups do — to make sure that they’re developing the right products, not just for men, but also — and specifically — for women because it’s a great business opportunity, it’s half the world, and it’s the right thing to do. With that, Meghan, let me turn over to you, and if you can introduce yourself we’ll get into some of the questions.
Meghan: Great, thanks Ben. Thanks for the opportunity to join DFS Lab’s inaugural podcast. I’m very honored. So, as you mentioned, I’m a Project Manager with Women’s World Banking. Women’s World Banking, for those who may not know us, is the global leader in women’s financial inclusion. We root our work in a deep understanding of the women’s market, and we tackle financial inclusion in three interconnected ways. First, by working with partner financial service providers to develop market-driven and scalable solutions that better position those institutions to serve women. Second, through our private equity Gender Lens Investment Fund. And, finally, because we know that diverse institutions are proven to be stronger, we build institutional capacity through leadership and diversity programs targeting women leaders and the mentors and executives that can support them. Through this holistic approach and our global network of over thirty partners, we accelerate economic opportunity for low-income women and growth for financial service providers.
Ben: Can you share a little bit about your own background?
Meghan: Yes, I have a background in international development with a focus on economic empowerment of women. I’ve been with Women’s World Banking for a little over two years now, and prior to that spent some time in the Peace Corps and some other non-profits in this space and am now thrilled to be continuing that work with a focus on women’s financial inclusion because I see so much strong potential to really improve the lives of women globally through this work.
Ben: Wonderful. One of the questions we have is, where are you seeing progress? So, in your previous experience and your current role, where are you seeing progress in expanding financial inclusion for women, and how can like-minded individuals, whether they’re in startups or non-profits, any part of the enabling ecosystem, what can we do to better accelerate that progress?
Meghan: Sure, so we’ve seen substantial progress in financial inclusion, including women’s financial inclusion in the past decade. The World Bank’s Global Findex Database shows us that over 700 million people became financially included, for example got their first bank account, from 2011 to 2014, so that’s a lot of people coming into the formal financial system in a fairly short time span. However, throughout those same three years, a 9% gender gap in access to financial services persisted, unchanged, in emerging markets. This leaves over 1 billion women who still today do not have access to formal financial services. So, this tells us that, while there’s been tremendous progress, there is an even more tremendous amount of work to be done and reaching the 1 billion women who remain excluded will require a concerted effort, and a collaborative effort, from a variety of diverse stakeholders. We see roles for everyone from regulators who need to create the enabling environment for financial inclusion, role for governments who can advance women’s financial inclusion in multiple ways, for instance the development of a national financial inclusion strategy that calls out gender-specific targets, or by digitizing government-to-person (G2P) payments that often have women as their primary beneficiaries. The G2P programs in Mexico and in Pakistan are both excellent examples of that. And governments can also work to provide and support financial education for women and men. Another key stakeholder is, of course, financial service providers themselves. This includes traditional players like banks and microfinance institutions, but also new entrants such as mobile network operators who are offering mobile wallets and mobile financial services as well as fintechs offering a whole variety of financial services like the companies in DFS Lab’s partnership portfolio. So, these financial service providers need to be developing financial solutions that work for women and that meet their unique needs. And then we also see a role for, beyond just the financial services sector, for private companies in other areas such as manufacturing or fast-moving consumer goods who have millions of women in their supply chain across the globe, and they can play a great role in collaborating with financial service providers, for instance, to bring financial products and services to those women. So those are the kinds of cross-sector partnerships that we see as holding a lot of potential to really advance women’s financial inclusion in the coming years, and we also are looking to digital solutions to increase women’s opportunity to access the formal financial sector due to the lower delivery costs and greater scalability. Digital solutions also typically offer greater convenience and affordability, which are concerns that are very important to women customers, so they have the potential to address those key barriers as well.
Ben: Yeah, and I’d like to kind of dive in to convenience and affordability in a little bit, but that number — more than 1 billion women still have no access to financial services — it’s a shocking number. It’s huge. Where are these women? Is this predominantly Asia? Is it Africa? Is it mixed, or are you seeing particular concentrations where it’s acute?
Meghan: That’s a really good question. We have done that analysis using the great data provided by The World Bank as well as Intermedia and other surveying organizations and we’ve identified a number of priority markets looking, not only at where are the most unbanked women in terms of mass numbers, so those might be larger countries such as Pakistan, Indonesia, Nigeria, Mexico, Egypt, India, Bangladesh. Some of those really large countries do have high numbers of women. Some of them do have very large gender gaps, and Pakistan is one example of that. So, we look, not only at where are there the most excluded women, but where are the biggest gender gaps, where are there also larger numbers of low-income women who are unbanked, since that’s part of our mission as well. Really, they are in regions across the world. There is no one area of concentration, which is why we continue to work globally.
Ben: Women’s World Banking, right? This is a global problem.
Ben: Very interesting. And this kind of segues to my opening statement about some mistakes we’ve made, and these are kind of mistakes of omission or ignorance, I think, but what mistakes would you say we’re making as an industry? So, as the DFS, or digital financial service, industry, even kind of looking at the developed world with more traditional fintech companies, what mistakes are we making that are exacerbating this, or just not helping?
Meghan: So, I think one of the most common mistakes we see is what you mentioned in your intro about assuming that taking a gender-neutral approach will result in equal access for men and women. Empirically, that’s not the case for a few reasons. The status quo is that men are more financially included than women. They have greater and digital literacy rates. They have greater access to digital technology in terms of, particularly, mobile phone ownership — there’s still a significant gender gap there in many markets. Digital literacy rates are correspondingly also higher among men. This leaves us with that 9% gender gap I mentioned earlier, so the status quo is unequal access. That means that we as an industry of financial service providers and other stakeholders who care about this issue need to be taking proactive action to overcome that gender gap. And this matters, not only from the social perspective of wanting to achieve greater financial inclusion for women and men, but also from a business perspective and from a macro-economic perspective. From the business perspective, if a financial service provider is not actively serving women, that’s 50% — more than 50%, really — of the untapped market given the gender gap. That means women are the majority of unbanked customers who need innovative that fintech companies can develop. And, from a macro-economic perspective, when women have unequal access, communities, families, and even countries cannot achieve their full economic potential. So this assumption of gender neutral as being equal for men and women really doesn’t pan out. It’s also important to recognize that men and women make financial decisions differently and they also use mobile phones differently, and there’s research done by many other organizations on those counts. The thing to keep in mind as well, the interesting number, is research shows that women account for up to 80% of purchasing decisions globally, so by not intentionally addressing the unique needs of women, fintech companies and companies in any other sector are missing out on a potentially large share of the market and additional growth opportunities. And the last point to mention under this gender-neutral-is-equal-access assumption is that the tech industry, including the fintech industry, remains majority male. We all carry implicit biases with us that inform the way we see the world, so if I’m a woman that’s part of the identity that shapes my world view and if I’m a man that’s part of that identity among a whole host of other personal characteristics. Those biases related to gender can unknowingly be reflected in the solutions that we design unless we take proactive steps to test those assumptions, validate them, and bring in diverse perspectives. So, that key mistake of the gender-neutral approach is a core one that we see. One other mistake that I’ll mention is a failure to capture and analyze gender-based data on your customers, on your users. So, capturing in the sense that many, many fintech companies still are not asking their customers, or confirming, are you a man or are you a woman? If you’re not capturing that information, you can’t analyze that, which means you can’t do even the most basic segmentation analysis to say ‘How might the behavior of my users or the needs of my users differ by gender?’ So, failing to capture and analyze that data is really just a missed opportunity to know and serve your customers better.
Ben: I just want to repeat back one of the things you said: The status quo results in unequal access. That definitely merits repeating. Starting to focus down into the product-level, what are the types of things that we might do to correct this? I mean, you’re talking about 80% of purchasing power globally being made by women, and that’s a shockingly-large amount. That’s a lot of GDP. And so, if companies aren’t paying attention to this, it’s bad business, fundamentally, among other issues that it raises. So, if you were an executive or a product manager at a DFS company, what would you do, or what might you do, to better recognize these biases, to better recognize some of the mistakes and assumptions we’ve made so that you could correct them?
Meghan: The paradigm shift that I would love to see take place in the DFS industry, and the financial services industry more broadly, is for every single company to recognize the women’s market, including the low-income women’s market, for the incredible business growth opportunity that it is. Because if companies recognize that, they would act accordingly, meaning they would be doing everything in their power to learn more about this customer segment and the sub-segments within it, and design solutions that meet those customers’ needs, etc. So, going back to this shockingly-huge number as I think you phrased it of over 1 billion women globally, that is a market opportunity for any fintech company, and we believe that market-driven solutions have tremendous potential to scale and to bring women into the formal financial system. Treating women as a distinct customer segment is the first step towards that objective, towards that end. And this start with capturing and analyzing that consumer data that I was talking about. It also starts with conducting consumer research to get to know the needs of the specific segment of women that you want to target, so that’s the specific needs of women in a given market and then within that where are the opportunities for you in your company-specific offering and value proposition. Which needs can your company serve? I’ll give an example of an opportunity that we came across in this way. So, we were working with a partner bank of ours, Diamond Bank in Nigeria, and the bank was looking to increase its outreach to the low-income women’s market. So, we were looking for opportunities to do that. And one of the potential segments of women that we identified were a group of market traders. These were women who, in many cases, literally sat no more than 20 yards from a bank branch and yet the vast majority of them had never entered the bank branch and, of course, had never opened an account. And so, we set out to find out why. Proximity, at face value, wasn’t the issue. When we started doing research and asking these women how they currently manage their financial lives and their needs, what pain points they have, how a bank or other financial service provider might address those needs, what we found out is that these women are time-poor. They are the sole owners and managers of their market stalls, and they are busy. They are there from sunup to sundown every day. They’ve got customers coming and they don’t want to miss a sales opportunity, so they don’t have time to go walk to the bank branch, stand in a line, and meanwhile leave cash on the table at their stall. So, we worked with Diamond Bank to design an agency banking, doorstep collection service and corresponding savings product, a basic mobile account that can be accessed via a mobile phone and deposits can be made in very small amounts at the women’s location in the market by a roving sales force. So that’s an example of how identifying women as a segment, going out and understanding their needs vs. the needs of men, and then designing a solution that specifically addresses those needs is a growth opportunity for the bank. They have over 500,000 accounts now — Beta Accounts, they’re called.
Ben: And that’s just in Nigeria?
Ben: And so you have agents going around the market with a smartphone or POS device and they’re capturing deposits from the women in cash, where they work.
Meghan: Yes, exactly.
Ben: One of the things that was really helpful for the industry in general was a few reports put out by CGAP, which is part of The World Bank. They’ve been trying to define a set of design principles, really. They’ve done a review of DFS applications in India. They’ve done a specific toolkit in partnership with Karandaaz in Pakistan about how to modify and design your apps for that specific market. And then they put out this larger set of principles around designing smartphone user interfaces and experiences for mobile money. And what’s lacking, I think, is a set of design principles that are specific to women. Of course, no one rule applies to everyone. These are 1.1 billion people in tens of markets, after all, but if you were to try to abstract and create some design principles, what comes to mind?
Meghan: Yes, I’m familiar with the work that CGAP and Karandaaz did and found those principles very useful, and really some of them are very similar to some of the ones that I’ll identify here for women-specific design, or women-focused design. In my mind, four key design principles come to mind for designing fintech products for women. The first is get to know your customers. This applies to women and men, but it’s particularly relevant for women given that they remain more financially excluded, so we still know less about them until we ask. So, this means going out, doing research, talking to women in your market, understanding their financial lives and financial needs, understanding how they currently meet them, and identifying the pain points. What are the most pressing gaps she has in achieving financial health for her business, for her family, for herself. With that, you can design effective solutions for those high priority challenges, and those pain points often vary by gender. The second principle that is critical is to segment your consumer research as well as your UX testing by gender. We know that women are less likely to speak up in mixed gender groups, which risks their perspective not being captured. There are often also gender differences in financial behaviors and priorities as well as the perceptions of a user interface, so it’s important to develop a research and testing plan that enables you to capture those nuances and design accordingly. The third principle is meet women where they are and engage them in the way that makes the most sense for them. Women have many responsibilities across both business and family. She may not have time to participate in a UX testing session that is scheduled during the same hour when she makes lunch for her family. She may not be able to leave her shop unattended for twenty minutes to walk to an agent location, and that’s the example with the Diamond Bank Beta Accounts where doorstep collection was a key feature. Effective financial solutions must be designed with women’s unique needs in mind and based on an understanding of what those needs are. In most cases, we found that products designed with women’s needs in mind end up being objectively better products. Women have high standards, and so the products that work for women typically do also gain traction among men. But the reverse is not the case. The final design principle is build in opportunities in your product design to gain her trust. Women are less likely than men to trust a new digital provider with their money, and this is particularly true for low-income women who are statistically less likely to have had any previous experience with either the formal financial system or with mobile phone usage beyond red button green button usage. So, thoughtful design can help women overcome these questions and these uncertainties that might be limiting their access. For instance, you can design the customer journey in a way that allows new users to explore the interface before having to commit to put money on the table and sign up. She can explore, ask around, ask questions if there is an interface for that, that can help build initial trust. Building in transparency, including clear and upfront explanation of any fees to be charged, and continuing to build trust throughout your interaction with the user through transaction confirmations and through offering a clear and effective customer recourse channel in the event that errors do happen and questions do come up. She needs to know that she can resolve those.
Ben: Many things have jumped out in our conversation. To reiterate some of those, one was the size of the market. So, 1.1 billion women are financially excluded, which is three times the population of the United States. 80% of global purchasing power, according to World Bank estimates, is decided by women, and that’s a huge amount of money. And then there are these four design principles, which I think are really interesting. Repeating them back, 1) get to know your customers, 2) segment and capture gender-specific data and conduct gender-specific user testing, 3) meet customers where they are, and 4) build and reinforce trust throughout the user journey. Also, if you design your app for women, it will almost certainly work well for men, but not the other way around. In the last minute or two here, do you have any last thoughts for the industry?
Meghan: What I would leave the industry with, and DFS Lab is a great example of an organization that’s advancing this conversation, is to make women not an afterthought, but really a core customer segment and recognize that opportunity. Because it is a huge opportunity, both from a business perspective and a social perspective. Women’s financial inclusion is good business, and also good for the women themselves.
Ben: Meghan, we really appreciate your time. This is Ben Lyon with DFS Lab. I’ve been speaking with Meghan Flaherty, a project manager at Women’s World Banking, and if you’d like to join the conversation, please connect with us on Twitter at @TheDFSLab. Let us know what you think. Feel free to comment on the blog and let’s get this conversation started. Meghan, thank you for your time!
Meghan: Thank you.