This was a report released in partnership with USAID in May 2021.
Executive Summary:
Financial inclusion of women brings disproportionate benefits to their families and to economic development, yet in many countries an access-to-finance gender gap remains. Sex-disaggregated data (SDD) is key to monitoring and addressing this problem.
This study examines the role that financial services regulators can play in efforts to address financial inclusion of women: how they are using, or could use, SDD to enhance women’s access to and use of financial products and services of the right quality that meet their needs; and how new technologies could help.
We worked with supervisory authorities in pilot countries in Africa (Kenya, Zambia) and South America (Colombia, Peru)2 to understand their experience to date and the key barriers and enablers of enhanced use of SDD to improve women’s financial inclusion.
We explored how the authorities in each country were collecting, analyzing, and using sex-disaggregated data. We also considered how that data related to both their regulatory mandates and activities and to the wider national effort to enhance financial inclusion of women to assess the extent to which regulators were, or could be, agents for change.
We used a causal chain (see diagram on page 16) to help us pinpoint where interventions could be made to enhance the collection, analysis, and use of SDD. We developed a maturity model drawing on six dimensions that interact to create the conditions for the optimal use of SDD: regulatory remit and capabilities, technological capabilities, financial inclusion focus, gender equality focus, market maturity, and infrastructure (physical, legal, and institutional).
In each of our pilot jurisdictions, we found areas of strength in some of these dimensions and areas that were less developed, or that needed to move to a next level of maturity as the market evolved and the financial inclusion challenge shifted from an entry-level goal to a next level of maturity. This may have been shifting from access to informal products to formal products, access to a single gateway product to a suite of products, or from access alone to use and quality.
Regulators often play a critical role in sourcing or collecting data to monitor the state of financial inclusion in their country. In our studies, they often did not collect or made less use of SDD in their core supervisory activities and were less clear on how a gender-sensitive approach would help them in regulatory activities, what SDD they would need to do so, and how they would use it.
Without clarity on how to use the data, improvements in technological and analytics capabilities are unlikely to be channeled towards using SDD in ways that effectively promote financial inclusion of women. We identified fertile areas for further development. Some relate to removing barriers to access, while others help with the usage and quality aspects of financial inclusion and consumer protection at a next level of market maturity.
Regulators operate in a larger ecosystem with multiple stakeholders with different degrees of contribution and influence. We recommend the following course of action to enhance regulators’ potential as agents of change for women’s financial inclusion as enabled by SDD and RegTech:
International standard setters and regulatory capacity builders need to show more clearly how gender is relevant to financial regulation or is a policy priority for consumer protection and financial inclusion, or even financial stability, and why SDD is important and how it can be used in practical supervision of international standards.
Donors, capacity builders, and civil society need to help regulators to access funding and expertise on gender equality and RegTech, to understand the real drivers of difficulties experienced by women, and to help governments enhance the non-financial infrastructure that supports digital delivery and use of financial services and RegTech.
National ministries need to ensure that regulators have the right statutory mandates to act as change agents for financial inclusion. This means giving them explicit consumer protection objectives, a broad regulatory perimeter, and shared responsibility for gender equality. Ministries also need to put in place cross-sectoral strategies and governance to tackle underlying barriers to financial inclusion, including infrastructure, cultural barriers, and access to technology, as regulators cannot solve these issues alone.
Regulators need to lead by example on gender equality and set expectations in regulated firms that explicit consideration of women is needed to ensure sound management of the firms, and sound provision of financial services to customers. They need to demonstrate that the marketplaces they supervise are treating women (as well as men) customers fairly and meeting the needs of both in spite of the existence of traditional barriers. They can leverage broader digital transformation programs and engagement with innovators to identify and build capacity for use of SDD in supervision, particularly in relation to core aspects of consumer protection supervision that benefit women as well as men.
Financial Service Providers (FSPs), whether they are incumbents or new entrants, need to consider the commercial opportunity of enlarging their customer base by including more women; how they will demonstrate to regulators that they are treating women (as well as men) customers fairly and meeting the needs of both; and how increasing the representation of women in their own staff can support these aims. Leveraging available tools and the wider tech ecosystem will help FSPs to optimize data and technology to meet these goals. FSPs must notify regulators and ministries about pain points that make it harder for them to provide women with the services they want. They can do this by providing viable use cases supported by SDD.
Technology providers need to show FSPs how digital service delivery can change the economics of providing services to women and other underserved groups and enable easier collection, analysis, and use of SDD to enhance customer service and demonstrate to regulators that women are being given access to financial services and are being treated fairly. They also need to ensure regulators know what solutions are available to address key pain points and to ensure that security and reliability are sufficient to maintain confidence in the solutions used.
Read the full report in the attached document.