The World Bank’s 2017 Global Findex report—which measures how people around the globe spend, borrow and save money—shared some encouraging news: between 2013 and 2017, 500 million of the world’s “unbanked” population opened formal bank accounts.
In terms of financial inclusion, this is true progress. Participation in the financial system is universally accepted as a key to reducing poverty—it helps the disadvantaged start businesses, save money, pay for education and manage risk through insurance and other safeguards.
However, within these World Bank statistics is a troubling sign: Among the nearly 2 billion people who do not have financial accounts, the majority fall into a significant, hard-to-miss demographic.
More than 56 percent of all adults without bank accounts are women.
This gender gap increases even more in developing countries. For example, while account ownership in Ethiopia has increased by 18 percent since 2014 among men, that’s double the number of women who opened accounts during the same time period. Pakistan and Bangladesh have also experienced lopsided male-to-female account ownership numbers the last few years.
What we have here, then, is a billion-strong demographic in desperate need of the kind of financial inclusion that could spark growth and prosperity in impoverished economies.
In fact, since 2013 the World Bank has prioritized gender equality as a means to ending poverty in Africa. “Women are essential to ending poverty around the world,” wrote World Bank Africa Region Vice President Makhtar Diop in 2015. “Nowhere is that more true than in Sub-Saharan Africa.”
Why are women so disproportionately unbanked?
The World Bank found that there are two main reasons why people don’t have bank accounts. First is lack of money, and second is cost and distance. In addition to these, other reasons include (a) that a family member already has an account, (b) lack of documentation and (c) distrust in financial institutions.
Women in sub-Saharan Africa—especially those in remote areas with children—are most likely unable to make and afford the trip to a traditional bank branch to open an account. They might also lack documentation. They probably have a husband or male partner already with an account.
She Counts, an international organization helping women gain financial independence, argues that the social norms preventing account ownership are hurting female businesses. Unbanked women often keep money in their homes, which is an inefficient and insecure way to store currency—it prevents the money from directly supporting their businesses, and it’s susceptible to damage, theft and seizure by family members.
The 2017 Findex report found that savings accounts help women in developing economies. In one study, female Kenyan vendors who saved at a higher rate invested 60 percent more in their businesses. Other studies indicate that women who save money use it more productively: Female-headed households in Nepal, after receiving free savings accounts, spent 20 percent more on education and 15 percent more on nutritious foods.
While it’s not possible for the World Bank to hand out free savings accounts to every unbanked woman in the world, there are some solutions on the horizon for narrowing the financial gender gap: namely, blockchain technology.
In addition to the unbanked numbers, the Findex report found that compared to men fewer women in developing countries have access to digital technology like a mobile phone and/or the internet. As these numbers improve, financial inclusion will as well.
Without question, crypto-currency and smartphone technology will help unbanked women take control of their money. As I pointed out in a previous article, “Where traditional banks are shackled by issues like inaccessible (for rural people) branch locations, high fees and a preference for cash over digital transactions, mobile money accounts provide simple, intuitive accessibility to anyone with a smartphone.”
How will this work? By making account ownership more accessible, women will increase their net worth, spending power and quality of life.
“Blockchain is a game changer,” says Dr. Jane Thomason, Global Ambassador of the British Blockchain Association. “It has the potential to provide secure identities, fast, safe and lower cost access to digital assets, in the safety of the family home. Women will be able to choose how they save, spend and invest their resources without having to carry cash and travel.”
The She Counts organization, whose central mission is to provide unbanked women with mobile money accounts, found that a combination of “savings and training” helped women achieve financial independence. In one experiment in Tanzania, researchers took three participant groups: one that received a mobile money account and training; one that received just a mobile money account; and one that received neither.
Of course, the group that received mobile money accounts and training saved the most money—more than five times the third group that received neither—yet the group that just had the mobile money account still saved three times as much as the third group.
Blockchain-based technology could also make financial account ownership much more affordable. For example remittance fees, i.e. fees people overseas pay to send money home, are the highest in the world for Africans. Mobile money accounts, especially in a competitive marketplace, minimize those fees.
Digital identity solutions could help the unbanked as well. Blockchain-verified identities are globally accessible and provide transparency for financial services organizations, helping the unbanked get loans and insurance. In addition to mobile wallets and remittance services, XendBit also provides identity services through the Xend Smart ID Card, which provides individuals with a convenient way to make secure micropayments.
Since it’s such a dynamic new technology, the many ways blockchain-based mobile banking will reduce the number of unbanked women are yet to be seen. Yet, clearly, blockchain and mobile money accounts provide the transparency, security and accessibility needed to improve financial solution in sub-Saharan Africa and emerging economies.
According to Dr. Thomason, “With growing mobile connectivity and increasing understanding of digital assets, we can start to close the gender gap for marginalised women. We need to be sure that the technology is coupled with context-appropriate training to ensure that women know and understand how to use it.”