On a recent trip to Indonesia, Mary Ellen Iskenderian of Women’s World Banking had an “ah-ha” moment about how to bring more financial services to rural women.
“It is a traditional practice for an expectant mother to save for her prenatal care, the delivery of the child and immediate postnatal care with her midwife,” she explains. “That was a trusted person. She knew that if the money was safely with the midwife, nobody else was going to have claims on that.”
Women’s World Banking teamed up with Indonesian state bank BNI to design a digital savings product and recruit midwives as rural banking agents.
“The best products we’ve designed are ones built on things that people are already doing. We always apply a big behavioral lens when we’re designing products,” Iskenderian tells ImpactAlpha’s David Bank on the latest Agents of Impact podcast.
Cracking the code
For 45 years, Women’s World Banking has been working to expand the economic participation, financial security and opportunity of low-income women and their households. The nonprofit provides gender-lens advisory services to commercial financial institutions and large fintech companies. It also invests directly in financial inclusion opportunities through Women’s World Banking Asset Management, which manages two emerging market investment funds.
The organization has reached more than 50 million women in emerging markets through its programs. It’s built a network of 74 financial institution partners in 34 countries, which collectively serve 185 million women. And it’s supported inclusive finance policy and regulation in 47 countries.
“I think we’ve cracked the code a little bit on how to reach those who have been underserved by the financial sector,” Iskenderian says.
Inflection point
Iskenderian joined Women’s World Banking at an important moment in global microfinance. Mohammad Yunus, the founder of Grameen Bank and father of microfinance, had just won the Nobel Peace Prize. And African telecoms provider Safaricomm was about to launch the digital payments service M-Pesa in Kenya.
“That combination of things—the recognition that the low-income population really was a bankable segment, but that digital was going to be the way we were going to be able to bring [down] the price point of reaching the low-income population with financial services—that was really the re-origin story of Women’s World Banking,” she says.
Digital disruption
Women’s World Banking in 2017 set a new goal of reaching 100 million women by 2027. Advising on a bundled savings and credit product in India has helped it achieve more than a quarter of its target.
In many markets with large populations of underserved women “it turns out the barriers were really simple,” says Iskenderian. There’s still a gender gap in smartphone ownership, which still limits the reach of digital finance. Traditional microfinance, too, has been slow on digital adoption.
But progress has been made on regulatory hurdles that disproportionately exclude women from formal financial systems, like collateralized lending. Women’s World Banking has also seen a positive shift in large financial services firms’ wanting to reach more rural and low-income customers.
“And fintechs have been a really great way for women to get past legacy financial institution barriers, like the lack of [consumer] data that has held them back,” Iskenderian adds.
Gender + climate
The rapid uptick and availability of digital finance has not been without drawbacks. Large fintech providers like M-PESA have been criticized—as some institutions in the early wave of microfinance were—for overburdening customers with debt. The issue is becoming more acute as low-income households and their livelihoods are jeopardized by climate change.
Amid India’s extreme heatwaves, rural farming families with savings and credit accounts have been able to cover emergency expenses, keep their children in school and replant devastated fields sooner than those without.
“The simple savings and credit combo is turning out to be a really important climate resilience product,” says Iskenderian. “Understanding what the pressures on a low-income household are and designing products that meet those pressures—I think that’s that’s the challenge for all of us in this industry.”
