MICROFINANCE PAPER WRAP-UP: “Enabling Women’s Financial Inclusion Through Digital Financial Literacy,” by Catherine Highet, Published by FinEquity

In this paper, Catherine Highet evaluated the gender gap in digital financial literacy (DFL) and identified related enabling and constraining factors in various countries including Bangladesh, Cambodia and Ghana. The enabling factors include literacy, numeracy, access, consumer awareness and design. A key to success in boosting DFL is closing the gender gap in phone ownership, thus enabling women to control their finances via mobile money.

DFL requires the use of many unfamiliar words, especially for low-literacy populations. Users’ levels of confidence in accessing digital financial services (DFS) often hinges on their ability to understand text that is presented to them. Digital tools often are poorly translated into local languages from English, and most instructions are text-based rather than making use of video or audio. This contributes to the gender gap as women are less likely to be literate than men. Training women to use DFS in groups can be helpful so there is a local support network of informed users.

Numeracy is a crucial enabler of DFS as it allows customers to recognize specific denominations of money and keep track of balances. To teach key elements of numeracy, Ms Highet recommends using visual cues, such as the design and color of different coins and bills to learn their denominations. Savings groups also are useful for teaching the importance of saving, providing accountability and empowering women to accomplish shared goals.

To use DFS, women need to have access to mobile phones and electricity to charge those phones. Because of social norms, many women do not own phones and sometimes have to share devices, limiting their privacy. To address this, Ms Highet recommends designing DFS to work on older phones, which can be more widely available. To maximize access to training sessions, organizers may hold them in commonly frequented locations such as markets. A related challenge is that women often lack access to photo identification, preventing them from opening accounts.

For women to continue using DFS long-term, they must feel in control of their finances. Often, salespeople are misinformed about products, preventing customers from understanding their true benefits. To address this, Ms Highet recommends increasing training for salespeople and customizing sales tactics to fit individual needs, for example showing a woman farmer how to access crop insurance. Publishing easy-to-use guides to DFS products also can help.

DFS products should be user-friendly and flexible enough to fit individual needs. Often, DFL resources are not adapted to local markets when they are rolled out to a new area. This forces customers to use unfamiliar technology and learning methods. To address this, Ms Highet suggests: (1) designing DFS interfaces to be “logical,” rather than focusing on visual appeal; (2) consulting with stakeholders when making design changes; and (3) continually re-evaluating and improving design.

Ms Highet identified the primary constraint to DFL as “gendered social norms,” which include “collective beliefs and expectations about how different genders should and can access digital tools, engage with financial services, and access information.” These and other norms have resulted in low levels of phone ownership among women and the deprioritization of education for women and girls. In addition to affecting how society views women, gendered norms impact how women see themselves and hence the levels of confidence they have in their abilities to use DFS. To address this, Ms Highet recommends: (1) using nudges to motivate users and demonstrate how DFS are applicable to women’s daily lives; (2) creating safe spaces where women can speak about their experiences; (3) using statistical evidence to show discrepancies between personal beliefs and actual results; and (4) positioning DFL as socially acceptable, such as via government-mandated programs.

This is a summary of a paper by Catherine Highet, published by FinEquity, May 2021, 24 pages, available at https://www.findevgateway.org/sites/default/files/publications/2021/FinEquity_Synthesis_Final_linked_0.pdf

By Sophie Fiala, Research Associate

Sources and Additional Resources

FinEquity webpage
https://www.findevgateway.org/finequity

CGAP homepage
https://www.cgap.org/

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