How Women's Financial Inclusion Can Transform Their Lives

Women's financial inclusion refers to ensuring that women have equal access to and use of financial services, products, and opportunities. This includes access to banking services, savings accounts, loans, insurance, and other financial instruments.

Why is it important? Well, it is because, in many parts of the world, women face significant barriers to accessing formal financial services. So, this inclusion for women aims to address the gender gap in access to financial resources and empower women economically.

How Access to Financial Services Can Transform Women’s Lives

According to data, currently, there are approximately 780 million women who lack access to formal financial services, with many of them being among the poorest and most marginalized in society. This lack of access not only limits their economic opportunities but also hinders their ability to save, make payments, and manage risks effectively.

For many women, especially those living in rural or remote areas, this access is crucial. It enables them to manage their finances more effectively, whether it's saving up for their children's education, investing in their businesses, or even preparing for emergencies.

Moreover, when women have control over their finances, they are more likely to invest in their families' well-being. This access can lead to significant improvements in women's lives, such as increased income, asset accumulation, and better access to food.

Additionally, financial services inclusion can empower women to participate more actively in decision-making processes within their households and communities.

Therefore, women's financial inclusion can be a game-changer for women around the globe, offering them opportunities to thrive and succeed in various aspects of their lives. When women gain access to formal financial services, it opens up numerous possibilities, empowering them economically and socially.

Women's Needs in Financial Services

From limited access to banking services to cultural and societal barriers, there are several factors when it comes to financial inclusion challenges for women. So, it's crucial to recognize and address the unique needs of women when it comes to accessing financial services, such as:

1. Access to Banking Services

Access to formal banking services remains a fundamental need for women's financial inclusion, as more than 700 million women globally lack access to formal financial services. Many of these women are from rural or remote areas, where physical bank branches are scarce.

To address this need, financial institutions should prioritize expanding their reach through digital banking solutions and mobile banking services. Providing convenient and accessible banking options will help women to easily manage their finances without the need to travel long distances or rely on traditional banking methods.

More than that, financial institutions should ensure that their banking services cater to the specific needs of women. This includes offering savings accounts with low or no minimum balance requirements, affordable transaction fees, and user-friendly mobile banking apps.

By removing barriers to entry and providing tailored banking solutions, women can confidently engage with financial services and take control of their financial futures.

2. Affordable and Inclusive Credit

Another crucial need in terms of women's financial inclusion providing access to credit. Affordable and inclusive credit is critical for women to unlock economic opportunities and invest in their futures.

Historically, microfinance has been a primary source of credit for women in many developing countries. However, as highlighted by the World Bank's supported research in Pakistan, over two-thirds of female microfinance borrowers needed approval from a male relative to qualify for loans.

So, this finding suggests that modifications in loan application procedures and criteria, prompted by this insight, could facilitate women's access to loans and empower them to manage their finances according to their own preferences.

Moreover, microfinance often comes with high interest rates and limited loan sizes, posing a risk of over-indebtedness for women borrowers.

One of the possible solutions is, that financial institutions should offer affordable and inclusive credit products tailored to women's needs. This may include low-interest loans with flexible repayment terms, targeted specifically at entrepreneurs and small business owners.

3. Risk Management and Insurance

In addition to banking and credit services, women also require access to risk management tools such as insurance. It is important in protecting women's assets and livelihoods against unforeseen events such as natural disasters or health emergencies.

However, many women, especially those in low-income countries, lack access to affordable insurance products tailored to their needs. So, to address this gap, insurance companies and policymakers should collaborate to develop innovative and accessible insurance solutions for women's financial inclusion.

This may include microinsurance products that offer coverage for specific risks relevant to women, such as crop failure or maternal healthcare expenses. Addressing this need can help promote greater gender equality, and empower women to achieve economic independence.

4. Other Needs to Help Women's Financial

Furthermore, there are other factors to highlight if the global community wants to give equal access and address women's financial inclusion challenges. Beyond basic financial services, women require additional support like financial literacy, digital literacy, and addressing cultural norms and social barriers.

First of all, promoting financial literacy and education will ensure that women can make informed decisions when accessing credit. By providing training programs on budgeting, debt management, and financial planning, women can build the necessary skills to utilize credit responsibly and achieve their financial goals.

Also, in this digital age, digital literacy is increasingly becoming essential for financial inclusion. Many women, especially those in rural or marginalized communities, may lack the necessary skills to navigate digital financial services such as mobile banking effectively.

Moreover, in many societies, women may face restrictions on owning property, inheriting assets, or engaging in financial decision-making. These cultural norms and social barriers perpetuate gender inequalities and limit women's economic autonomy.

So, it's essential to engage with communities and stakeholders to challenge harmful gender stereotypes and promote gender equality. Empowering women through education, advocacy, and community outreach can help dismantle barriers to financial inclusion and create more supportive environments for women's economic participation.

Transformative Changes When Women Get Financial Access

Overall, inclusive financial access can truly transform women's lives in many ways. As their financial literacy improves, it will lead to more assets and improved access to basic necessities like food, health, and more.

When women gain access to financial education and services, they also experience shifts in decision-making power within households, increased self-confidence, and an ability to plan for their own futures independently.

One of the ways to empower and address women's financial inclusion is by investing in an inclusive microfinance marketplace, such as Amartha, a microfinance marketplace that empowers small and micro-enterprises through value creation. Join us in making a difference and shaping a brighter future for all.

Held in Jakarta, Indonesia, The 2024 Asia Grassroots Forum hosted by Amartha, is in collaboration with SME Finance Forum, Managed by the IFC (International Finance Corporation), Accion, and Women's World Banking, stands as a collaborative beacon of change.

This transformative event marks a groundbreaking milestone as the premier annual grassroots conference in Southeast Asia. At the Forum, a diverse array of grassroots stakeholders converge, uniting voices from across backgrounds and disciplines in a singular opportunity to engage, exchange, and inspire.

Join us for the upcoming discussion on Inclusive Growth in the ASEAN Grassroots Economy, exclusively at the Asia Grassroots Forum 2024 on May 21, 2024!