The key challenges regulators face in promoting women’s financial inclusion is a lack of buy-in from FSPs. Around the world, many financial institutions, even those whose mission and operations are geared toward financial inclusion, believe that they are already including women as their clients. Indeed, many already target women specifically. Since their portfolio performance and other business metrics are positive, they believe that they do not need to do anything more to effectively serve women. This indicates that even though promoting women’s inclusion and empowerment has been a major focus of the financial inclusion movement for more than a decade, the main message has not been well understood and internalized––that targeting women is not the same as serving women well.
However, the lack of buy-in is not simply a matter of misunderstanding the concept of women’s inclusion or low level of awareness on the importance of gender inclusivity and responsiveness. It is also a business decision. From the point of view of a financial institution, serving women better means redesigning products, re-engineering delivery systems, hiring more women, and training all staff on gender issues. All of these activities entail significant investments, while the potential increase in profits is uncertain at best. In other words, the business case for serving women better is not all that clear.
This leaves regulators in a bind. As government officials, they have an interest in advancing women’s financial inclusion for the numerous social benefits it has for women as well as their families. As guardians of financial sector stability, they have an interest in advancing women’s financial inclusion because it diversifies risk in the sector’s loan portfolios. Yet, few regulators have been willing to mandate that financial institutions under their supervision expand outreach to women in the way that many have done for micro-entrepreneurs or smallholder farmers.
So far, there is no clear or standard formula or even a set of effective actions that regulators in other countries have taken to promote women’s financial inclusion. In fact, in a November 2023 blog post, CGAP noted that although 43 out of 52 National Financial Inclusion strategies mention women’s inclusion as part of their objectives, in many instances women are referenced only in passing, and the targets often lack policy guidance or accountability for actions taken by financial institutions.
However, CGAP did not recommend which specific policies or regulations could be followed to advance women’s inclusion. This was also the case when Financial Sector Deepening (FSD) Kenya conducted its gendered review of financial sector laws in Kenya. It mainly focused on addressing laws that are either discriminatory against women or ostensibly gender-neutral but nevertheless have the impact of excluding women. FSD’s main recommendations centered on using gender-neutral language in laws and regulations and conducting gender impact assessments before a law or policy is enacted. In terms of proactively promoting women’s inclusion, their report recommended the development of a “National Gender in Finance Policy and Strategy” which would analyze the current state of and constraints to women’s financial inclusion, and include Gender Action Plan with measurable gender inclusion goals, targets and clear steps and strategies with timelines and metrics to measure progress. However, the report did not specify what those steps might be.