This blog series began its discussion of policy approaches by noting that one of the key challenges regulators face in promoting women’s financial inclusion is a lack of buy-in from FSPs. In the previous post, we noted three approaches for increasing FSP buy-in:
- In Papua New Guinea, the ADB-funded MEP program provided external financing for technical assistance to enable its seven partner FSPs to develop and implement gender action plans.
- In the Philippines, the Cooperative Development Authority (CDA) requires cooperatives to implement gender action plans, and supported implementation by creating a gender assessment toolkit for cooperatives to use, providing free training and technical assistance for gender mainstreaming, organizing fora and conferences, guiding the integration of sex-disaggregated data (SDD) reporting, and providing recognition, awards, and incentives through its annual Outstanding Cooperative Leaders/Women Leaders competition.
- In Pakistan, the State Bank (SBP) issued a policy and regulations that mandate an increase in women staff at the head office (including senior management) and branches, set up a “Women’s Financial Services” department and section on their website, report sex-disaggregated data. SBP also invited banks to participate in regular consultations on gender and finance policy.
SBP is well-regarded as a regulator and has been proactive in promoting financial inclusion for decades, and the sector may have accepted these new requirements as a matter of course. Nevertheless, most regulators may find SBP’s approach too heavy-handed, especially when there is limited buy-in from the industry. Absent significant funding as was provided by MEP in Papua New Guinea, regulators may consider CDA’s lighter-touch approach, combining carrots (incentives) and sticks (mandates) to reward and encourage financial institutions to invest in increasing outreach to women.
Specifically, this approach would have three components:
- Find and promote a champion that already serves women well
- Financial institutions learn best from their peers. Showcasing financial institutions that earn solid profits from serving women well is perhaps the best way to encourage others to follow suit. Highlighting such example can demonstrate to other financial institutions that the women’s segment is highly profitable if served well.
2. Provide incentives for other financial institutions to improve their outreach and service quality to women.
- The requirements to serve women well––redesigning products and delivery systems, hiring more women, training staff (including the board and management) on gender mainstreaming, delivering more financial literacy training, etc.––are costly endeavors. If regulators could offset these costs, it would encourage more financial institutions to implement them, as happened under the MEP program in Papua New Guinea. Financial support could be provided directly as subsidies for capacity building and training delivery (either from the regulator’s accounts or in partnership with a development agency) or indirectly via reductions in taxes and fees.
- However, incentives should not only be financial. Recognition and awards for achieving certain goals are also valued by financial institutions. For example, a regulator could recognize financial institutions that implemented its Gender Equality & Social Inclusion (GESI) Toolkit or design a “Gender Mainstreaming Pathway” for financial institutions to follow, with certification.
3. Require sex-disaggregated data reporting.
- The one mandate that will go furthest in encouraging financial institutions to better serve women is also the least costly for financial institutions to comply with: sex-disaggregated data (SDD) reporting. Most financial institutions can easily generate SDD and requiring them to do so is the easiest way to make them look at their business from a gender perspective. SDD reporting also provides regulators with the data they need to monitor progress and make evidence-based policy decisions.
Showcasing financial institutions that have had success serving women well, incentivizing other financial institutions to follow their lead, and requiring all of them to measure their progress through SDD reporting constitute a “three-legged stool” upon which regulators can build their gender and inclusion programs.