Nearly a billion women around the world are economically excluded. They lack access to formal financial services, like bank accounts. They are unlikely to have their own formal identification, meaning they cannot own property or land, or a mobile phone. They struggle to own businesses, or secure the credit and insurance they need to run them. They are more likely than men to be poor and have no job, and are often one economic shock, and not always a big one, away from economic disaster.
Research suggests that global growth rates are 1.1 per cent slower because women are not economically empowered. This is in part because women are great consumers – they purchase household items, education and healthcare products for their children and wider families. McKinsey suggests that $28 trillion in GDP growth is being left on the table worldwide because women are not reaching their full potential.
This is why the work being done by the government of Bangladesh in wage digitization is so important for women. The government's goal is to digitize wage distributions to around 90 per cent of the population by 2021 as part of a push towards a cashless society. A large and significant group that will benefit from this are garment sector workers, most of whom are women.
However, there are challenges. Despite 50 per cent growth of financial inclusion in Bangladesh, the gender gap has widened – the gap in financial account ownership between men and women has grown by nearly 4 per cent, meaning that while more people overall are being financial included in Bangladesh, the benefit is being felt by men, not women. All tides are not lifting all boats equally.
This is because men and women have different financial lives and therefore different financial needs. Additionally, women have a steeper technology adoption curve then men, and digital wallets can be difficult to navigate, and rely on sometimes sporadic data or network availability – it is not a good moment when you send money on your mobile and the internet crashes.
Wage digitisation can help with financial inclusion as it provides women with greater security and control.
However, giving women access to digital financial services is only half the issue. Once customers have a wallet or an account, it is important to ensure that they use it, which is why Women's World Banking worked with Dutch-Bangla Bank on an extensive pilot to test how to best serve women garment workers with digital financial services. We delivered the results in a round table in Dhaka in early January this year to see how wage digitization can be delivered in the most effective way for women workers.
Challenges of wage digitization and solutions
We discovered that, while wage digitization was an important step towards financial inclusion, we need to look beyond that and focus on usage if we are to achieve real results in financial inclusion for women garment workers. Although workers' wages were paid into their digital wallets every month, they were often unaware of the functionality on offer, and resorted to cashing out as quickly as possible so that they had physical cash to use, however, they needed. They were not aware, for example, that they could use their mobile device to send money home immediately and more cheaply than over the counter options. They also have usability concerns since the phone menus were in English.
All of this is solvable. Education and training play a large role. We found that peer learning was the most effective approach to this and interestingly, it worked for both men and women. Furthermore, we found that women were effective teachers, both for other women, but also for men. We also found signs that, as women became more confident using basic services, they were more open to trying additional services, which becomes an opportunity for financial service providers to up sell.
At a policy level, inseparability requirements, supported with central bank mandates, help to ensure that no wallet corners the market and consumers have choice.
There is huge potential in wage digitization, but we must look beyond that to realise the benefits for women in Bangladesh. There are opportunities for all ecosystem players if we invest a bit more effort in not only connecting women with financial products, but making sure they have the confidence to use them. Our experiences with our pilot showed us that increasing both the financial and digital capabilities of women in the garment sector together has real benefits and can become a solid platform for further acquisition of financial services over a mobile platform. And everyone benefits from that.
The writer is the global head of advocacy of the Women's World Banking.