The untapped power of women as financial actors has the potential to dramatically expand the market for financial products and services while improving the lives of women and their communities. Indeed, financial inclusion is relevant at every level of the income pyramid, and within developed and developing countries alike.
The market opportunity for developed and developing countries is significant, even when estimated using a highly conservative methodology. Our analysis demonstrates that closing the gender gap will unlock women’s access to financial products and services, while increasing annual revenue for financial services firms.
Heidi DuBois joined Dollars and Change to discuss Return on Equality and the market potential of advancing and achieving gender equality. Listen to the interview, which originally aired on Sirius XM Channel 111, Business Radio Powered by The Wharton School.
However, a large and persistent global gender gap in financial inclusion is currently standing in the way of realizing these opportunities. Though women have influence or control over assets worth more than $20 trillion globally — roughly 25 to 30 percent of the world’s wealth — they remain generally underserved by the financial services industry.
Financial inclusion is a critical component of sustainable economic development. Approximately two billion people — disproportionately women — do not use formal financial services, and more than half of adults in the world’s poorest households are unbanked. Combating poverty and driving economic growth require increased availability of basic financial products and services for all people. Women access and use financial products and services at lower rates for three primary reasons:
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The urgent need to close the gender gap was underscored in September 2015 with the establishment of the 17 Sustainable Development Goals (SDGs), which were adopted by 193 Member States of the United Nations and defined an ambitious global and universal sustainable development agenda. SDG 5 is dedicated exclusively to achieving gender equality and empowering all women and girls.
Bridging the global gender gap will require leadership and investment by the public and private sectors. In particular, institutional and individual investors have both a significant market opportunity to realize and a unique role to play in accelerating the advancement of women and girls. To date, private investment for financial return that simultaneously supports gender equality goals (commonly known as “gender-lens investing”) has typically taken the form of investing in women-led businesses and investing in companies that promote gender diversity in their workplaces. Increased focus is needed on a third, less-common type of gender-lens investing: investing in companies that advance gender equality through their product and service offerings.
The need for such offerings is clear, both in developing and developed markets. Globally, 1.7 billion women still do not own a mobile phone and 1.1 billion women are unbanked — both major barriers to pursuing and benefiting from economic opportunities. Every day, women around the world spend 200 million hours collecting water to sustain their families due to inadequate infrastructure , they could otherwise invest in education, gainful work, or leisure. Approximately 225 million women have an unmet need for modern contraception, preventing them from determining the number, spacing, and timing of births that best align with their aspirations for themselves and their families. Of course, these are not simply supply-side issues. Women’s access to and usage of products and services is shaped by prevailing social and gender norms, as well as constraints on women’s mobility and control over assets—obstacles that must be addressed to ensure women realize the full benefit of product and service offerings.
Many of these challenges are disproportionately faced by women in low- and middle-income countries, but women in high-income countries are also disadvantaged by product and service offerings that fail to reach them or meet their needs, often due to deeply rooted gender biases in product design, market segmentation, and marketing. For instance, among women who have financial advisers, 67 percent stated in a recent survey that their financial adviser does not understand them or is not interested in their needs or goals.
In addition to the moral imperative of closing the gender gap, the potential market impact is likewise substantial, creating significant opportunities for investors. In fact, achieving parity across products and services in just five sectors—water, contraception, telecommunications, energy, and child care—could unlock a market of more than US $300 billion in incremental annual spending by 2025. Investors, asset managers, and companies can seize the opportunity to advance gender equality and drive financial returns by taking these initial steps:
By investing in companies offering products and services that promote gender equality, investors can earn the “return on equality,” seizing profitable, under-tapped market opportunities. Given how the use of products and services shapes the health outcomes, livelihoods, and opportunities of billions of women on a daily basis, this investment approach has the potential to help advance gender equality at scale.