Banking on women for business growth
- Jessica Schnabel
Banking on women for business growth
Female customers and women-led businesses present a substantial growth opportunity for pioneering financial institutions and FinTech companies.
This opportunity is significant and growing. One-third of registered small and medium-sized enterprises in emerging markets globally have been created by women.
In emerging markets, women own or run over nine million formal small and medium-sized enterprises and 63 million micro-businesses, with a total estimated unmet credit demand of $1.5tn.
Global opportunity
The International Finance Corporation (IFC) set up its Banking on Women business to help financial institutions seize this opportunity and close the finance gap. It provides investment and expertise to emerging market financial institutions to help them develop successful strategies, services, and customer insights for women customers and women-owned SMEs — and profitably finance them.
Our clients are seeing the results: providing valuable financial services to female customers generates bottom-line value for banks.
Yet challenges exist. Women and women-owned businesses around the world, not just in developing countries, can face more hurdles than businesses owned by men, including access to finance, property ownership and collateral for business growth, legal environment barriers, business networks, access to digital assets, and unconscious bias.
Return on investment
But leading with a strategy to earn and acquire more women customers and serve them better helps financial institutions achieve some of their most important key performance indicators: market share growth and reputation, deposit and asset growth, profitability, and asset quality.
For example, women customers contribute to a better risk profile. We know through data analysis of IFC’s client banks that non-performing loan ratios for women-owned SMEs are lower, for example. In 2018, data from 157 IFC financial institution clients shows the aggregate non-performing loan (NPL) ratio for loans to women-led SMEs was 39% lower (better) than for the aggregate portfolio of total SMEs (NPL of 3.0% vs 4.9%).
We have also observed a significant first-mover advantage for financial institutions that provide value and finance to women customers due to customer loyalty and preferences.
Now is the time
My message to banks, FinTechs and all financial institutions is that there is an abundance of evidence that doing better and more business with women customers is not only advantageous for economies, but profitable for your institution.
If you develop better customer insights and provide value to women customers, you will grow market share and strengthen your KPIs. There’s a real opportunity, and now is the right time.
Women’s participation in the global economy is growing every day. If you miss the chance to be the financial solution provider of choice for women, then another FinTech or financial institution in your market is going to seize it.
Jessica Schnabel is Global Head, Banking on Women, at the International Finance Corporation.
The International Finance Corporation (IFC) – a sister organisation of the World Bank and member of the World Bank Group – is the largest global development institution focused on the private sector in emerging markets. It works with more than 2,000 businesses worldwide, using its capital, expertise, and influence to create markets and opportunities where they are needed most. In fiscal year 2019, IFC delivered more than $19bn in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit: www.ifc.org