Why putting women in charge of their own financial security pays dividends

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Rathi Mani-Kandt, Director of Women’s Entrepreneurship, Financial Inclusion Specialist and Human-Centered Designer, CARE and Koheun Lee, Human-Centered Designer, CARE

• Failure to design financial products and services without considering women perpetuates existing inequalities.
• Women-centred design aims to dismantle these barriers, giving women entrepreneurs a more level playing field.
• When women are enabled to gain better access to finance they can make a significant economic contribution to society.

Women are 17% more likely to be killed than men in a car accident, and a gender biased design process is to blame.

Too often, human-centred design treats “man” as the proxy for human. Crash test dummies have sizes and weights representing the average male, which means that the seat belt doesn’t take into account the frame of a woman, and the results are deadly. While death is an extreme example, comfort and practicality are a regular burden for women because the world is designed for men, by men, as women are wrongly considered a niche group, as opposed to 50% of the market.

The impacts of not designing products that put women at the centre of the design process can also have dramatic economic impacts, resulting in an endless cycle of inequality. Imagine being denied a loan because of your husband’s debt, or because you can’t find a man to back your loan, as is still the case in parts of the world.

What is women-centred design?

Women-centred design acknowledges that women’s needs and the barriers they face are fundamentally different to men. Barriers might include laws and political systems that disadvantage women, harmful gender and social norms, and limited access to finance due to no credit history or collateral, male guarantor requirements, or restrictions on land ownership.

The woman-centred design process can be summarized as follows:

• Discover by understanding the needs, wants and barriers for women.
• Define and synthesize the top problems and opportunities.
• Ideate new ways to serve women.
• Test early ideas and concepts rapidly with women.
• Adapt and design new products and services that meet female customer’s needs.
• Launch and iterate products based on regular feedback.

How breast cancer screening became part of a business loan

CARE’s Ignite program supports women entrepreneurs looking to grow their businesses by opening up much needed access to finance, technology and networks, and building entrepreneurship capacity and skills. We do this by working with our local partners to develop products and services which are tailored to their specific needs. Our job is to ensure that the voices of these women are heard in the boardroom, where key business decisions that impact the customer are made, typically, by men.

In Peru, we wanted to develop a tailored loan product for women entrepreneurs with our microfinance partner Financiera Confianza, who believe that investing in women is a great investment. By taking a woman-centred approach, we were able to learn about their access barriers, ideate, and test solutions with them through focus groups, interviews, pitch tests, and virtual surveys. We discovered three key things: they couldn’t get the right sized loans because they lacked credit history; they needed more repayment flexibility and shorter seasonal loans for busy periods; and they weren’t able to cover all their medical costs, especially preventative care.

What’s the World Economic Forum doing about the gender gap?

The World Economic Forum has been measuring gender gaps since 2006 in the annual Global Gender Gap Report.

The Global Gender Gap Report tracks progress towards closing gender gaps on a national level. To turn these insights into concrete action and national progress, we have developed the Closing the Gender Gap Accelerators model for public private collaboration.

These accelerators have been convened in ten countries across three regions. Accelerators are established in Argentina, Chile, Colombia, Costa Rica, Dominican Republic, and Panama in partnership with the InterAmerican Development Bank in Latin America and the Caribbean, Egypt and Jordan in the Middle East and North Africa, and Kazakhstan in Central Asia.

All Country Accelerators, along with Knowledge Partner countries demonstrating global leadership in closing gender gaps, are part of a wider ecosystem, the Global Learning Network, that facilitates exchange of insights and experiences through the Forum’s platform.

In 2019 Egypt became the first country in the Middle East and Africa to launch a Closing the Gender Gap Accelerator. While more women than men are now enrolled in university, women represent only a little over a third of professional and technical workers in Egypt. Women who are in the workforce are also less likely to be paid the same as their male colleagues for equivalent work or to reach senior management roles.

In these countries CEOs and ministers are working together in a three-year time frame on policies that help to further close the economic gender gaps in their countries. This includes extended parental leave, subsidized childcare and removing unconscious bias in recruitment, retention and promotion practices.

If you are a business in one of the Closing the Gender Gap Accelerator countries you can join the local membership base.

If you are a business or government in a country where we currently do not have a Closing the Gender Gap Accelerator you can reach out to us to explore opportunities for setting one up.

Using insights from testing, and triangulating customer preferences with business parameters to check for viability and feasibility, we worked with the Financiera Confianza team to design a pilot-ready prototype called “Emprendiendo Mujer” (Female Ventures). We also added a suite of non-financial services to support women entrepreneurs with mentoring, training, and networks.

The end result was a loan product designed exclusively for women. The loan requires no credit history and includes an alternative credit assessment, based on references and behavior, and does not take into account their husbands’ debt, unlike other products in the market. Repayment is on a 45-day term to reflect the seasonality of business needs, and the loan includes cancer insurance, covering breast cancer screenings. The maximum loan amount was reduced so that women could take out an initial smaller loan, repay and move to a larger loan with a new credit history.

The product was launched in June 2021, and we continue to iterate and check-in with women on satisfaction to ensure the product remains relevant and demand-driven. The feedback we have received has been incredible. Delia Nizama, a Peruvian entrepreneur, told us: “It seems important to me that it is precisely women entrepreneurs, who are going to use this valuable tool, that they be consulted about what else we expect from it.” We have seen unbelievable traction, with 15,000 loans disbursed in six months, and in the midst of a global pandemic.

Designing for women is simply good business

Some might say that these adaptations we made sound risky (e.g. no credit history needed), especially during COVID-19 where credit markets are contracting, but global data shows that women have better non-performing loan (NPL) ratios: 3% compared to 4.9% for total SME portfolios according to an IFC assessment of 157 financial institutions. And while it’s early, Emprendiendo Mujer has a 0.5% default rate, performing 5.5% better than the rest of the portfolio.

So, women are not only better loan clients, but data also shows that women are stronger entrepreneurs, tend to hire more women, and are more likely to create impact and social value than their male counterparts. Designing for women should not be such a tough sell.

Invest in women-centred design

Enabling women to gain better access to finance could unlock $330 billion in annual global revenue, but the financial world is still dominated by men. It’s not that men can’t have empathy for women, it’s that men aren’t women. They can’t experience the barriers that women face every minute of every day. Consequently, insights about the needs and barriers of women will continue to slip through the cracks. If we want to close the gender gap, we need to create products and services that have three characteristics: they add value to women’s lives; are easy to access and use by women; and are affordable based on their financial behaviors.

Enabling women to gain better access to finance could unlock $330 billion in annual global revenue.—International Labour Organization.

How radically different would the financial world be if there were more women designing products and services with the unique needs and barriers of women in mind?

To promote women-centred design, this is what we need funders and financial service providers to do:

• Design with women, not for them. Put women at the centre of the design process and build solutions for their needs.
• Like our partner Financiera Confianza, invest in a serious effort to get more women-centred products and services into the world, and maybe even start assessing men and women through differentiated credit scoring mechanisms.
• Hire more women on product design teams and let women lead the design process like the Head of Financial Inclusion, Jack Burga, has done for our CARE Peru team.
• Get more women in the boardroom. Women in the design team are a great step but we can go further. Women need a seat at the table where key financial decisions are being made that impact the customer.
• Introduce more women-owned and led financial institutions like First Women’s Bank the first women-owned, women-led financial institution in the USA 100% designed for women, by women.

Until we see these changes happening, we will fall short of realizing women’s economic potential in our economies.

Find out more about CARE’s Ignite program, supported by the Mastercard Center for Inclusive Growth.