Can Fintech Or Financial Technology Reduce The Gender Gap In The Economy?
Can Fintech or financial technology reduce the gender gap in the economy?
A prerequisite for economic security and prosperity is equal participation in the financial system or financial services. By exploiting this opportunity a person can increase his income and build wealth. As a result, his chances of becoming an entrepreneur increase.
But it can be seen that the participation of women in the banking sector is less than that of men in almost all countries of the world.
In the past, experts expressed optimism that fintech or financial technology would increase women's participation in the economy and reduce the gender gap in the sector.
But has fintech actually increased women's participation in the economy? To find out the answer, the World Bank conducted a study on 27,000 adult men and women in 28 countries. The participants of the study gave their opinion about fintech services and its various products.
In this regard, the opinions of those who transact in both fintech services used in the conventional banking system and new fintech startups have been taken. The research report also sorted the data collected from the participants based on age, gender and personal status.
Gender Inequality Exists Between Women And Men In The Economy
Research findings suggest that fintech has yet to have the expected impact on women. While 29% of men surveyed use fintech, only 21% of women use it.
That is, 8% of the percentage difference remains here, which is called the 'percentage gap' or 'percentage point'. Almost all countries have this gap. Accounting for personal characteristics such as age, income, education, marital status, occupation or financial literacy explains only 30% of the gap. That is, there remains a 5 percentage point gap in fintech usage between two men and women of the same age in the same region of the same country and with the same income.
Is this gender gap or gender inequality seen in the conventional banking system?
Research shows that 72% of men in the world have bank accounts. On the other hand, it is only 65% in case of women. There is a 7% gender gap, which is at least lower than the gender gap in the fintech sector. Considering the Average Adoption Rate, it is 69% in case of bank account but 25% in case of fintech. That means the disparity between men and women is more pronounced here. Therefore, considering all the research reports, it can be understood that the increase in the prevalence of fintech has not increased the participation of women in the economy.
What Do We Understand From This Difference?
Are people's decisions influenced by who is releasing fintech products to the market?
49% of people surveyed said they had used a new financial product. But they are from their familiar banking institutions. On the other hand, the rate of using the new company's products has decreased to 25%.
But in both cases men are ahead of women. Considering the gender gap, it can be seen that it is 9 percentage points in case of new institutions and 8 percentage points in case of old institutions. That is, statistically speaking, who is providing the service does not make much difference.
In other words, in explaining the gender gap in the use of fintech, it is not important whether the new or old company is providing the service. The main thing is what product they want to provide service with.
These fintech products can vary depending on the scope of work. For example, some products may be complementary to existing financial services. Such as online budgeting tools, financial planning tools or aggregators. There may also be products that are brand new that will take the place of existing products. For example, peer to peer payments or digital banking.
Participants were asked about 19 such products. It can be seen that women are more interested in using old fintech products than new fintech products. Although there is a gender gap in the adoption of both new and old products, the gender gap in the use of old fintech products is 50% less than the use of new products.
To go deeper into the matter, the researchers wanted to see if there is any role of social structure here.
Households where men make financial decisions have more fintech use, or households where women make financial decisions have more fintech use. So the family is also surveyed. Here too, fintech is used less in female-headed households.
The researchers also sought to see if the reason for women's lower interest in fintech use is related to women's attitudes towards technology and privacy as a whole. According to the survey, women are not as interested as men in adopting new technologies. For example, digital banks can be talked about. Women are less willing to share their data with banks to get better offers or products at lower rates. Similarly, women are more concerned about online security than men.
Ensuring Equal Opportunities For All Through Policy Formulation
We still don't know the exact reason behind this gender gap. It can depend on many things. Maybe there is a difference in preferences between men and women. For example, who among them wants to take more risk or how they calculate profit and loss.
The answer to these may again be influenced by previous events. For example, if a woman has been subjected to discriminatory behavior while taking services in a financial institution, then she may not be interested in taking this service again. That may apply to fintech services as well.
In the end, it can be said that our social norms or unwritten laws control the two types of mentality that men and women have about joining the financial system. Considering these, women turn away from financial services in cost benefit analysis. Moreover, part of the gender gap can be explained by women's attitudes towards adopting and evaluating new technologies. These issues can be given greater emphasis in future research on the gender gap.
Public policy can play a significant role in the financial inclusion of women. But fintech alone will not be able to reduce the gender gap in the economy. Rather, government policies are needed to popularize fintech. These policies should be formulated in such a way that gender inequality can be reduced and innovative services that benefit all are emphasized.