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Insights: A Missed Opportunity for Fintechs: Female Customers

Nov 17, 2020

By: Inez Murray
CEO, Financial Alliance for Women and SFF 2020 Ambassador

Women control more than US$216 trillion in wealth (World Bank) and are responsible for up to 89 percent of purchasing decisions globally (Neilson). They’re also strong savers and loyal customers. Yet, this market remains largely underserved. Only 65 percent of women have access to a bank account, compared to 72 percent of men. (Global Findex). Unmet demand for business finance among female-owned MSMEs in emerging markets is estimated to be US$ 1.7 trillion (IFC). And 73 percent of women of all segments are dissatisfied with their bank (BCG).

The fintech sector is uniquely poised to close the gender gap and respond to women’s distinct needs and behaviors. But are founders and investors aware of the opportunity? While they may be aware of glaring gender inequities in the broader startup space—for example, it is now widely known that that roughly 2 percent of global venture dollars go to female founders—far less attention has been paid to how gender biases have resulted in the fintechs focusing less attention on the women’s market.

Our recent study, How Fintechs Can Profit from the Multi-Trillion-Dollar Female Economy begins to unpack the problem. Based on research with 168 fintechs and 30 investors across 43 countries, we found that while the fintech sector has largely overlooked this multi-trillion-dollar opportunity, fintechs—with their wealth of data, nimble organizations, and ability to deliver high-value services efficiently—have exceptional potential to tap into it.

A Strong Business Case for Serving Women

Fintechs that view their data through a gender-lens will find a strong business case for targeting women.  In the Alliance’s survey, sixty-four percent of fintechs that collect sex-disaggregated found that female customers had similar or higher usage rates than men—casting doubt on the myth that women are not early adopters of technology (in fact, this varies significantly depending on the country context. In the US, 58% of financial app users are women and 42% are men, according to a Clearing House consumer survey).

Additionally, the majority of fintechs with sex-disaggregated data found similar or higher life-time values (LTV) and similar or lower customer acquisition costs (CAC) for women compared to men.

When asked why the LTV for female customers might be higher, fintechs reported that women are more loyal, have better repayment rates and refer more customers. However, fintechs often leave these factors out of their LTV calculations, thus undervaluing women customer’s potential return.

An Overlooked Opportunity

Why are women customers widely undervalued by the sector? One major reason is that sex-disaggregated data often goes unused. While 80 percent of fintechs in the study can identify consumers by sex (far higher than in the incumbent financial services sector), most do not integrate sex-disaggregated data to inform decisions at any stage in the business lifecycle.

This problem begins early on in the business development with fintechs not breaking down their Total Available Market by sex. This is then coupled with a tendency to rely on assumptions about consumer behavior, such as men being early adopters, driven by the desire to grow their userbase as quickly as possible and capture investor interest. Products and services are then designed with an archetypal male in mind, reflecting skews in market research. In our study, we found that just 11 percent of B2C fintechs surveyed use sex as a criterion to segment their market. By the time most fintechs reach maturity, they are well on their way to becoming caught in a self-reinforcing loop of catering primarily to male users.


How Fintechs can Tap into the Women’s Market

The path to taking advantage of this opportunity begins with incorporating sex-disaggregated data into strategic decision making. While B2C fintechs can configure their onboarding and data-capture flow to collect sex as a variable, B2B fintechs will need to work with their partners to get this data.

Next they will have need to research women’s needs, preferences and behaviors as relevant to the problem they are seeking to solve. In our study, we found that 58 percent of B2C fintechs do not conduct any market research on female customers. From our work with banks all over the world, we’ve found that market research is a crucial step to developing a customer value proposition that women respond to. Targeting women goes beyond simply changing the design and color to create a “female friendly” variant of an existing offering; also known as selling “pink” products. Instead, fintechs need to build a gender-intelligent customer value proposition focused on helping women overcome barriers, providing solutions for salient life moments identified through market research, and applying appropriate incentives to encourage use.

Many of the incumbent financial services institutions that have developed successful women-focused strategies have integrated holistic, non-financial services such as information, financial and business education & networking into their customer value propositions. Fintechs are well poised to do the same, as seventy five percent of fintechs in our research already offer non-financial services—a huge advantage for targeting women.

To communicate these products and services to a wider audience, marketing needs to be thoughtfully crafted and tailored to women, or at a baseline take care not to alienate women. Like all marketeers, fintechs need to understand that “gender-neutral” messaging is often skewed towards men and check for unintended biases in their messaging.

Incumbent financial institutions with gender diverse teams and inclusive cultures are more successful in the women’s market, and this will be the same in the fintech space. This is also an important dimension for fintechs to take action on.


How the Ecosystem can Enable a Gender-Intelligent Sector

Ecosystem stakeholders—including incumbent financial services providers, fintechs, and investors, fintech associations, regulators and development finance institutions—can help the fintech sector become gender-intelligent by: raising awareness of the opportunity; encouraging fintechs to use disaggregated data and conduct market research on women’s segments; fostering market entry for women-founded and women-focused companies through hackathons, accelerators, and the like; and encouraging investors to develop an investment thesis showing the scale of the opportunity and encouraging fintechs to cater to both sexes.

Strategic partnerships will also play an important role. Three-quarters of the fintechs we surveyed have already partnered with one or more financial services provider (FSP). And while all of the Alliance’s members work with fintechs, just 8 percent are working with fintechs on solutions for the women’s market. This speaks to the need for stronger internal communication between the women’s markets and the fintech-focused teams inside the banks and the need to incorporate gender-intelligent approaches at the beginning stages of partnerships between fintechs and banks. Partnering with community-focused tech startups that cater to women also offers an opportunity for fintechs to target female customers at scale.

Ultimately, all ecosystem actors can benefit from creating a gender-intelligent fintech sector. For the fintechs themselves, tapping into the women’s market is a huge and largely untapped market while allowing for differentiation in an increasingly crowded space. For incumbent financial services providers, working with gender intelligent fintechs enables them to deepen their value to existing women customers and to reach and add value to new sub-segments of women. For the fintech sector as a whole, more diversity and representation will undoubtedly make it more innovative and profitable. And for all of us, fully financially including more women will help build more resilient economies and societies.

We hope you will enjoy the full report and be inspired to develop your own strategy towards building a gender intelligent business model that drives the female economy.

Link to report:

For more information, please contact the Financial Alliance for Women:   

Inez Murray  Ambassador-02

About the Author

Inez Murray is the CEO of the Financial Alliance for Women, a leading members’ network of financial organizations dedicated to championing the female economy—the world’s largest, fastest growing market, and yet one that remains untapped. Its member institutions work in 190 countries to build innovative, comprehensive programs delivering women the tools to access to capital, information, education and markets they need to succeed.

Inez was appointed chief executive officer by the Financial Alliance for Women’s board of directors in November 2012. As CEO, Inez, who had previously served the Alliance as Vice Chair of the board, is responsible for setting the strategic direction, implementing the board’s vision, and overseeing the Alliance’s day-to-day operations. She is a globally recognized expert in women’s economic empowerment, speaking and publishing widely on that topic, and is also a seasoned executive with nearly 20 years’ experience running complex global projects, incubating new initiatives, and raising more than $20 million in funding from public and private sources.

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