Editor’s Choice, February 2017: financial diaries of 1,000 women and men give clear directions for shifts in financial services provision

Consumer intelligence is often based on 'quick and dirty' feedback from as many consumers as possible, minimising the burden on them, and focusing on their attitudes.  Our Editor's Choice this month is a fascinating contrast: it summarises findings from 'financial diaries' collected in 3 countries, covering around 1,000 women and men in total.  Their financial transactions were documented in detail over several months.  The report is particularly interesting because of the gender lens applied to analysis:  by comparing and contrasting the discoveries about men and women's financial life, it identifies many small things that financial service providers can do to improve their offer for women.

The report, ‘A Buck Short, What financial diaries tell us about building financial services to that matter to low-income women’ is written by Julie Zollmann and Caitlin Sanford from Bankable Frontier Associates and sponsored by the Omidyar Network.  It summarises data from three different projects in Mexico, India and Kenya, all of which tracked financial transactions of men and women.  A summary of respondent data is shown at the end of this blog.  The research started with initial questionnaires to capture demographics, income sources and financial instruments. Field researches then tracked every income, expense and cash flow in formal and informal transactions using a customized tablet application. Researches also recorded personal stores and commentaries to contextualise the quantitative data.  Quite an effort.

By analysing thousands of transactions, big picture differences between women and men's financial behaviour are unearthed. For example:

• Their sources of income are very different. In all three countries, women were more reliant on remittances from others, and received much less than men in regular earnings. A regular remittance represents an opportunity to save and plan for the future. But women's ability to borrow based on regular income is very low, relying on their male partners to apply for formal financial services while those remain tied to regular earnings.
• Although both men and women face significant pressures to meet cultural and family obligations with limited resources, the source of this is different for each gender. Women tend to receive a lot of external pressures, from in-laws, spouses, brothers, and parents, whereas men face internal enforcement of pride and shame. Men therefore face a lack of enforcement when they neglect their financial responsibilities, often leaving women and children in precarious situations. This in turn affects their financial needs.

Their financial priorities are different, with women focused on stretching household resources to cover short term shocks, and men focusing on longer-term priorities, as shown in Figure 7 below.  Kenya data revealed women placing more emphasis on their aspirations for a permanent house (brick walls, metal roof, cement floor) and their children’s education. Men placed more importance on investments in their businesses and land.3 In Mexico, men’s planning seemed to place stronger emphasis on securing a regular job and financing a permanent home. Women, in contrast, paid more attention to children’s educations and cultural events, along with generating small business income that could fill gaps in the family’s financial needs.

• Their sources of liquidity are very different, as shown in Figure 9 below.

 From detailed data to implications

The report is strong on drawing out the practical implications, and there are many.   The many small details make perfect sense. After all, while access to basic financial services is expanding rapidly globally, there are still an estimate 1.1. billion women that are left out of the formal financial system.  Despite evidence that women are more active savers and have better repayment rates than men for certain types of credit, 55% of the global unbanked are women.  So, if there is no business case to neglect women, and no evidence that financial institutions are intentionally excluding female clients, then it is critical to identify the small, contextual and cultural barriers that make formal banking services impractical for women in developing countries.

The report summarises these multiple constraints and makes recommendations to financial service providers on how small changes could address these issues. Providers need not create women-specific products, they argue. Rather, create flexible products—for example, savings accounts with fee structures that cater to small, inconsistent incomes and to those relying more on regular remittances than regular earnings.  Services must offer better tools for managing day-to-day transactions, small scale risks and making money 'stretch' rather than long-term investment.  For example, Providers can offer a broader spectrum of products that help women access short-term nano-credit, retail layaway plans and flexible financing for just-in-time solutions at schools and medical clinics, better aligning with women’s financial responsibilities.

The financial diaries methodology is not going to be an option for every organisation, and if I have one complaint it is the lack of information on methods in this overview report.  But learning from this data, and thinking how else to compare customer data by gender, is useful for all.

 Further information

Summary of participants in the 3 studies

• The report ‘A Buck Short’ can be downloaded here.
• Read more on Customer intelligence revolutionising business at the Base of the Pyramid in the February 2017 series, which highlights many 'lean' initiatives to gather swift cheap consumer insight and use it to improve business models
• 149 resources available on ‘Results measurement and impact’ on Search Inclusive Business