132 years is too long to close the gender gap. How can we accelerate financial inclusion?

Estimated reading time: 7 minutes

The World Economic Forum’s Global Gender Gap Report 2022 reveals that despite progress made towards gender equality in education and health, the gender gap in economic participation and opportunity remains essentially unchanged.

The report states that at the current rate of progress, it would take another 132 years (figure 1) to close the global gender gap. 

The COVID-19 pandemic has also exacerbated the gender gap, with women disproportionately affected by job losses and economic insecurity. 

One area where gender inequality is particularly pronounced is in financial inclusion, where women are more likely to be excluded from formal financial services, limiting their economic opportunities. 

To accelerate progress, we need innovative solutions, including digital financial services and financial education programs tailored to the specific needs of women.

At Trade Finance Global’s (TFG) annual Women in Trade, Treasury and Payments, we spoke to several prominent female leaders across the industry.

This wide-ranging roundtable discussion – explored global financial inclusion, gender lens investing, and how to get more women into senior leadership roles at major firms.

Figure 1: Global Gender Gap Report 2022, at current pace, when are regions likely to close the gap? Source: World Economic Forum

Gender lens investing: the economic benefits of investing in women

Participants unanimously agreed that investing in women is a real business case, which will ensure that more financing goes to this underserved market segment.

Despite research showing that investing in women-owned businesses positively impacts economic growth, many financial institutions fail to adequately target such businesses or create financial products tailored to their needs. 

In many countries, women-owned businesses – particularly small and medium-sized enterprises (SMEs) – face challenges in accessing financing. These challenges, exacerbated by the COVID-19 pandemic, limit the potential of these businesses to grow, create jobs, and thrive in the economy.

One possible solution that the World Bank has trialled provides micro-loan programs to women who lack access to traditional banking services, helping them start small businesses.

While these programs and much of the rhetoric on the impact of investing in women-owned enterprises focus on developing countries, it is crucial to recognise that investing in women is relevant to all advanced and emerging economies.

Gender lens investing and other strategies for improving financial inclusion for women

Another emerging practice for removing gender inequalities across the financing landscape is gender lens investing.

Gender lens investing refers to considering gender and its impact on investment opportunities and allocating capital to businesses and organisations that promote gender equality and women’s empowerment.

Advocates can further support disadvantaged women by combining gender lens investing with micro-investing approaches.

Research has demonstrated that this can be an excellent way to support female entrepreneurs in developing markets, particularly in informal business areas where they may not have access to traditional financing options. 

According to the OECD, supporting the development of digital payment systems can help women entrepreneurs in developing markets overcome the challenges of carrying cash across borders and putting themselves at risk of attack or robbery.

By providing these entrepreneurs with safe and reliable payment systems, they can more efficiently and safely conduct business transactions and manage their finances.

Finally, it’s essential to embrace and bring women into the formal banking sector, which can help to break down the barriers that prevent women from accessing financing and other financial services. 

Introducing women to banking can be achieved through initiatives such as Visa’s financial literacy programme, Practical Money Skills, whose outreach efforts help underserved communities and bridge local organisations and community groups.

While gender lens investing has many demonstrated benefits, it has some potential downsides. 

One of the challenges is that if the focus is solely on gender, it may limit the mainstreaming of the investments and create specific funds, which could have a smaller pool of funding available than mainstream investments. 

Additionally, there is a risk of negative screening, where certain investments are excluded based on gender considerations, which can lead to a narrow investment portfolio. 

To overcome these challenges, it can help to have women in prominent leadership positions across the industry.

Strategies for helping early-career women progress to leadership positions

While progress moves towards gender equality in the workplace, a recent report from Deloitte highlights the ongoing underrepresentation of women in top corporate leadership positions, with women occupying only 20% of boardroom seats globally.

Figure 2. According to this survey by ‘Deloitte, Women in the boardroom’, among the most senior roles across the globe within financial services institutions, women held 21% of board seats, 19% of C-suite roles, and 5% of CEO positions in 2021.

Participants at TFG’s roundtable agreed that nurturing the talent pipeline is crucial to getting more women into the boardroom.

Several initiatives can help women early in their careers develop the skills, experience, and confidence to reach and excel in senior leadership positions.

One approach organisations can take is providing mentorship and coaching programs to support women’s career growth.

Mentoring programmes benefit women – pairing junior women with more senior female leaders who can provide guidance, advice, and support on a personal level whilst also using their influence in the organisation helps create opportunities for other women.

Organisations need to ensure that the excellent female leaders who have already broken through to senior roles are visible so that early-career women can see what is possible and have role models to look up to.

Providing opportunities for women leaders to speak at conferences and events can be one way to highlight their achievements.

Companies must also instil policies that ensure women don’t feel penalised for choosing motherhood in their careers. 

The best way to promote this is to offer flexible work arrangements, parental leave, and other policies that support work-life balance for both men and women. 

One final suggestion from the discussion was to have goals and targets for gender diversity in hiring and promotions, which can involve setting targets for the number of women in leadership positions and tracking progress towards those targets.

Many of these approaches may require firms to develop a different organisational mindset. They involve actively prioritising gender diversity and creating a culture that values and supports women’s career growth. 

This type of change is not always easy.

6 tactics for creating a gender inclusive company culture

Developing an organisational culture that respects and actively encourages gender equality is vital to nurturing the next generation of female business leaders to take that first step and enter an industry that has yet to shed its outmoded ‘old boys club’ existence entirely.

Here are some practical suggestions for organisations and the individuals within them to achieve this goal. 

• Open up entry-level jobs to more women: Companies should ensure that entry-level positions are accessible to women, allowing them to get a foot in the door and kick-start their careers.
• Be deliberate about hiring, training, and promoting women: Companies need to be intentional about hiring, training, and promoting women. They should set specific goals to ensure that women are included and are progressing at the same rate as their male counterparts.
• Provide visibility and space for women to thrive: Companies should give women in the workplace visibility and an area to thrive. This will ensure that they are not overlooked, and it will help to break down the misperception that women are not as creative, firm, or committed to their careers as their male counterparts.
• Have more women at the top: Having more women in leadership positions will help to accelerate the progress of young talent and boost the careers of other women in the company. It will also help to break down the perception that trade finance and other male-dominated fields are not for women.
• Launch programs that support diversity: Women in leadership positions should be responsible for launching programs that support diversity and take care of the young talent in their organisations. This will help to create a more inclusive workplace and boost the careers of women in the company.
• Be brave and speak up: Sometimes, it is about being brave and being in a room full of men. Women should not be afraid to raise their voices and highlight the need for additional female voices in leadership and other positions. This will help to break down barriers and create a more inclusive workplace culture.