Banking Article, Banking Finance 2021, Banking Finance October 2021

Women and Money Matters

We are part of a society that continues to view women as the weaker section. The age-old practices and norms always tended to give little importance to women down on the scale of progress. Gender inequality is so entrenched in families and society, maybe on a differentiated scale across the country, influenced by the factors like literacy and affluence. The chain of patriarchy, which prevails in different forms like the caste-based panchayats in certain parts of the country, pushes her down with minimal recognition in the society all along her life span. Even from a global perspective, women have often been regarded as subservient to their male counterparts. Across the world, the subordinate status of women has had a deleterious impact on society’s overall growth.

Despite the intellectual, economic, and material progress that happened to post the Second World War, a woman’s role continues to be restricted to the household- rearing children and taking care of all the household chores, even when employed the family’s finances. However, managing finances continues to be the sole preserve of men. However, with the enhancement in literacy standards and improved access to formal education, the situation is changing, even though at a slow pace.

The lack of access to finance and the discrimination towards providing enablers to the women in financial management has negatively affected societal growth. The vast unbanked women population accentuated this. There, if we look at every country’s demographic profile, it can be observed the most potent factor influencing financial stability is the empowerment of women in fiscal matters.

A vast large majority of women are unaware or ignorant of the benefits of financial stability. They are oblivious to the role played by the banks in reaching out to the last mile of the society, especially women, and the wide-ranging opportunities a finance institution opens up for the upliftment, empowerment, and development of women. Data from the 2017 report on the gender gap in financial literacy by the Global Financial Literacy Excellence Center showed that only 20 percent of women recognized the economic concept (offset of 8 percentage over male). In most developed countries that had high overall financial literacy, the difference was higher. Financial literacy makes people effective at budgeting, saving, spending control, debt management, participating in financial markets, planning for retirement and accumulating wealth, and considering the humongous role played by women in anchoring families.

There are a variety of possible explanations why women are not generally comfortable with finance. Primarily, the peer group and social pressure may not encourage them to engage in investment-related discussions. Secondly, from the role models they see, they seem to believe that financial management is the domain of men. Even when women know about financial products, they may not invest appropriately. Part of that has to do with the fact that women always look at wealth differently. For instance, they may perhaps be more attentive towards saving than investing. Some do not trust the information provided by financial institutions or feel secure about transactional services. More often, the advice generally is essentially geared towards men. For example, studies in developed countries have found that the language used by investment enablers was more focused on returns-oriented (which suits men) rather than risk-mitigation (the concern of women).

Further, women may find themselves late in investing due to the multitude of family pressure situations and get into the picture mostly when they are vulnerable. For example, when the spouse is not in good health or when a crisis occurs, the responsibility might get delegated to them, but that is not by choice but through compulsion. They are also at risk of being misdirected by commission-based advisors who do not have the best advice suited for women’s financial knowledge and risk-taking ability. Stereotypes can also be at play, which can lead women to get ultra-conservative advice. Consequently, though they have the potential to take risks early in their careers, they may stick to low-risk instruments that yield low returns.

We also find that women are a significant segment of society that works mainly in an unorganized environment. The Periodic Labor Force Survey (2018-2019) found that there had been an unequal distribution of gender in domestic activities. The lockout imposed by COVID-19 further compounded the situation. Women come to retain risky, unsafe, and stigmatized jobs as front-line health workers, waste pickers, domestic workers concerning regular employment, but the government-mandated minimum wage wasn’t paid to them. These could shallow their development, personally, professionally, and financially. Although women are getting opportunities to move beyond household activities, their personal and professional development is still undermined. In addition to being treated with low pay, they are often subject to oppressive working conditions, less or no benefits, and unsafe environments. Industries and cooperative societies leverage a large population of women and add them to their workforce because it involves minimal spending. Of course, with the evolution of many professional educational institutions and campus placements, there is a paradigm shift in the employment and growth potential for women in highly paid jobs, that too at an early age. Nevertheless, interactions with financially well-placed young women employees in different sectors throw a similar pattern. Investment decisions other than linear are left to their male support system.

Financial service providers need to take time to communicate with women, both as customers and employees, to relate and interact with them from their respective perspectives. With the Kantar study touching women’s opportunity costs, financial service firms risk losing $782 billion in women’s potential investable assets. Inside the retail walls, the ambiance, lighting, and the usual banking jargon can have an intimidating effect on women customers. However, women are far more receptive to advertising that shows diverse groups of people than only one group, with emotional messages and showcasing women as role models for investing and financial planning. Hence, probably, the optimal approach that financial service providers can leverage to develop lasting relationships with women customers is by engaging more women in this sector.

Thus, from a deeper understanding, overall financial stability could only be accomplished by a substantial rise in women’s income and investment-related freedom. To a great extent, this would reduce all gender inequality and open a gateway to a more inclusive society. Interestingly, an honest and highly beneficial endeavor towards this is seen in the financial sector. Most of the MFIs/SFBs are focusing exclusively on JLGs/SHGs that comprise women members only. They also encourage small savings and micro-insurance, which, over some time, make them stand on their feet. To conclude, considering the multiple roles women play in life and the myriad expectations, the gender disparity still prevailing in the society in financial matters deserves a far more significant and deeper look.

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