The Imperative for Increased Focus on Women’s Financial Inclusion: A Regulatory Perspective

July 8, 2019

By H.E. Serey Chea from the National Bank of Cambodia (NBC); H.E. Ibu Nurhaida from Otoritas Jasa Keuangan (OJK); Pia Roman, Head Inclusive Finance from The Bangko Sentral ng Pilipinas (BsP)

The 2017 World Bank’s Global Findex report reveals that true financial inclusion for women has not yet been realized in all parts of the world.  In Southeast Asia, the numbers tell a hopeful story about the progress made with women’s financial inclusion. However, underlying data suggest that while inclusion is growing, there are still many challenges to be tackled if we want to increase economic development.

In Cambodia, women’s financial exclusion stands at 27% overall according to the Global Findex. With different measurement approaches and methodologies, local data shows a different number, which is 2.5 times higher than the above-mentioned rate. It is important to highlight that 80% of microfinance borrowers in Cambodia are women. On the other hand, only 15% of banking borrowers are women. This low rate of women’s access to banking products and services shows that women are still excluded from the complex and high-level financial instruments. In terms of saving, 75% of women’s bank accounts are dormant with a balance of less than five United States Dollars, highlighting that more must be done to improve the quality of access.

The National Bank of Cambodia (NBC) has worked with other relevant ministries and agencies to formulate the National Financial Inclusion Strategy 2018 – 2025. The strategy aims to increase the formal financial inclusion level from 59% to 70% and reduce women financial exclusion by half.  In order to achieve these goals, the strategy stipulates many action-plans including: 1) promote women in leadership 2) to collect and analyze sex-disaggregated data 3) integrate financial literacy into general school curriculum 4) enhance financial literacy among women entrepreneurs and 5) encourage the use of digital financial services.

Currently, the NBC is working with the Ministry of Women’s Affairs (MoWA) to prepare and implement women’s financial empowerment programs to focus on both girls and women by introducing financial literacy awareness to the Women Entrepreneur Association. The next step is to understand more about the current situation as well as the cause of women’s financial exclusion by strengthening the collection of gender-disaggregated data; and from the data analysis, we will prepare an effective plan to increase women’s financial capability.

To encourage by example, the NBC is proud to assure that we also recognize the strong role of women by having a gender-diverse team at our workplace. As of now, 5 out of 9 NBC’s senior management positions are women. At the technical level, women have greatly contributed to many important projects of the NBC including the project to use blockchain as a payment gateway. In this particular project, women play an important role in coding the system for the project. The NBC hopes that this type of financial technology project, partly implemented by women, would further enhance financial inclusion, especially women.

In Indonesia, the government has made financial inclusion one of its strategic priorities. Indonesia experienced the biggest account ownership increment of any developing economy in the East Asia and Pacific Region between 2014 and 2017—from 36% to 49%. Indonesia’s Financial Services Authority (FSA) put out a national survey as well, which showed financial literacy and inclusion at 21.8% (women) and 59.7% (men) in 2013, versus 29.7% and 67.8, respectively, in 2016. In Indonesia’s case, the government must lead the charge on a regulatory and supervisory framework to address women’s financial inclusion. Lack of education among women compared to men is a major hurdle in both urban and rural parts of the country and financial literacy directly correlates to financial inclusion, according to the FSA’s national survey in 2013.

Geography is also a critical factor in Indonesia, an archipelago nation. Geography and logistical challenges render banks inaccessible for many citizens, which in turn makes infrastructure development and FinTech adoption central to the government’s strategy to achieve 35% financial literacy and 75% financial inclusion by 2019. The implementation of student savings accounts as well as a non-cash food aid bank account program are examples of measures in effect to achieve those national goals.

The Philippines flips the conventional script on financial inclusion, at least from a gender perspective. In 2017, 39% of women had an account compared to just 30% of men. In a traditional Filipino household, women manage the money and household budget, which may be linked to the higher level of financial knowledge and access among women. That said, poverty remains a barrier to financial inclusion nationwide. Account penetration among the poorest 40% increased from 10% in 2011 to 18% in 2017, but the gap between rich and poor declined only modestly, from 28 percentage points to 27 percentage points in the same timeframe. The socioeconomic barriers at play have steered The Philippines toward an innovation-forward strategy. The government recently passed into law the creation of a national biometric identification system, which will take care of people lacking acceptable IDs and the highly inefficient, paper-based Know Your Customer (KYC) processes.

Digital payments indicators also show promise across the country. For example, significant improvements were seen in the share of adults who sent or received digital payments and used the internet to pay bills or buy something online. In order to stay abreast of the changes to the financial system driven by technology, the BsP has implemented a regulatory sandbox to safely balance the potential of new technologies to reach women with the risk management that is necessary to ensure economic stability.

Although our approaches may differ across markets, policies must support the structural reform needed to drive increased economic participation for everyone. Committing to our distinct strategies will make us more effective in reaching a common goal: greater financial inclusion for women and in turn, greater economic opportunities for all.