Women in the Fintech Space – Blogger

“Women belong wherever decisions are made.” -Ruth Bader Ginsburg

Covid-19 stopped our world. Life as we knew it was changed, and what was meant to be a month-long shutdown became a two-year shutdown in many countries. While everyone took time to adjust to the new life, it was the poor who were worst hit.

A Findex survey found that 1.4 billion people worldwide did not have access to banking facilities, and given that 91% of Pakistanis are unbanked, it clearly makes it harder for people in the lower income bracket to save, borrow, receive and send money, or even starting a business. The remaining nine percent turned to online means to buy groceries, access healthcare, entertainment, transfer money and even socialize in a limited sense; But for the vast majority, the experience was quite different. Unable to access financial services online, they were forced to look for shops that defied curfews and remained open despite government restrictions. Furthermore, people who had bank accounts but depended on brick-and-mortar banks faced obstacles as many banks closed their branches.

It is important to recognize that ‘financial inclusion’ represents a whole range of services ranging from everyday banking to savings, pensions, credit and insurance. This is where it becomes important that organizations such as those involved in microfinance, in addition to the many fintechs that enter the space and development sector players, collaborate to form new solutions. Technology in particular has a big role to play. For example, Raast in Pakistan offers person-to-person (P2P) mobile payment services, and according to the State Bank of Pakistan (SBP), nearly 15 million registered users made transactions worth Rs 100 by the end of the 2021-2022 financial year. billions.

In this new world where financial inclusion has become such an important topic, we need to keep an eye on how the benefits are spread across gender. According to Jameel Ahmed, Governor, SBP, for every three men who have a bank account, only one woman has access to one. Study after study has shown that financial inclusion plays a role in reducing poverty and improving lives, especially for poorer women. When a woman opens an account, she uses it to build savings, invest in her children’s education, and invest in long-term business opportunities. It puts her on the path to greater security, privacy and freedom of action over the economy.

Financial inclusion can be seen at three levels: female entrepreneurs in fintech, female professionals in fintechs or other financial institutions, and the female user base. Taken in its most basic sense, financial inclusion means that women have a safe place to keep their money; it is transferred electronically or through bank checks to an account that frees them from the risk of carrying large amounts of cash that can be intercepted or, as usual, taken by the male heads of their families.

It also means being able to transfer money to their families if they move to rural areas, or even to other countries, to find work. This also benefits them by building a credit history with sellers and suppliers who accept electronic transfers and thus making it easier to access short or long-term work loans.

According to the SBP, as of December 2022, only 18% of Pakistani women have bank accounts compared to 51% of men. Gender-intentional strategies and products can address this stark difference. Fintechs have a big role to play here to get more women into the banking network. We have seen certain initiatives in this area in recent years.

S&P’s Global Market Intelligence Quantamental Research Team published what is considered the most comprehensive study of its kind called When Women Lead, Firms Win. It looked at the performance of firms that hired female CEOs and CFOs. It found that in just 24 months, female CEOs saw a 20% growth in the stock market. In the same way, female CFOs were able to increase profitability and achieve eight percent growth in share returns.

Female entrepreneurs are slowly entering the fintech space. Tez Financial is the first Pakistani company to receive the Non-banking Financial Company (NBFC) certificate in 2018, just one year after it was founded. Naureen Hyat, Managing Director, Tez Financial, was inspired by her work with microfinance institutions while serving as a financial analyst at the Pakistan Credit Rating Agency (PACRA). She noticed that a large proportion of applicants for microfinance were rejected because they had no credit score. The Harvard graduate co-founded Tez Financial, a fintech company that provides nanoloans to the unbanked masses who are ignored by conventional banks. This demographic is also not catered to by microfinance institutions, as they do not have credit scores. Tez takes the smartphone data, consumption patterns and social behavior of searchers and uses it to find the best product that fits their needs. The company was acquired in May 2022 by ZoodPay, a Switzerland-based buy-now-pay-later company.

Oraan is another company founded by women. Positioned as Pakistan’s first gender-inclusive fintech, the company works on the Rotating Savings and Credit Association (ROSCA) model. Managing Director, Halima Iqbal, noticed that a large number of women around her were using ROSCA or what is commonly called ‘committees’ to save for important events like weddings, home renovations and even smaller investments like buying household appliances like a refrigerator or washing machine. Using the model, Halima and co-founder Farwa Tapal launched Oraan which focuses on products related to savings, insurance and savings. Currently, the company has over 10,000 users using the committee-based product and 84% are women. The company received $3 million in seed funding in September 2021 from Zayn Capital and Wavemaker Partners.

Metric is another fintech co-founded by a woman. Babson grad Meenah Tariq worked with startups in various roles over the years and realized how getting a small business bank account was nearly impossible, and services like online banking or business debit/credit cards were far from a dream.

This meant that companies had a low ceiling when it came to growth because not only access to financing, but also the use of their own money was complex and difficult. Metric helps businesses track their own finances and aims to make it easier for micro-entrepreneurs to open business bank accounts through the app and access financial products. Unfortunately, even though Metric was designed with businesswomen in mind, the percentage of users who identify as women is only 20%. This is because female business owners tend to shy away from managing business finances (this is much less personal finances). This results in a much higher percentage of women either losing their business or being exploited. At Metric, Tariq’s team now reviews all communications and campaigns to be able to speak directly to women and inspire them to rethink their relationship with their own businesses.

Not only are women now entering the fintech space as founders, but many established companies are now seeing the potential in adopting a gender-inclusive approach, especially as competition intensifies and the conventional user base becomes saturated. The OneLoad Women Empowerment Program, for example, makes the OneLoad app more attractive to female dealers by offering special incentives, full-time troubleshooting and credit service support, and trained salespeople who offer hand-holding to help them use the app more easily. The financial aggregator, which received a catalyst grant from the Bill and Melinda Gates Foundation, has already grown to over 1,000 active women traders with 150,000 customers served and a throughput of Rs. 129 million.

We are seeing an increasing number of women not only starting fintech companies, but also sitting on fintech boards. While Oraan, Tez Financial (now acquired by ZoodPay) and Metrics have female CEOs, others are increasingly becoming aware of the need for female representation on their boards. The Central Depository Company is one example with two Pakistani tech stalwarts, Jehan Ara and Ammara Masood, on the board. The Pakistan Stock Exchange also has a female chairman, Shamshad Akhtar, and a female general manager, Raeda Latif. With an increasingly gender-aware environment, Pakistan’s striking gender disparity among its banking population and the bank-unbanked divide should show significant improvement over the coming years.

Maria Umar is a specialist in gender inclusion and economic empowerment for women. She is the founder and president of the Women’s Digital League. [email protected]