Advancing Financial Inclusion for Women: An Interview with Mary Ellen Iskenderian

Financial inclusion remains one of the biggest global challenges. This is particularly crucial for the 43% of women worldwide who still do not have an account at a financial institution. Technological development is helping surmount previously intractable barriers and has opened many attractive investment opportunities to advance financial services for historically excluded groups. However, “technology alone isn’t going to break the gap.” Mary Ellen Iskenderian, President and CEO of Women’s World Banking, is breaking the gender gap in financial tools for over 44 million clients across 32 countries. Through her leadership at Women’s World Banking, a global nonprofit for financial inclusion, she is devoted to provide low-income women with access to the financial tools they need to build security and prosperity.

We live in an era of unprecedented technological development. However, according to the World Bank, 39 percent of the world population still does not have access to a bank account. What are the main barriers to financial inclusion?

Technology is going to be the principal tool to close the gap in financial inclusion. Not only in terms of banking, but also in terms of the gender gap, which is the Woman’s World Banking’s perspective. There remains a very considerable gap between men and women in access to finance and technology. However, we can’t just assume that because technology exists, financial inclusion will exist as well. Particularly for women, there are still a lot of social and cultural norms that make it very difficult to actually have a cell phone of their own. And women are pretty clear that if they are going to bank through their phone, it has to be their own phone, because they don’t usually want their husbands or sons to know that they’re transacting or that they have access to funding. There is a lot of potential, particularly in confidentiality and security in all banking, but women don’t necessarily have access to their own technology.

We are doing a fascinating project in Pakistan with the largest mobile money provider. They discovered that only 15 percent of their clients were women. Women used the products in the same grade that men did, but the way that the company attracted new clients was through agents, and 90 percent of the agents were men. In a country with really strong gender prohibitions, not only would the woman have to feel confident going to the shop and dealing with men, but she also had to give them her cell phone number.

There was this full set of reasons that made no sense for women to want to engage with these products. Our work with them has been to identify a whole network of woman-owned Unilever kiosks throughout Pakistan to train them to be agents for the company. They’re already very respected people in the village, so women would be attracted to them as agents. We’re exploring a whole range of other ways to bring women into usage of technology, but the technology alone isn’t going to break that gap. 

Why is financial inclusion for women relevant as a social goal?

During the rounds of negotiations of the United Nation’s Sustainable Development Goals (SDGs), there was a lot of discussion on whether financial inclusion should be an SDG, and there was explicitly a decision not to make it a goal in itself, but rather to consider it an enabler of many of the goals. From our perspective, financial inclusion can get you a long way to better water sanitation, food security, better education and better health, but women’s financial inclusion can get you there faster and further because those issues are very particular to the things women care about, spend their money on, and save their money for.

We have a lot of data on how women make less money than men and have less disposable income, but they are the risk managers of the households: they will determine how the money will be spent. When a woman is given that kind of discretion, she’s always going to choose health, sanitation, improvement of their housing or nutrition, so women’s financial inclusion has a multiplier effect (because financial inclusion is not an end in itself by any means).

There is really amazing research that looks at the positive effects of being financially included and financially independent on a woman’s self-esteem, her negotiating power in the household, her political participation, and her protection from domestic violence.

In your experience leading Women’s World Banking, what major insights have you gained about women’s unique financial realities?

One thing we see, and it is fascinating as it happens across all income levels, is that women need a lot more information to make a financial decision. Fidelity Investments did a fascinating study of middle- and high-income professional women who had financial advisors, and they asked way more questions, needed way more explanations, and wanted to be really sure about whether or not this product made sense to them. We see exactly the same things—we have hilarious stories with loan officers that would just come and complain about how long it takes to get that woman’s business. But once you get her trust, she becomes a loyal customer of the financial institution.

There are really good data about client retention rates of women customers. If they are happy with the service, women are much more likely to tell other people. They’re also much more likely than men to talk about the fact that they’re unhappy with the service. Men would leave a banking relationship for a couple of basis points on interest rates, but women really value the relationship.

Nevertheless, one of the things we often hear from low-income women is that having a bank account is very aspirational; they would see it as something to brag about to other women, they would be proud to tell their children they have one. And yet, women feel a really strong sense of emotional distance from the bank—“Oh, it’s not for me; they wouldn’t want me as a customer.” That’s not something that a bank thinks about when they are attracting male clients, but it’s something they’ll have to think about for reaching women.

Women’s World Banking has expanded access for over 1.5 million women to previously unavailable financial products and services. What has been your most challenging project?

The biggest challenge is when we make a business case and the bank still says no. It’s the continuous bias of not looking into the numbers and immediately assuming that women are riskier when the opposite is true.

In countries that have gender-disaggregated data, such as Chile, they are unequivocal that for all size loans and income levels, women are better at repaying loans than men. Yet, we know from research that they typically face shorter-term loans and higher interest rates. Also in Chile, men are more likely to borrow for consumption purposes, and women are more likely to borrow for home. The challenge is that we provide these data, we know how much lower the risk of lending to women is, and still so many bankers still say no. I don’t know how you fight that bias—that unwillingness to look at facts that don’t necessarily sound like the things you’ve heard all your life.

How does financial inclusion for women in the U.S. differ from developing countries?

I’m not an expert in financial inclusion in the U.S., but I know there is virtually no gender gap. Access issues here are not the same as in other parts of the world. At the same time, we see that woman-owned companies receive less than three percent of all the venture capital in the United States, so having access to capital is the same issue as in the developing world. The biggest determinant of whether a woman-owned company will get venture capital funding in the U.S. is whether there’s a man in the investing committee that makes the investment decisions. Men don’t see women’s start-ups as viable, exciting venture opportunities. There was recently a case in the press about a start-up founded by two women that wasn’t getting anything, so they invented a male CEO when they were sending out their pitches to venture capital companies. They pitched in many of the same companies they had before, but they got a meeting after making that up.

In the U.S., you don’t really have the issue of access to collateral, which is such an important driver of access to credit for woman-owned businesses everywhere else in the world. Something that has been a huge boom in the U.S., Mexico, and a growing number of developing countries, is the introduction of movable collateral, so you can register your car or accounts receivable as security against your loan. It doesn’t have to be real estate, land, or built property, which women are much less likely to own. I saw a great statistic—86 percent of the loans written to women entrepreneurs in the U.S. could not be made in Nigeria; they only recently introduced a movable collateral registry. Women don’t have a lot of physical assets to pledge, so being able to pledge accounts receivable is enormously important.

While financial inclusion brings multiple economic benefits, the rationale for the private sector is profit-driven, often preventing firms from reaching lower-income clients. How have you managed to overcome this barrier and develop business models that are both financially inclusive and sustainable?

Technology has really driven costs down, so a lot of the reasons that banks give for not making money with a particular population are no longer true. It is more a question of whether there is a business case for serving this population. That’s a big part of the work that we do, and others who are engaged in this field have to make that decision. But even with the cost structure as it is, there is absolutely opportunity to make money on these costumers.

The right mechanism is probably around cross-selling of products, about getting these low-income clients on a platform where they can do other things as well. If you think about the value chain of both financial institutions and other companies, there is absolutely a business case there. At Women’s World Banking, we don’t believe in charity, we don’t believe in a subsidy; we know that if these products don’t make money, no one will continue to provide them after the grant funding runs out.

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Mary Ellen Iskenderian is President and CEO of Women’s World Banking, the global nonprofit devoted to giving more low-income women access to the financial tools and resources they require to achieve security and prosperity. Ms. Iskenderian joined Women’s World Banking in 2006 and leads the Women’s World Banking global team, based in New York and also serves as a member of the Investment Committee of its $50 million impact investment fund. Prior to Women’s World Banking, Ms. Iskenderian worked for 17 years at the International Finance Corporation, the private sector arm of the World Bank. Before that, she worked for the investment bank Lehman Brothers. Ms. Iskenderian is a permanent member of the Council on Foreign Relations, as well as a member of the Women’s Forum of New York and the Business and Sustainable Development Commission.  Ms. Iskenderian holds an MBA from the Yale School of Management and a Bachelor of Science in International Economics from Georgetown University’s School of Foreign Service.

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