We need more financial services innovation for women
Personally, I’ve been sceptically following the debate on innovation for women for a couple of years now. Do we need more female-oriented design in financial services? I didn’t consider the gender differences in developing services myself, and I didn’t pay sufficient attention to the difference between a male and a female persona.
Is this any different from how most banks and fintechs design their products and services? When we asked our audience, about 50% believed that banks should adapt to make their product/services more women-friendly; 50% disagreed. With this Afterwork session, I hope The Banking Scene contributed to the debate, and that we helped to grow the awareness for gender differences.
As I said: in my observations, I don’t see a lot of financial institutions and fintech that consider women as a separate persona. Luckily, there are exceptions: there are organisations and researchers that draw attention to this matter, like Anette Broløs and Erin Taylor. These women wrote a report about it for EWPN, “Female Finance: Digital, Mobile, Networked”, where, they explain the differences between women and men. With many practical use cases from all over the world, they demonstrate why a female-oriented approach can be critical in developing financial services.
Recent announcements by Belfius and BBVA for example, show that this discussion is coming of age. BBVA will roll out a gender-neutral chatbot, and Belfius launched an investment fund to promote gender equality. The days that only a niche part of fintechs consider women as a separate market segment seems to be over. This article will explain to you why that is.
Why should you care?
First of all: women are an enormous market opportunity: they represent half of the population.
Let us first look at daily banking: according to the study by Erin and Anette, globally, women make or influence 80% of purchasing decisions globally!
Erin: “This debounces the myth what women do when they go shopping: buying clothes and jewellery and so on and so forth.” To make her point, she refers to a book by an anthropologist Daniel Miller on the theory of shopping.
Miller followed women around shopping malls in London and found out that the vast majority of their shopping was for their husbands, or children, or other relatives. Rarely they would buy something for themselves.
So why do financial institutions keep targeting women on these prejudices?
Why aren’t there more daily banking services that fulfil the specific needs of women to manage better the family budget, instead of purely trying to sell more credit cards with loyalty schemes for fun shopping?
We can only guess…
Another study, by McKinsey, looked at the investment side of financial services. They surveyed over 10,000 affluent US investors, nearly 3,000 of them female financial decision-makers. They conclude that by 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess, a potential wealth transfer of a magnitude that approaches the annual GDP of the United States.
That is an enormous market opportunity that deserves more attention.
That is why you should read what is essential for women when considering the right financial services or products.
Real-life goals and purpose instead of (long-term) profit
Both the EWPN and the McKinsey study came up with a list of key differences. Many of these characteristics are getting a lot more attention these days. Take ‘purpose before profit’ for example.
Women consider the community more than the ego, not just in the day-to-day routines, but also in the values that they stand for. They put more emphasis on doing good for society, on helping the community and more inclusion. This is not only essential in designing daily banking services, but also investment products. Belfius understood this.
Focus on real-life goals instead of pure profit is another vital element.
Erin: “Women are much more likely to have career disruptions for having children, for example. That tends to disrupt the possibility to think long-term incrementally and continuously. Living from life goal to live goal, with these interruption changes the way you think from a simple linear progression through your entire life to thinking ‘I have to go past this stage’. That is why absolutely, I think we should pay more attention to those stages.”
Anette referred to a study from Barbara Stuart that showed that women don’t look at their investments as a pile of stocks but prefer looking at it like investing in a career, in education or investing in a company.
Lower risk tolerance
In Erin and Anette’s study, we read that “the general view is that women are risk-averse and financially less competent and literate than men, while instead, they may rather be risk-aware, and perhaps less confident.”
An attendee, with a background in asset management and private banking, joined in by saying that those women may not have a lower risk appetite. Still, they do have a greater appreciation for more factors in determining risk in an investment decision.
Erin did agree that the whole debate is not that straightforward. Often a lot more parameters are in play.
Whether it is a better risk calculation, or avoiding risks, statistics show that women have fewer accidents and less fancy cars, for example. A few companies in the past used this and offered particular lending and insurance products only to women, or at a much better rate to women.
Erin: “You could argue that it is sexist to offer products to women and not to men. The 2012 European Price Discrimination Laws made it illegal to offer services to one sex or the other. The only exception might be in some particular medical procedures, like medical insurance, for example, that are specific to the female body.”
Companies like Sheilas’ Wheels, a car insurer, was forced to adapt their go-to-market because of that. Before 2012 they offered car insurance to women at a much lower price. In a way, targeting women for this kind of products, and making men a minority in the customer base, helps them today, reducing the price for all.
Another attendee made the reflection how it is still possible that women cannot get a better price for car insurance, but that they still need to pay more for a loan because they have these career interruptions when giving birth etc.
Definitely some food for thought.
Lower financial confidence
Erin: “Male children tend to receive more financial education than female children do. So even if you come from the same family, you might be behind your sibling.”
It made me think of the Afterwork session on microcredits with Microstart, BNP Paribas Fortis and Accenture. The similarities concerning lack of confidence were striking. There was one big exception: they did not mention the word women; they just talked about underserved micro-entrepreneurs. The lack of confidence requires a different, more personalised advice to be successful.
It says a lot about the importance to invest in financial education from a very young age! Not only will it help people to manage their money better, but also it helps them manage their money with more confidence!
Personalised advice and communication
Is it the lack of confidence, a different communication style, or both? Women expect more personalised communication and client relationships.
Anette: “Communication with customers is so important. To communicate well, you need to know and understand them. That is probably part of the trouble here.”
Voleo, an investment app, understood this. They help you identify stocks, assist you in investments and help you benchmark your results with others. The app also allows you to build a club with friends, colleagues, or likeminded people, for example, to invest together and to share ideas and experiences. Creating these digital communities is appealing to women, where they can learn from each other, rather than listening to how a male advisor tries to sell his preferred stocks.
Women are highly networked and tend to trust their peers more than others. That is precisely Voleo’s Unique Selling Proposition. 46% of their customers are women, without explicitly targeting them. The business sells itself.
Involve women from the start in your services and product design
Banks have always developed their products and services from inside out: they create a product, launch it, and evaluate it. Banking has been a male industry for ages, and the legacy bias from history still influences the way that banks are built and managed.
Someone made the remarks that banks should speed up their efforts, or fintechs take over, which would be disastrous for banks, given the magnitude of the market. PSD2 provides more possibilities to manage the money of a household, combining multiple accounts to manage the household budget better. If banks do not do anything, they risk ending up being the account provider.
Anette confirmed that many people are setting their hopes on fintech to provide financial services in a more female-friendly way finally.
Unfortunately, even in fintech, finding the right gender balance in staff remains a challenge. That balance is an essential ingredient for companies to understand how female-friendly services should look like.
So yes: there is great potential, but we are not there yet.
We can witness that has changed over the last decade: banks started consulting their customers increasingly more at the beginning of the development cycle.
Yet, even in the pilot phase, the testing is done predominantly by male testers. Mind you: this is not a pure financial services phenomenon.
Anette: “Medical companies test vaccines, but they mainly tested it on young males. Many studies show this. Nobody knows how the vaccine will react to the female body or a child. I don’t believe they do it on purpose, but you start from a standard and until today that standard was a young male.”
How should a big universal bank answer these needs? My first thought was how to realise this when even online apps and platforms still provide a very general, uniform service. Based on the feedback afterwards, I was not the only one thinking this.
We talk a lot about personalised services, based on big data mining etc.,… bottom-line, yet banks are not doing everything they can to overcome the differences between men and women.
We can learn a lot from the retail industry, where the go-to-market is hugely segmented. Last year I wrote that the future of banking is for the nimble and niche players. Today you can have financial services for every niche segment, from migrants to young people, women…
Fintech, cloud, software-as-a-service and banking-as-a-service, and open banking will drive financial services will move in the same direction as retail. Hopefully, can witness new dedicated services soon to help women achieve their full financial potential!