Informed and empowered men and women make fewer risky financial decisions than those with less knowledge. And for a low-income woman, having the right knowledge – like knowing when to borrow against her savings or separating business expenses from household ones – can make a long-term difference.
Digital financial tools are growing in importance as technology becomes more ubiquitous, accessible, and connected. Yet, the advent of digital financial services has surfaced unique challenges for low-income women customers. Across low- and middle-income countries, women are 8 percent less likely than men to own a mobile phone, and 20 percent less likely to use the internet on a mobile device. This leaves women fewer avenues to learn digital financial skills.
Digital financial services are not a silver bullet for financial inclusion, but they are the direction in which the industry is going. Financial capability must evolve to include digital financial capability (DFC), so low-income women are not left further behind. Digital financial capability is a critical component of the digital transformation journey, as it ensures that women customers can use digital financial services with ease and confidence.
Financial capability must evolve to include digital financial capability, so low-income women are not left further behind.
The shift from analog to digital tends to be seen as an easy transformation, swapping out one for the other. This assumption ignores the multiple barriers that may impede the uptake of digital financial services and risks further excluding women, oral communities, and others from the formal financial system. It also leads to a grave underestimation of the role of digital capability and digital financial capability, among other factors, in shaping financial capability.
We believe that digital financial capability can bridge that gap and provide practical tools to help low-income women effectively use digital financial services.
New Maxims to Guide Effective Digital Financial Capability Programs
In the same way as the conversation on financial literacy shifted to the more action-oriented concept of financial capability, we believe that the digital financial capability conversation needs to transition to practical tools to help customers gain the knowledge, attitudes, and skills to effectively use digital financial services. Upcoming research by CFI has identified that traditional financial literacy approaches were ineffective, while social norms particularly impacted women, who were starting from lower educational levels.
The research has found that peer and role model learning was critical in building digital capability because women did not see themselves as digital financial service clients, and needed to build a degree of confidence and trust with the channel before fully engaging. Meanwhile, building flexibility in the form of test and learn approaches helped providers adapt to a woman’s contexts, like time constraints and continuous learning opportunities through low-tech touchpoints (video, SMS, chatbot for example). Finally, sex-disaggregated data is critical to measuring different impacts between men and women.