For the fifth year in a row, our seminal “Economics of Banking on Women” report, published this month, shows that women are excellent banking customers if served well and that a financial institution’s performance improves the longer the bank’s women’s market program is in place. Institutions that have women’s market programs for more than 2 years see higher products per female customer, lower NPLs across all segments, and a higher percent of female customers and borrowers. And, internally, mature institutions also have higher percentages of female staff, managers and board members. While we cannot say these results are statistically correlated, there is definitely a relationship.
These results were corroborated with the publication last week of the 5-year results of the Women Entrepreneurs Opportunity Facility (WOEF) founded by Goldman Sachs 10,000 Women and IFC Banking on Women in 2014. The report, like ours, shows that women pay back their loans at greater rates and have lower average loan sizes than men — which we know is both a demand- and supply-side issue. The analysis also shows that financial institutions participating in WOEF are growing their women’s SME loan portfolios at higher rates than IFC financial institution clients without a specific gender initiative.
Even if both reports confirm the notion that women have lower risk profiles, incentives, often in the form of rebates to client banks, contingent on reaching pre-agreed upon growth targets or covering the first loss, are still necessary given all the obstacles, real and imaginary, that banks have to financing female entrepreneurs. Some of these barriers will be removed as the capital markets move in at greater scale. The many impact investment vehicles already available in other categories, such as climate change, are coming to the fore in gender equality. This month we interview gender-lens investing pioneer Gema Sacristian, Chief Investment Officer of IDB Invest, about her work in creating vehicles that incent financial services providers to be the bank of choice and employer of choice for women – and her vision for making Latin America the benchmark region for gender-lens investing.
From incentives to the “how” of implementation, this month we remind members to register now if you wish to attend the BLC Bank Study Tour Nov 18-19 and to sign up for the eighth cohort of our Mentoring Program, a highly cost-effective way of getting the support you need from the pros!
A shout out to achievements in our network news roundup, and last but not least, a warm welcome to our newest member, NDB Sri Lanka. In this issue we interview Mr. Dimantha Seneviratne, Group Chief Executive Officer, about the great work his bank is doing to enhance their relevance to underbanked women, including taking movables as collateral, which, traditionally, banks do not do.