Blog: Unlocking the Women's Market: Comprehensive Strategies for Financial Institutions to Engage the Lucrative Women's Market

Significant progress has been made in women’s financial inclusion across Latin America and the Caribbean, with the gender gap for account ownership declining by two percentage points between 2017 and 2021, according to the 2021 World Bank Global Findex report. However, many women, specifically female entrepreneurs, remain underserved or excluded from formal financial systems. To better understand the state of women’s financial inclusion and how financial institutions can expand access, IDB Invest partnered with ConsumerCentriX on a new research study entitled “Women Entrepreneurs on the Rise: A study on the growing financial power of the female market in Latin America and the Caribbean and what this means for financial institutions” The report is the result of a study conducted in over 13 countries in the LAC region with the participation of over 240 financial institutions that assessed the availability of financial offers and strategies that such institutions use to serve women and how they collect and utilize sex-disaggregated data. This blog summarises critical insights from the study, focusing on the state of women’s banking as a significant business differentiator and its potential to strengthen the competitive positioning of financial institutions in the region.

Findings from the research study indicate that women represent a significant portion of financial institutions’ customer base. The research illustrates that female-owned businesses constitute nearly 50% of retail and business customers in the region. Additionally, the research demonstrated that there have been higher growth rates of women’s market portfolios, with individual banks reporting substantial compound annual growth rates (CAGRs), surpassing those of the total portfolio. Such findings reinforce the message that neglecting the expanding financial influence of the women’s market and its diverse customer segments could weaken overall institutional positioning.

The findings also indicate that the degree of ambition and progress regarding leveraging female-owned businesses varies from country to country, depending on the types of financial institutions. Of the banks with products that appeal to the female market, the majority view them through the lens of corporate social responsibility (CSR) or as part of their environmental, social, and governance (ESG) initiatives rather than recognizing them as mainstream growth opportunities. This highlights a prevalent perspective in which women’s market propositions are often considered ancillary to broader social and developmental goals within the banking sector.

Unlike the region’s microfinance institutions, development banks, and cooperatives, which generally share the aforementioned perspective, the fintech sector emerges as a distinct and proactive player. In contrast to most traditional financial institutions in Latin America, who often lack dedicated strategies, fintech companies lead the way with a more driven approach, underscoring the imperative for traditional financial institutions to reassess their strategies.

Findings from the research study also highlight the importance of prioritizing the women’s market for business purposes, revealing a noteworthy trend in loan repayment and deposit behavior. The study found that female retail and business customers consistently demonstrated higher loan repayment rates than their male counterparts, as illustrated by a substantial difference in the 90-day non-performing loan (NPL) ratios. For instance, the average 90-day NPL ratio for female retail customers in commercial banks is a commendable 2.7%, well below men’s 4% average. Previous studies have identified a strong correlation between lower NPL ratios and increased bank profitability.

The increasing interest from financial institutions in the region to serve the women’s market is also evident. The study indicated that approximately one-third of financial institutions currently have a strategy to serve the women’s market, and over 40% are developing one. It also demonstrated that an increasing number of financial institutions are incorporating non-financial services into their women-focused propositions and more robustly collecting sex-disaggregated data, particularly regarding retail portfolios. This continued strategic focus on women, along with improved collection and use of gender data, is likely helping to reduce the gender gap over time by informing more inclusive approaches that have already shown women can be profitable customers.

Despite the growing interest in serving the female market among financial institutions in the region, these institutions have yet to capture this significant market potential. Some key strategies for them to do so and to ultimately advance women’s financial inclusion in the LAC region include:

• Comprehensive women’s market propositions: Financial institutions can develop comprehensive women’s market propositions that involve products tailored to women’s needs and priorities. For instance, institutions like Banco Visión in Paraguay have developed offerings beyond single products to address women’s diverse needs through preferential rates, minimum requirements tailored to female entrepreneurs, partner discounts at women-owned businesses, and insurance partnerships explicitly designed for women.
• Common WSME definition: As discussed in the report, the lack of a universal definition of women-owned/led SMEs across countries and institutions makes it difficult for financial providers to identify and serve this vital segment. A standardized approach would help address this challenge.
• Enhanced gender data: As previously mentioned, most institutions track sex-disaggregated data. However, improving quality, automating the collection, and ensuring data is gathered regarding a wide range of financial services beyond just credit would give providers deeper insights to develop more impactful women-focused strategies and measure their effectiveness over time.
• Integrating gender data into Key Performance Indicators (KPIs): Only half of the surveyed institutions currently incorporate gender performance metrics into management indicators, as noted. Regular tracking and reporting on progress towards gender-focused KPIs could help hold management accountable for women’s market strategy.