Empowering Low-income Women through Access to Financial Services

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As a young girl growing up in Limuru, Kenya, a rural village roughly 25 miles west of Nairobi, Loise Muya watched her mother harvest maize and potatoes to sell in the local market.

“My mother tilled the land from morning until evening,” says Muya, who is one of seven children. “But when the money came in, it all went to my father. My mother had no say in how it was spent — not for her, and not for my brothers and sisters and me. That is the way it is for women. It’s part of the culture.”

Today, Muya — the senior manager in charge of customer experience at Equity Bank in Nairobi, Kenya — is determined to change that. “I’ve felt inspired and motivated ever since I got my promotion,” she says. “I want to reach out to other women, to mothers like my own, and help them. I want to empower them to participate in the economy.”

It’s an audacious goal. To help herself achieve it, Muya enrolled in the new Leadership and Diversity for Innovation Program (LDIP), a year-long course jointly run by Wharton and Women’s World Banking, the global nonprofit group. The parallel leadership course, which is targeted at senior financial executives and high-potential female employees from 20 banks and microfinance institutions (MFIs) around the globe, combines classroom-based lectures and webinars with individualized remote coaching.

The program has multiple objectives: to expose participants like Muya to the latest business practices, to develop the next generation of talent in emerging countries, and, perhaps most importantly, to expand low-income women’s access to, and participation in, the financial services sector.

“Before, I had all these ideas in the back my head of how to reach new [female] customers,” says Muya, who started the program earlier this year. “And now I am learning how to implement them.”

That sentiment is one that Michael Useem, the program’s faculty director and the head of Wharton’s Center for Leadership and Change Management, hopes to hear repeated as the program continues. “Long-term, the way that most people move out of poverty is for the economy to develop, and for that we need gender equality,” he says. “This program is a step in that direction. Teaching participants how to best serve the women’s market with innovative products and services will help microfinance, which is a self-sustaining engine for growth and equality, to flourish.”

“Before, I had all these ideas in the back my head of how to reach new [female] customers. And now I am learning how to implement them.” –Loise Muya

The Economic Case for Equality

More than two billion adults around the world do not have an account at a financial institution, according to the World Bank’s Global Financial Inclusion Database. In developing countries, women, in particular, are left out of the formal financial system. According to the World Bank, women in developing economies are 20% less likely than men to have an account at an official financial institution.

Eliminating this gender disparity is critical to driving economic development in emerging market countries, according to Harsha Rodrigues, the chief strategy officer at Women’s World Banking. “The strongest arguments for women’s financial inclusion are economic in nature Twitter ,” she says. “If half a country’s population is un-banked or under banked — meaning they lack access to credit, savings and other financial services — that represents a potentially huge gap in economic growth.”

Providing women with access to banks — giving them a safe place to save money, acquire credit and obtain insurance — allows them to gain better control over their lives and the lives of their families, according to a growing body of research. Indeed, study after study shows that when women in the developing world are able to participate in economic decisions, relationships within their homes become more equitable and they invest more in their children’s health and education. Over time, this research shows, this contributes to the cycle of poverty alleviation.

Access to financial services also increases the likelihood that poor women living at the bottom of the economic pyramid will start and grow successful businesses. The International Finance Corporation (IFC) estimates that women own more than 30% of registered businesses worldwide. But only about 10% of those female entrepreneurs have access to the capital needed to grow their businesses. According to a recent report by Goldman Sachs, the credit gap for women-led small- and medium-sized enterprises (SMEs) amounts to a financing opportunity of roughly $285 billion. The bank’s research indicates that if the credit gap is closed by 2020, in just 15 countries including Brazil, Russia, India, and China, per capita incomes could be 12% higher by 2030.

One way to increase inclusion is through the development of new kinds of financial products and services aimed expressly at women. Women require financial products and advice that appreciates their perspective and experience, according to Rodrigues. “The fact is,” she says, “when a bank develops a financial product with women in mind, it will most likely work for a man, but the reverse is not always true.”

But this presents a management and innovation challenge for organizations eager to win a share of this market. Research conducted by Women’s World Banking shows that most executives in financial institutions serving low-income clients have had little or no training in leadership or management.

Enter the LDIP program, which aims to teach participants how to create innovative products for female customers and give them a deep understanding of the nuances of that marketplace. “Our program participants — the women and men who run these MFIs — have typically not had extensive management training,” says Useem.

“They’ve had to invent their own way,” he adds. “They’ve learned wonderfully by doing — that’s the best school there is — and this program gives them an opportunity to share their learned best practices with each other, and also for us to share with them what we know about management and leadership of growing organizations. The road to successful expansion of an MFI relies on great leadership, and our goal is to help participants move their organizations forward.”

On top of that, MFI leaders face fast-changing market dynamics. The microfinance industry has expanded tremendously over the past decade. According to recent data, the industry is worth about $7 billion today and is on track to grow to $14 billion over the next four years. In addition, the growth of digital technology and the rise of mobile payments are forcing leaders of MFIs to rethink their business models.

“When your organization evolves from a very small enterprise to a much larger one, that requires a different management skill set; it’s true for technology start-ups in Silicon Valley and it’s true for MFIs in the developing world,” says Useem.

According to the World Bank, women in developing economies are 20% less likely than men to have an account at an official financial institution.

“There’s the added management challenge for microfinance as it is becoming a bigger industry,” he continues. “Managers increasingly need to learn how to work with regulators, how to manage risk, how to reach new customers and how to execute a competitive strategy. This program is focused on developing the next generation of leaders of MFIs.”

Creating a Strong Female Presence at the Top

In the era of Lean In, the lack of women leaders in the workplace is an issue that’s well known. Women make up a mere 5% of CEOs in Fortune 500 companies and, according to data from the Kauffman Foundation, only 19% of corporate board seats. The dearth of women leaders in the financial services industry is especially acute. Despite the fact that women comprise more than half the workforce in financial institutions, data from 20 global markets compiled by PwC show that only 19% hold senior leadership positions. Women hold 14% of board seats and a paltry 2% of CEO positions.

Statistics for the developing world are difficult to come by, but anecdotally, the situation is similar, says Rodrigues of Women’s World Banking. “Gender equality at the institutional level is an issue,” she says. “There are women at the staff level, but as they advance in their careers, you see fewer women.”

Rodrigues notes that the lack of women at the top could be at the root of their exclusion from the sector. “Institutions should mirror the market in which they work,” she says. “There needs to be representation of women at all levels — from staff, to managers, to the board level.”

By teaching both top executives and promising female workers, the LDIP aims to increase the number of women managers in the industry in a number of ways. “What’s different about this program is that we’re bringing together a senior leader with high potential women,” says Rodrigues.

For the CEOs and senior executives, the program focuses on honing their coaching and talent management skills. They learn how go beyond the traditional mentorship role to support the emerging women leaders in developing their own vision and bringing their voices to the decision-making table.

For the second track of participants, meanwhile, the focus is on individual development. They learn negotiation skills, strategic relationship building and how to best contribute to their organizations. Creative Metier, the remote coaching delivery group, provides executive coaching support to complement the in-person classroom lectures throughout the year.

As the program progresses, each two-person team works together to identify and solve a real-time challenge facing their institution, such as growing the business responsibly, better serving clients, reaching new market segments or creating an inclusive workplace. “This program not only provides for leadership development at the personal level, but also works toward achieving institutional impact through the strategic business initiative,” says Rodrigues.

Raising the ambition of these high-potential female participants is an implicit goal of the program, according to Laura Hemrika, the head of the Impact and Microfinance Capacity Building Initiative (MCBI) at Credit Suisse, which is one of the program’s sponsors. “We hope that 10 or 20 years from now, the younger talent that is participating in this program will be the CEOs and CFOs of leading microfinance institutions and that there will be a strong female presence at the top of these organizations,” she says.

“When your organization evolves from a very small enterprise to a much larger one, that requires a different management skill set.” –Michael Useem

A Virtuous Circle

The program, which launched in April with a three-day forum run by Wharton faulty in New York City for the top executives, has proceeded as planned. In September, senior participants travel to India for another roundtable, which coincides with a one-week leadership program for the high potential women mangers.

Credit Suisse has provided access to in-house experts, guest speakers and meeting space in New York and will do the same in Mumbai. “We want to provide more than just the check,” says Hemrika. “We also want to create opportunities to raise awareness of microfinance partners with our clients and staff through events and knowledge-sharing opportunities. In return, we learn a lot from our partners, too. It’s a virtuous circle.”

Meeting and interacting with the program participants “brings home the reality of delivering financial services at the base of the pyramid,” she adds. “And it reminds us of the positive impact that the expansion of financial services has in the developing world.”

Employees get a firsthand look at working in financial services in the developing world. “It is a different experience, but at the same time, the importance of thinking about who your client is, keeping your client’s needs front and center, and ensuring that your organization reflects your client in its management structure — these are very much the same whether you’re working in financial services on Wall Street or in Nairobi,” notes Hemrika.

Back in Nairobi, Loise Muya and her fellow Equity Bank program participant — whom she describes as a “very promising customer care manager” — are working on a virtual banking product for the organization. “It means that a woman who is sitting at home with her babies, who has no time and no means to do her banking, can do money transfers, check her balances and save money at her own convenience from her own home.”

Muya says that the program is helping them figure out how best to execute. “We’re laying out strategy and [the coach and professors] are helping us break it down, think it through, create a timeline and enhance our strategy so that it can be implemented more easily.”

Muya is optimistic — and impatient. “There are so many women that need to be empowered,” she says.

 

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