The Digital Gender Gap

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The advent of digital financial services—such as those that use mobile phones or the internet to conduct financial transactions—is transforming people’s lives, helping the underserved gain greater access to financial services. But not all segments of the population are benefiting equally.
Authors: PURVA KHERA, SUMIKO OGAWA, RATNA SAHAY, MAHIMA VASISHTH. Publication: F&D Magazine, December 2022.
Core thesis: Greater inclusion of women as users and leaders of digital financial services has benefits beyond addressing gender inequality and can foster better firm performance and economic growth.

Women are significantly underrepresented in fintech leadership:
- Women represent less than 13 percent of leadership—both as founders and as members of executive boards of fintech firms.
- These numbers have hardly moved in the past 20 years.
- Regional variation: highest shares of fintech companies founded by women in the Western Hemisphere and Asia and Pacific regions; lowest in the Middle East and Central Asia.
Relationship between gender diversity and firm outcomes:
- A 10 percent higher share of women on executive boards is associated with roughly 13 percent higher revenue and funding earned by a firm.
- Firms with a higher share of women executives earn higher revenue and receive more funding.
- Contrastingly, firms founded by women tend to make less revenue and receive less funding than those founded by men—possible explanations include women’s greater risk aversion or gender bias among investors.

Increasing digital financial inclusion, including women’s access to and use of financial services, is positively associated with economic growth and broader societal benefits.
Mechanisms:
- When more women access financial services they participate more in the labor force and contribute to business activity, directly increasing GDP.
- Greater diversity in the labor force likely helps productivity grow and reinforce economies’ output growth.
Evidence on fintech narrowing gender gaps:
- Fintech helps remove obstacles that particularly affect women—such as mobility and time constraints—and circumvents interactions with bank branch agents in contexts where social norms constrain interactions between men and women.
- In a sample, gender gaps in digital financial inclusion were narrowing in 31 of the 52 countries between 2014 and 2017; in the other 21 countries they widened further.

Three key drivers identified:
- Women often lack the basic means to access digital services—such as mobile phones and the internet.
- Cultural norms in some countries limit women’s financial literacy, as measured by the share of women who have completed upper secondary education.
- Women’s digital and technology-related literacy, measured by the share of women in STEM (science, technology, engineering, and mathematics) fields, remains low at about 15 percent globally.

Invest in digital and financial literacy as a high-priority agenda for governments.
Consumer protection agencies and regulators should play an active role in the prevention of explicit or implicit biases in digital financial services.
Promote higher inclusion of women as users and leaders in the digital finance industry to enhance economic growth and mitigate emerging risks of new sources of financial exclusion due to the digital gender divide.

Need for more research and better data to identify conditions that facilitate entry of women into leadership roles in the digital financial industry.
Preliminary evidence suggests a positive correlation between women leaders in fintech firms and the use of digital financial services by women, indicating that greater female representation in leadership may spur development of services tailored to women.
Call for more rigorous and in-depth work to inform efforts to improve financial inclusion.

Women hold fewer than 25 percent of board seats in traditional banks and bank supervision agencies (Sahay and Čihák 2018).
Globally, 65 percent of women have an account with a financial institution, compared with 72 percent of men (Demirgüç-Kunt and others 2018).
Women represent less than 13 percent of leadership in fintech firms.
Timeframe referenced: these leadership numbers have hardly moved in the past 20 years.
Regional sample outcome (digital inclusion trend, 2014–2017): 31 of the 52 countries saw narrowing gender gaps; 21 saw widening gaps.
A 10 percent higher share of women on executive boards is associated with roughly 13 percent higher revenue and funding for a firm.
Share of women in STEM fields: about 15 percent globally.

The Digital Gender Gap, F&D Magazine, December 2022.

The Digital Gender Gap
- The Digital Gender Gap (Markdown version)
- The Digital Gender Gap (PDF)