Connected Women: What’s holding back digital financial services uptake among women in India?

I recently participated in a panel discussion on Indian digital financial services (DFS) adoption at GSMA’s Connected Women Working Group in New Delhi. The insights I presented come from the Financial Inclusion Insights (FII) India Tracker Survey, a nationally representative survey of 45,024 Indian adults, on topics related to access and use of financial services. The survey highlighted a few key areas to address if Indian women are going to take up DFS.

The basic ingredients for large-scale adoption of digital financial services (DFS) by Indian women are in place. Most women have access to mobile phones (81 percent versus 89 percent of men) and tend to use these phones once a week. More than a third of Indian women have their own bank account and 41 percent of women send and receive payments regularly (men are much lower at 26 percent).

But digital financial services are yet to take hold.

  • Women are unfamiliar with mobile money- only 3 percent of women have heard of mobile money and 0.1 percent ever used it.
  • Almost none of the women with bank accounts use their accounts digitally or via a banking agent and prefer to physically visit a bank branch to make transactions. In fact, well over half of Indian women’s bank accounts are inactive (i.e., they have not been used in the last three months). Eighty-two percent of women bank account holders have not used their accounts beyond basic deposits and withdrawals.
  • Over 90 percent of women who conduct any financial transactions do so using cash. Saving and borrowing money is informal, largely through neighbors and personal networks.

There are three core factors working against greater DFS adoption among Indian women:

Shared mobile devices: While women’s access to mobile phones is 81 percent, only 31 percent own their phone. They use a shared phone in their household, or a public phone where they pay for use, making it hard to access a digital financial account. This suggests that DFS adoption will take some efforts in promoting ownership of mobile phones among women.

Further, mobile ownership rates for women varies from 19 percent to 76 percent across individual states in India. In urban states and in south India, men and women are almost equally likely to own their own mobile phones. In northern states such as Haryana and Uttar Pradesh men are three times more likely than women to own a phone. In other states such as Jharkhand and Chhattisgarh both men and women have low rates of ownership. Programs to increase mobile ownership among Indian women should have a region-specific focus.

Lack of a digital ecosystem that accepts digital payments: Often cash is the only accepted payment form where poor, rural women live and transact. To further investigate the potential of digitized payments,InterMedia conducted a qualitative study with digital government-payment recipients. Beneficiaries, a major segment of which are women pensioners and scholarship recipients, have set up bank accounts to receive their government benefits electronically. But most say that only cash is accepted at their points of purchases, such as grocery stores and bookstores, and locations where they pay for school fees. So they withdraw their payments in full and use cash to pay for all of their expenses. This suggests an undeveloped digital financial ecosystem in these rural environments.

Low awareness and trust in digital options: Low mobile ownership and the lack of a digital ecosystem leads to low awareness and trust in DFS among poor, rural women. Very few women in these areas have even heard about mobile money and mobile payment options, and trust in such services is negligible. Digital banking and the use of banking agents is also very low.

But DFS adoption does increase as awareness and access to financial services increase. In India’s largest cities, women’s mobile phone ownership, mobile money awareness and active bank account use levels are all higher than the national average; and encouragingly, even poor women show higher use of these services than women in the rest of the country.

This suggests that mobile phone operators, banks and other digital finance providers can work towards connecting the dots between basic access to digital technologies and large-scale DFS adoption. They can do so by focusing not just on building agent networks and reducing distances to cash-in-cash-out points, but also by investing in awareness building and promoting personal mobile phone ownership among poor and rural women.

You can see the complete presentation here.