Accelerating female inclusion with biometrics
By Catharina Eklof, CCO of IDEX Biometrics
Women are critical to the world economy yet remain largely underrepresented, and underbanked, consumers. They control around $20 trillion in annual consumer spending, which is expected to rise to as much as $28 trillion within the next five years. In the same period, women’s total yearly earnings of $13 trillion could also increase to $18 trillion. In total, women constitute a larger growth market than China and India combined, more than twice the size, to be precise. Despite the increasing share of consumer spending, more than 40 percent of women worldwide, equivalent to 1 billion women, still lack access to financial services.
Financial equity and inclusion involve providing equal access to financial services and economic opportunities for all individuals. However, the gender gap remains a challenge, particularly in developing countries. Only 37 percent of women in sub-Saharan Africa have a bank account compared to 48 percent of men. This exclusion from the financial ecosystem means women are unable to access insurance, loans, life assurance, or obtain a pension. This also prevents women from launching their own businesses, penetrating the economy on a deeper level. While the disparity is a fairness issue, it is also an efficiency issue. There is a vast untapped market for potential consumer spending and female talent.
Ensuring equal financial inclusion for both men and women is crucial for global economic growth. However, achieving this objective has been challenging due to many persistent barriers including formal identification, digital footprints, skills, and financial literacy.
Focus group: Female refugees
Promoting women’s financial inclusion is among several powerful means to advance gender equality. However, we cannot make significant progress without truly understanding the reality of women’s lives. Presently, women and girls constitute at least half of the world’s total number of refugees. Women represent almost half of the 244 million migrants and half of the 19.6 million refugees worldwide . Currently, foreign aid spending is capped at 0.5 percent of GDP, which accounts for some £11bn in the UK alone.
Women and girls experience significantly different potential vulnerabilities from men and boys. Cultural differences often result in women being assigned a lower social status and made dependent on men, creating obstacles to accessing decision-making positions and safe livelihood and education opportunities. The refugee experience exacerbates these challenges, putting them in situations that create significant vulnerability. In addition to these issues, women face barriers in accessing financial services, legal protection, reproductive, and other health services due to the lack of educational opportunities.
Studies conducted by the UNHCR with refugee women have revealed how low levels of formal education, literacy, or language barriers can lead to increased experiences of marginalization, hindering their access to critical financial and legal resources required for successful social integration.
Overcoming barriers through biometrics
If harnessed correctly, technology can be a force for dynamic economic and social improvement: democratizing access to banking, payments, and formal ID. Digital financial inclusion technology offers innovative tools that include new identification and verification measures such as biometric smart cards. These tools help in creating user profiles that facilitate more effective identity verification, prevent fraud, and enable risk-based monitoring of transactions. Biometric technology refers to the use of technology to identify and verify a person based on some aspect of their biology – their fingerprint, face, iris, or voice. The basic premise of biometric authentication is that every person can accurately and securely identify themselves, by themselves. In cases where illiteracy and rural living are prevalent, relying on passwords and paperwork can be problematic. Biometrics, on the other hand, are inherent to an individual’s identity, such as fingerprints. Biometrics are now being integrated into government processes, hospitals, and airports as a secure and expedited means of identifying individuals.
Nordic fintech and open banking solution provider Enfuce, in collaboration with French social enterprise Welcome.Place, is conducting a pilot program to distribute Visa-branded prepaid cards to refugees who arrive in France. The program initially focused on Ukrainian refugees who arrived after the onset of the Ukrainian war in February 2022. The success of the pilot program is expected to lead to a larger contract in 2023, which will expand the program to serve more refugees. The program also aims to onboard additional NGOs and commercial partners to widen the scope of coverage, demonstrating the significance of payment cards in supporting financial inclusion.
Biometrics for inclusion in motion
In Mexico, Mastercard and specific-purpose payment solutions provider Edenred conducted the first regional trial of biometric card technology in 2019 for individuals in state benefits programs. The trial exhibited the significance of collaborations between public and private entities in implementing effective programs. By streamlining purchase transactions and enabling secure fund disbursement to those in need, the pilot program highlighted the value of biometric technology in facilitating financial inclusion.
Countries such as India and Pakistan have successfully rolled out national digital identity programs, using biometric data to eliminate literacy as a barrier . Women are now also able to utilize their national ID numbers to establish digital financial accounts and directly access government services. The pairing of digital identities and digital accounts has proven to be advantageous for both governments and citizens. In India, millions of people have opened accounts for the first time thanks to the issuance of digital IDs. In Pakistan, the number of women registering for IDs nearly doubled after the government linked the identity system to a social payment scheme.
To enable a connected world, seamless payment solutions are essential for individuals, businesses, and NGOs alike. As payments serve as the backbone for local and global transactions, it is crucial to establish robust industry and regulatory agreements to ensure secure and smooth payments across the globe.
The role of women in the developed world
To promote gender equality in financial inclusion, it is beneficial to have women in influential positions within the financial sector who can advocate for equal access and drive policy changes. Unfortunately, in 37 out of 55 countries studied, women hold less than 25 percent of the decision-making roles in the financial sector. This lack of representation can lead to a gender bias in decision-making, which may impact the discussion on gender-related issues.
Moreover, financial solutions often do not cater to the needs of low-income women because financial institutions lack knowledge about these customers. According to research by IDEX Biometrics, most women are willing to embrace biometric technology to overcome the digital divide. In Brazil, for example, 91 percent of women are ready to switch from PIN to fingerprint authentication for in-store payments . Therefore, it is essential to understand the needs and constraints of all consumers to develop inclusive financial products and solutions.
It is key to bridge the gender gap in financial inclusion for women, creating an equitable society, and unlocking significant market potential and talent. Innovative technology, such as biometric smart cards, has been proven to help promote financial inclusion for women by bypassing the need for formal ID, financial literacy, and a digital footprint. Women in influential positions can help drive policy changes and promote gender equality within financial inclusion.
About the author
Catharina Eklof has served as IDEX Biometrics Chief Commercial Officer (CCO) since June 2021. Prior to joining IDEX, she was the CCO at Defentry, a cyber safety solutions provider, and established Mastercard’s global strategic merchant programme. With over 20 years of experience in leading business transformation across financial services, retail, travel, and information security, Eklof serves on the board of directors of Avanza Bank Holding AB.
DISCLAIMER: Biometric Update’s Industry Insights are submitted content. The views expressed in this post are that of the author, and don’t necessarily reflect the views of Biometric Update.