Women-owned very small enterprises (WVSEs) fall between the upper end of micro and the lower end of SME lending and are often informal (not registered). The gap is roughly $1 trillion when informal women-owned businesses are included. These businesses are vital sources of income for millions of households. Yet they face compounded financing challenges because of incomplete financial statements and paper trails, lack of formal registration, limited business experience, being located in the home, and making sales based on community credit rather than cash.

To cater to these firms, some banks introduced cash-flow-based lending or began accepting co-guarantors in place of property titles (which are often a barrier for women seeking loans). However, these approaches can be expensive, and adoption by banks is not widespread. Supplier credit offers some respite, but that, too, has limitations and is irrelevant for many businesses. Supply chain finance has promise, yet it has not achieved scale.

Banks need faster and more efficient ways of underwriting loans to women-owned VSEs and SMEs, availing of the latest alternative information sources to create credit scoring models and assess multiple income sources, psychometric testing for likely repayment behavior, blockchain to establish collateral ownership, social networks to create co-guarantor mechanisms, and customer data to establish financing demand. Those who design these systems must be careful to safeguard against potential gender bias within data sources, algorithms and human-made lending decisions. Many core banking systems cannot work with alternative data sources.

Banks also need support in acquiring these customers. This includes current customers, because their MIS cannot identify women-owned/led businesses easily and many remain unknown in the consumer portfolio. They also need help with prospect customers—identifying them and reaching out to them in the marketplace.

In some cultural contexts, loan collection processes must also be adapted because the traditional recovery agent model does not work. While some fintechs have solved pieces of the equation, the market is still vastly underserved. This presents a huge B2B partnership opportunity for fintechs and banks, as well as a B2C opportunity for fintechs.

To know more download the “How Fintechs can profit from the Multi-Trillion-Dollar Female Economy” report

Women-owned Very Small Enterprises (WVSEs) fall between the upper end of micro and the lower end of SME lending and are often informal (not registered).  The gap is roughly $1 trillion when informal women-owned businesses are included. These businesses are vital sources of income for millions of households. Yet they face compounded financing challenges because of incomplete financial statements and paper trails, lack of formal registration, limited business experience, being located in the home, and making sales based on community credit rather than cash. 

To cater to these firms, some banks have introduced 'cash-flow'-based lending and or began accepting co-guarantors in place of property titles (which are often a barrier for women seeking loans); however, these approaches can be expensive and adoption by banks is not widespread. Supplier credit offers some respite; but that too has limitations and is irrelevant for many businesses. Supply chain finance has promise; yet it has not been achieved scale. 

Banks need faster and more efficient ways of underwriting loans to women-owned VSEs and SMEs, availing of the latest alternative information sources to create credit scoring models and assess multiple income sources, psychometric testing for likely repayment behavior, blockchain to establish collateral ownership, social networks to create co-guarantor mechanisms, and customer data to establish financing demand. Those who design these systems must be careful to safeguard against potential gender bias within data sources, algorithms, and human-made lending decisions. Many core banking systems cannot work with alternative data sources. Banks also need support in acquiring these customers. This includes current customers, because their MIS cannot identify women owned/led businesses easily and many remain unknown in the consumer portfolio; as well as prospect customers—identifying them and reaching out to them in the marketplace. In some cultural contexts, loan collection processes must also be adapted because the traditional recovery agent model does not work.

While some fintechs have solved pieces of the equation, the market is vastly underserved. This presents a huge B2B partnership opportunity for fintech’s and banks, as well as a B2C opportunity for fintechs.

To know more download the “How Fintechs can profit from the Multi-Trillion-Dollar Female Economy” report

Women-owned Very Small Enterprises (WVSEs) fall between the upper end of micro and the lower end of SME lending and are often informal (not registered).  The gap is roughly $1 trillion when informal women-owned businesses are included. These businesses are vital sources of income for millions of households. Yet they face compounded financing challenges because of incomplete financial statements and paper trails, lack of formal registration, limited business experience, being located in the home, and making sales based on community credit rather than cash. 

To cater to these firms, some banks have introduced 'cash-flow'-based lending and or began accepting co-guarantors in place of property titles (which are often a barrier for women seeking loans); however, these approaches can be expensive and adoption by banks is not widespread. Supplier credit offers some respite; but that too has limitations and is irrelevant for many businesses. Supply chain finance has promise; yet it has not been achieved scale. 

Banks need faster and more efficient ways of underwriting loans to women-owned VSEs and SMEs, availing of the latest alternative information sources to create credit scoring models and assess multiple income sources, psychometric testing for likely repayment behavior, blockchain to establish collateral ownership, social networks to create co-guarantor mechanisms, and customer data to establish financing demand. Those who design these systems must be careful to safeguard against potential gender bias within data sources, algorithms, and human-made lending decisions. Many core banking systems cannot work with alternative data sources. Banks also need support in acquiring these customers. This includes current customers, because their MIS cannot identify women owned/led businesses easily and many remain unknown in the consumer portfolio; as well as prospect customers—identifying them and reaching out to them in the marketplace. In some cultural contexts, loan collection processes must also be adapted because the traditional recovery agent model does not work.

While some fintechs have solved pieces of the equation, the market is vastly underserved. This presents a huge B2B partnership opportunity for fintech’s and banks, as well as a B2C opportunity for fintechs.

To know more download the “How Fintechs can profit from the Multi-Trillion-Dollar Female Economy” report

Women-owned SMEs face a number of constraints to growth, including access to finance. While financing is almost always a challenge for SMEs, the difficulties are often intensified by gender-related factors, including women’s lack of collateral, weak property rights, tendency to have been in business for a shorter amount of time and be subjected to discriminatory regulations, laws and customs. On average women self-report report less financial literacy and seek out smaller loans or prefer to use credit cards rather than apply for business finance from banks.  With both supply and demand side barriers, the International Finance Corporation (IFC) estimates that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions, amounting to a financing gap – and opportunity – of around $285 billion (Source: Credit where it is due, Goldman Sachs Global Investment Research, 2014). 

Moving up in business size, women owned/led formal SMEs are registered as businesses, have bank accounts where transaction history can be assessed, pay taxes, borrow from multiple sources—often using their credit card. Banks requirements are perceived to be and are onerous. The banks themselves find it difficult to identify these women whether they are their own customers (often availing of consumer credit and in the retail rather than corporate portfolio, and also often using credit cards) or are prospect customers; find them costly to acquire them once identified and costly to serve. .  This segment is growth-oriented and tremendously loyal when served well but still face many of the same constraints as WVSEs when accessing finance.

To know more download the “How Fintechs can profit from the Multi-Trillion-Dollar Female Economy” report

Women-owned SMEs face a number of constraints to growth, including access to finance. While financing is almost always a challenge for SMEs, the difficulties are often intensified by gender-related factors, including women’s lack of collateral, weak property rights, tendency to have been in business for a shorter amount of time and be subjected to discriminatory regulations, laws and customs. On average women self-report report less financial literacy and seek out smaller loans or prefer to use credit cards rather than apply for business finance from banks.  With both supply and demand side barriers, the International Finance Corporation (IFC) estimates that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions, amounting to a financing gap – and opportunity – of around $285 billion (Source: Credit where it is due, Goldman Sachs Global Investment Research, 2014). 

Moving up in business size, women owned/led formal SMEs are registered as businesses, have bank accounts where transaction history can be assessed, pay taxes, borrow from multiple sources—often using their credit card. Banks requirements are perceived to be and are onerous. The banks themselves find it difficult to identify these women whether they are their own customers (often availing of consumer credit and in the retail rather than corporate portfolio, and also often using credit cards) or are prospect customers; find them costly to acquire them once identified and costly to serve. .  This segment is growth-oriented and tremendously loyal when served well but still face many of the same constraints as WVSEs when accessing finance.

To know more download the “How Fintechs can profit from the Multi-Trillion-Dollar Female Economy” report

Women-owned SMEs face a number of constraints to growth, including access to finance. While financing is almost always a challenge for SMEs, the difficulties are often intensified by gender-related factors, including women’s lack of collateral, weak property rights, tendency to have been in business for a shorter amount of time and be subjected to discriminatory regulations, laws and customs. On average women self-report report less financial literacy and seek out smaller loans or prefer to use credit cards rather than apply for business finance from banks.  With both supply and demand side barriers, the International Finance Corporation (IFC) estimates that as many as 70% of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions, amounting to a financing gap – and opportunity – of around $285 billion (Source: Credit where it is due, Goldman Sachs Global Investment Research, 2014). 

Moving up in business size, women owned/led formal SMEs are registered as businesses, have bank accounts where transaction history can be assessed, pay taxes, borrow from multiple sources—often using their credit card. Banks requirements are perceived to be and are onerous. The banks themselves find it difficult to identify these women whether they are their own customers (often availing of consumer credit and in the retail rather than corporate portfolio, and also often using credit cards) or are prospect customers; find them costly to acquire them once identified and costly to serve. .  This segment is growth-oriented and tremendously loyal when served well but still face many of the same constraints as WVSEs when accessing finance.

LATAM: Colombia; Brazil 

To know more download the “How Fintechs can profit from the Multi-Trillion-Dollar Female Economy” report

To support women, including those from minority groups, in growing their small businesses, access to finance must be complemented with business and financial education (40 percent of women going to a bank for a loan do not have a projected cashflow), access to networks and markets (women have smaller networks than men and yet size of network is correlated with business success), relevant information that’s timely and efficient (women are avid consumers of information) and some form of recognition (too few role models, require increased visibility). This holistic value proposition is what women need to succeed.

Traditional approaches (classroom training, mentoring, trade fairs, etc.) are being supplanted by digital platforms (PFM platforms, upskilling on e-commerce platforms, networking on social media platforms, etc.) and women are looking for one-stop shops that improve their skills, build their networks (including exports) and enable access to financing (at whatever stage of business lifecycle). Banks in the Financial Alliance for Women network offer this holistic value proposition but need to do so more cost effectively and at scale through use of innovative technology — fintech, edtech, healthtech — availing of real and financial sector stakeholders, to solve for business growth needs.

For more info, download the "Non-financial Services: The Key to Unlocking the Growth Potential of Women-led Small and Medium Enterprises for Banks"

Although women hold approximately 40 percent of global wealth, as per Credit Suisse’s 2018 Global Wealth Report, they are underserved by financial services providers and tend to have low satisfaction ratings. Women’s wealth is expected to increase, as they are inheriting at greater rates than men and getting closer to parity in education and entrepreneurship. Yet asset management companies have thus far failed to take a tailored approach to serving the women’s market. That many relationship managers struggle to communicate with women is evident in consumer behavior patterns. For example, 70 percent of widows leave their financial advisor within 12 months of becoming
a widow.

On the other hand, women tend to face multiple demands on their resources (paying for children, health, housing, etc.) and constraints on their time. They often deal with wealth management through informal channels:  According to a 2016 report by Boston Consulting Group, 30 percent of high-net-worth (HNW) women list friends and family as their primary source of investment advice, compared to 11 percent of overall respondents. Or they may not focus on their own financial security until they reach old age. This can lead to financial insecurity in retirement, a problem compounded by the pension gender gap, lower lifetime earnings and longer life expectancies than their male counterparts.
While wealth tech is taking off, the mass market for women’s wealth and investment management is largely untapped. Successful solutions should earn the trust of clients and the public, provide relevant and timely information, build financial confidence and expertise, and offer a range of products that are good value and have strong values that speak to women’s widespread interest
in ESG investing.

The Financial Alliance for Women's report, “The Growing Opportunity of Women of Wealth,” revealed that HNW women have financial needs distinct from their male counterparts. At the same time, women are often under-informed about investment opportunities and lack confidence in their own financial planning abilities. Fifty-five percent of HNW women “strongly believe” that they know less than the average investor. Eighty-two percent of affluent and HNW women globally and across age groups believe that men know more about investing. This does not necessarily mean women are not interested or active in dealing with money. Women are highly involved in managing expenses (85 percent) and paying bills (80 percent). However, 58 percent opt out of long-term financial planning, instead prioritizing savings and short-term investments.

To build confidence in their own long-term financial planning abilities and drive financial security, women need trusted financial advisors that work closely with them to provide timely and relevant information through a range of consultative practices, including risk/reward trade-offs, gamification, and peer learning.

To know more download the "The Growing Opportunity of Women of Wealth: DefiningStrategies for Success"

Identifying women-owned/led very small businesses, often semi-formal (WVSEs) and women-owned/led small businesses that are formal (WSMEs) is a challenge for FSPs. This is due to a variety of reasons. First, FSPs systems are not set up to capture and/or aggregate sex-disaggregated data, particularly for WSMEs and WVSE. Many FSPs MIS are inadequate or based on legacy systems that are not easily changed, and many core banking systems cannot integrate alternative data. Second, while sex-disaggregated may be available, the data may be inaccurate. One driver is that some banks may not be setting consistent definitions of what a WVSE/WSME are in order to tag them. Many women who are actually small business owners remain in the consumer banking portfolio, as it is difficult for banks to determine the purpose for which their account is actually being used, and any changes in shareholding and management can be burdensome to keep up to date. Finally, although data may be available, many FSPs are not using it or analyzing it to its full potential. Aggregating the data can be cumbersome, and due to a lack of automation in extracting sex-disaggregated data, it is not done on a consistent basis, nor is it complete. This leads to WVSE/WSME data not being included in regular management reporting.

The situation is compounded by the lack of universal definitions of women-owned/led businesses, but the IFC definition is a useful benchmark: >51 percent female ownership or >20 percent female ownership and 1 woman CEO/COO, and >30 percent female board, if a board exists. Further, existing reporting requirements by funders, investors, regulators, or other stakeholders can vary, and because there is no universal definition for WSMES, nor are there consistent indicators being used, reporting requirements vary and can be onerous.

for more insights on this challenge read the report:  "A Data-Driven Path to Women's Financial Inclusion | Financial Alliance for Women"