How Does Financial Inclusion Help in Economic Development?



Increasing access to and use of quality financial products and services is essential to inclusive economic growth and poverty reduction. Research has shown that when people participate in the financial system, they are better able to manage risk, start or invest in a business, and fund large expenditures like education or home improvement. Increasing women’s financial inclusion is especially important as women disproportionately experience poverty, stemming from unequal divisions of labour and a lack of control over economic resources. There are a number of women who remain dependent upon their partner (whether it is by choice or varying circumstances) and about one in three married women from developing countries have no control over household spending on major purchases. About one in 10 women are also not consulted about the way their own earnings are spent. In addition, women often have more limited opportunities for educational attainment, employment outside of the household, asset and land ownership, the inheritance of assets and control over their financial futures in general.


Providing low-income women worldwide with effective and affordable financial tools to save and borrow money, making and receiving payments and managing risks is critical to both women’s empowerment and poverty reduction. However, the path to greater financial inclusion for women is reliant on the creation of a more gender-inclusive financial system that addresses the barriers faced by women like the lack of assets for collateral or account opening requirements that disadvantage women, supported by an inclusive regulatory environment. Financial service providers and other stakeholders can leverage appropriate product design features to overcome some of these barriers to women’s financial inclusion. However, broader social constraints related to intra-household bargaining power and the social status of women may continue to limit the broader impact of financial inclusion on women’s economic empowerment.

Payment products have emerged as one of the most promising tools for financial inclusion in recent years. Digital finance has opened the door to greater product design innovations in the payments space by reducing some of the traditional barriers to financial inclusion such as transaction costs from time saved in traveling to and back from a bank branch, added privacy and trust. These costs are especially pertinent for women and can be a significant barrier to take up and usage. However, to access many types of digital products access to a mobile phone is necessary. Women on average are 14 per cent less likely to own a mobile phone than men, which translates into 200 million fewer women than men owning mobile phones (GSMA 2015). Furthermore, even when women own a mobile phone, they use it less frequently than men. Initial research on digital payments however shows that they can provide women with more privacy and control over their financial transactions and income flows, helping to overcome some of the challenges that women face surrounding savings and investment decisions.

Payment products that give women more control over income and spending can lead to positive outcomes for female bargaining power in the household, leading to different labour market participation and household expenditure decisions. While results surrounding digital payments products are promising, the gap in the take-up, use, and impact of digital financial services between men and women remain large. In particular, these are a few key points organizations have to look at to reduce the gap:

  1. Increasing women’s mobile phone ownership by looking at the barriers to mobile phone ownership that women face and what are the most effective interventions to overcome them.

  2. Transition women from digital payments to users of other digital financial products by observing where and why do women drop off of the mobile financial services customer journey and what are the most effective ways to promote continuous usage of digital payments products.

  3. Designing products to maximize control and privacy by thinking about what kind of product design features maximize an account holder’s control and privacy and determine if one size fits all when it comes to controlling and privacy.

  4. Ensure effective consumer protection by checking if there are consumer protection issues that are specific to women or specific barriers that women face to accessing safe information about these products, how regulators ensure that users receive appropriate information about the terms and features of products and are protected from predatory practices and lastly what should policymakers and members of the private sector do to ensure that new female customers are treated fairly and have sufficient financial skills so they know and trust digital financial services enough to adopt them.

Although the barriers to women’s financial inclusion are varied, appropriate product design features can help to overcome some of them. Design tweaks that take into account the specific needs and preferences of women can enhance their access to financial products as well as the impact of those products on women’s ability to make investments and smooth consumption in the event of income shocks. Designing products that allow women greater degrees of control and privacy surrounding their incomes and spending decisions appear to be particularly promising. Lastly, researchers should continue to explore the role of gender norms and intra-household bargaining power in women’s economic empowerment outcomes and test product and program innovations that can directly address women’s unique preferences and the future challenges they may face.

Here at AwanTunai, we believe that there are those who are more vulnerable than others and we always find ways to provide the right product for our customers to create real change that matters by contributing to a more inclusive economy. Contact us at AwanTunai to create an impact that matters in your world.



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E. awantunai@mail.co.id     P. (021) 222 333 44