Three-quarters of a billion women globally are not included in the formal financial sector. Not including women in the formal economy ultimately limits countries’ economic growth and development. Essentially, money is left on the table when women aren’t enabled to open accounts, save, borrow, invest, and thrive.

This alone should be a sufficient motivator for public and private sector players to jump at the opportunity to better serve women. But we are not seeing the sense of urgency that addressing it merits.

In our third episode in a series to spotlight the latest in global developments in payment systems from a financial inclusion lens, Sonja Kelly, Global Head of Women’s World Banking Institute, joins Joanna Wisniecka to dive into design principles for inclusive digital financial systems and how all end users benefit when design considers the specific needs of women.

Listen in as they discuss barriers to women’s financial inclusion, the critical importance of addressing safety and trust issues, and potential benefits and risks associated with emerging technologies like AI and CBDCs.

Featured episodes in this series:

Episode 266 – Innovating Inclusive Financial Systems on the African Continent, with Sabine Mensah, AfricaNenda

Episode 263 – Driving Digital Financial Inclusion: The Journey We’re On and the Road Ahead – Michael Wiegand, Gates Foundation

 

Joanna Wisniecka: Hello, I’m Joanna Wisniecka, an Associate Partner at Glenbrook, and your host for this episode of Payments on Fire. At Glenbrook, the topic of inclusive financial systems is at the center of our practice that provides advisory services to central banks, NGOs, and other organizations to establish and scale instant payment systems worldwide.

We’re quite privileged to collaborate with incredible leaders in this space. This is why I’m excited to bring you this episode, the third in a series to spotlight the latest in global developments in payment systems from a financial inclusion lens and the opportunities for public and private sector to bring value to more consumers and businesses, including those who may be excluded currently.

So far in this series, we spoke with Michael Wiegand, Director of Inclusive Financial Systems at the Gates Foundation, about design principles for inclusive instant payment systems, the importance of competition and driving innovation and emerging innovations like digital public infrastructure. Then we turned our attention to developments in instant payments, including cross border payments and other innovations on the African continent with Sabine Mensa, the Deputy CEO at AfricaNenda.

Both episodes provide a unique perspective on efforts undertaken globally to make financial systems and payment systems, in particular, more inclusive. The extent to which innovation will provide greater financial inclusion depends on choice. First, choosing to deliberately address financial inclusion in design.

And then choosing to design in a way that promotes inclusive payments between the end parties, consumers, and businesses. A growing body of research points to key elements of what constitutes inclusive design, like interoperability. One thing that has become clearer is that all end users benefit when design considers the specific needs of women.

We’ll dive into this in today’s episode. Joining me for this really important and exciting conversation is Sonja Kelly. Sonja is the Global Head of Women’s World Banking Institute and authoritative source on inclusion and economic development. Sonja, I’m delighted you are here with us on Payments on Fire.

Welcome.

Sonja Kelly: It’s such a pleasure to be here. Thanks, Joanna.

Joanna Wisniecka: Wonderful. Well, let’s ease into our important conversation with a little bit about you. You have been with Women’s World Banking for over five years leading a really ambitious research agenda related to women’s financial inclusion. Can you tell us about your career journey and how it brought you to your current role as the global head of Women’s World Banking Institute?

Sonja Kelly: Yeah, absolutely. And let me just say, this is so fun for me. Because I’m usually the one on the other side of the table in my role as host of the Making Finance Work for Women Podcast. Engaging with you here as a guest is just a real treat.

And I love an origin story. I came at this space from microfinance. I actually started right out of college more than two decades ago in microfinance and thought it was so interesting, thought it had a lot to offer. And I was talking to one of my mentors who said, In order to grow, you’re either going to need to become a loan officer and be on the front lines or you’re going to need to become an expert.

And that was a, honestly, a very hard choice for me because I think I would’ve loved becoming a loan officer. But I decided to instead become an expert. So I went and did my PhD. While I was doing my PhD, it took me to consultancies at the World Bank, CGAP, the Center for Financial Inclusion. I later worked as the Director of Research for Accion. I advised the US Department of State.

And now I’m here at Women’s World Banking and I get to think about women’s financial inclusion from that kind of vantage point of expert, informing practitioners. I just, I love my role because I get to facilitate research and learning and there’s so much more research and learning that we have to do in this space.

I think 20 years ago I thought like, Oh, we’ll be done by then. We’ll be done in a couple decades and I’ll switch to a new career. And instead, it just feels like there’s so much more to do. Maybe you feel the same way, honestly.

Joanna Wisniecka: Yeah, no, absolutely. And with you being the expert in the space, we’re thrilled to have you here and learn about some of the deeper learnings that you’ve come out with as part of the institute over the years. So, wonderful to have you on here and that sounds like a fantastic journey to this stage.

Let’s really start to get into some of the research and the findings and where are we now or where do we need to go, how much additional work there is to do, like you said. There is so much more research to do in this space. So, let’s get into the current state.

There are three quarters or a billion women globally that are not included in the formal financial sector. That’s a large number. Not including women in the formal economy ultimately limits countries’ economic growth, development. There’s a business case for including women in the economy.

Essentially, money is left on the table when women aren’t enabled to open accounts, to save, to borrow, to invest, and ultimately thrive. This alone should be a motivator, right, sufficient motivator for public and private sector players to jump at the opportunity to better serve women. But we know that the gender gap persists.

It’s improved and we see some of that in the research, but we’re not seeing the sense of urgency that addressing it further and closing it ultimately merits. So let’s start with what the research says currently about why this gender gap in access and digital financial services persists.

Sonja Kelly: Yeah, it is stunning that we haven’t solved this yet. I kind of thought the business case would take over because there is such a compelling business case to engage women customers. And you mentioned three quarters of a billion women are not included in the formal financial sector. Let’s just look at the data behind that.

That is actually, three quarters of a billion women do not have a bank account in their name. An additional one quarter of a billion women do have an account, but they haven’t even used it in the past year. That is a billion women that don’t have adequate financial services. And the number of women who aren’t accessing payments instruments is even higher than that. When we talk about financial exclusion, three quarters of a billion is actually a pretty conservative number.

We can even look at specific use cases for example, women in climate vulnerable countries. There’s this database of climate vulnerable countries at Notre Dame, and we looked only at climate vulnerable countries, and we found that in total there are 880 million women in climate vulnerable countries who would have no way to receive an emergency relief payment after a natural disaster.

Governments aren’t pulling up trucks or lorries to places that are flood affected and handing out cash. There’s just no way to do that. The only way they can solve for people’s financial vulnerability after a climate emergency is through digital payments, and 880 million women in the world don’t have any way to receive an emergency relief payment because they haven’t used a payment device in the past.

You mentioned the gender gap, which I think is interesting. I actually don’t love looking at the gender gap. I love instead to look at the overall addressable women’s market and impact because for Women’s World Banking, our goal is not that women would catch up to men’s inclusion but instead that all women would have financial services that work to meet their needs very simply.

Like you said, huge, huge business case. Women make up an estimated 70 to 80% of household consumption decisions, like they’re the ones leading those household consumption decisions. But funny enough, they aren’t thought of as early adopters. Let me tell you a quick anecdote. I was sharing a taxi with a founder of a digital credit company over 10 years ago, and I said to him, So tell me about your customers. And he said, Well, they’re young urban men. They have smartphones. I was like, oh, that’s really interesting. Uh?

Joanna Wisniecka: Yeah. How about the 50% remaining?

Sonja Kelly: Exactly. Where are the women? When are they going to be your customers? And he said, Oh, well, women aren’t early adopters. We’re trying to address the early adopters, and that’s young urban men that have smartphones.

He’s leaving out an entire huge part of the market. And I’m not going to say the name of this company, but I will say that it has grown to offer services to women as they’ve continued to grow, which is really good news. But it’s funny that that business case kind of has to be proven.

I will also say that there are kind of competing business cases. And this is terrible, but when you present the business case for women customers to a financial institution, they’re kind of pitting women customers against rural customers and customers with disabilities and accounts for children. And so it’s funny that they’re weighing all of these different vulnerabilities instead of saying, how can we get to new markets?

Because really financial institutions are not yet competing with each other. I love that you had the conversation with Michael Wiegand about competition. I think it’s really important. But when it comes to people who are excluded, financial institutions are competing with money under the mattress. They’re competing with assets stored in livestock. They’re competing with the informal savings instruments and informal loans that people are getting. And so they have to kind of adopt that mindset of I’m not competing with the financial institution down the road. We should all be going after this very low hanging fruit market share. So that’s the business case.

I’m going to name three other barriers. It’s a bit of a long-winded answer.

Joanna Wisniecka: I mean, I have tons of follow up questions. This is great.

Sonja Kelly: Awesome.

Joanna Wisniecka: You’re setting me up well.

Sonja Kelly: That’s great. The second is connectivity issues, especially for digital payments. We rely on people to have access to a personal technology device that is connected to the internet and only 63% of women, two thirds of women, in the world use mobile internet. And actually adoption has slowed. So the trend line is not going up anymore. It’s kind of plateauing, which is a problem.

I mentioned personal technology, that’s the third one. Personal technology prices have been going down, but personal technology, there’s a necessity to have a well-functioning phone and 400 million women still do not even own a mobile phone, like they’re borrowing from somebody else. So no way are they going to put their financial service on that phone that they’re sharing with someone else.

And then, finally, related, is digital financial capability. I sat with this woman in Indonesia in her orange grove in a rural area, and I thought like, Ok, this woman probably doesn’t have a phone, probably doesn’t have connectivity. But she pulled out her phone out of her clothes and she showed me like, Oh yeah, I have a smartphone and it’s connected to the internet. She’s got 5G connectivity.

And I was so excited. What do you do on your phone? Like, show me what you do. She said, Oh, well this is how I talk to my doctor. This is the app I use when I talk to my doctor. She’s showing it up and she’s pointing to it and she does video chatting with her doctor. This is the app I use to communicate with my daughter who’s at school in the city. And I said, Oh, well what about your bank or your payments? Like how do you pay people? Or, do you have your bank on your? Oh yeah, I have the app there, but I’ve never used it. I’m like, Why, why haven’t you ever used it? She said, Oh, well, like for the doctor and for my messaging app where I text my daughter, I can ask my nephew for help with that, but I don’t want to ask him for help with my financial services.

So this woman has low digital financial capability and she doesn’t know how to raise it and she can’t go to the source that she used to solve her digital literacy issues. And so that low digital financial capability ends up being a huge barrier even when we do see connectivity and personal technology solved. So those are just a few of the barriers that I’ve been thinking about recently. And again, really surprised we’re still having this conversation.

Joanna Wisniecka: Yeah. And Sonja, how do you react also to, there’s innovation and change happening so quickly now. So let’s even take AI. Without smartphone, right, in your hand with innovation that’s happening on the AI side, how do you make sure that not only we address the existing barriers, but potentially new barriers that expand even further because there are still so many women that don’t even have access to a smartphone. How are you thinking about this to make sure that all this good stuff that is happening, that potentially can bring benefits to all, doesn’t actually put women even further behind because of some of the existing capacity, capability issues they’re already facing?

Sonja Kelly: I love this question because it’s such a tricky one to answer because you actually can’t say, Let’s slow technology down until women can catch up. That would be completely impractical and it’s just not going to happen, and unfair as well to the people who are benefiting from new technology. But I think there are ways that we build in inclusion by design from the outset.

So with AI, for example, the person I mentioned who only had urban male clients. As rural women clients start using it, are they thinking about the data that’s being used to go into their algorithm to decide who is credit worthy? Are they thinking about rebalancing the data now that they have data on rural women who, for example, might spend more time at home than at their business location than an urban man would, which is a factor that can be used to evaluate credit worthiness? Building in checks and balances into the model to make sure it’s representative of the people it’s designed for are really important.

I think also your point about women kind of naturally being left behind is really critical. Because if they don’t have connectivity, if they don’t have a smartphone, they have a lower data footprint. And having a lower data footprint is a disadvantage in a world where data opens up possibilities. But there are kinds of data that you can get on people that are not their personal data.

So for example, Women’s World Banking has been working with Kaleidofin in India, which is a credit scoring company to use climate data, micro level climate data, that’s publicly available in order to reassess people’s vulnerability with that lens in mind. Like, are they going to see a monsoon in the next few months? Does that change their credit worthiness? And also does that change how a financial institution might be able to contribute to their resilience?

Could they restructure a loan or structure it differently so that the repayment period isn’t during monsoon season? Could they add some kind of a resilience payment during the monsoon season? And that is not somebody’s personal data, like generated by a phone, it’s just new data that is publicly available that we can use to predict things.

And so I think there are a lot of ways that innovation is increasing inclusion, we just have to make sure that we keep asking these hard questions so that along the way we’re not unintentionally creating new exclusion.

Joanna Wisniecka: Mm-hmm. And the business case, going back to your original point there, I mean, that is just so essential. And maybe, can you point to some actions that either Women’s World Banking or others in this community have taken where they’ve been able to convince providers that, Look, this is here. And not just convince them, not just get head nods, but actually lead them to take action. You mentioned one provider.

What are some of those things? What are the really key things that you would point to that like helps them to get it?

Sonja Kelly: Yeah, I think the most classic one that we have been using for years, and lenders are really only just starting to pay attention, but women borrowers are more likely to repay. And they’re 20%, this is a financial institution we just worked with recently and I can’t tell you the name of it, but I will say women are 20% less likely to sell assets to repay loans compared to those without credit. Figures like that are really important.

We also can share what we call the customer lifetime value. This is a figure that Women’s World Banking calculates for every single product that we help to build. We look at the customer lifetime engagement with the financial services institution. So not just the individual financial service that is the entry point for them, which in all honesty is usually like a lower value than an entry point for say, an urban man.

But when you look at the customer lifetime value, we know that women are more likely to be loyal. Women are more likely to recommend a product to a friend than men are, even if they’re just as satisfied, the woman and the man. If a woman has a really good experience with the financial institution, they refer the product to a friend. People who are referred to are more likely to be sticky customers than those who just come in from like the generic marketing materials.

And so for all of these reasons, it’s really smart to be focusing on women customers, but again, somehow that hasn’t translated into mass excitement and enthusiasm for women customers. I really look forward to the day when we’re just talking about the fact that there are way too many financial institutions and way too few women customers to engage.

And then I think we’re going to see, Michael talks about competition really driving down prices, really increasing the physical access for people. And that’ll be an exciting moment.

Joanna Wisniecka: Yeah. From the start of this conversation, we’ve said, what’s good for women, what we want to see for women, but let’s acknowledge not all women have the same financial services needs, right, just like not all men end users do. Women business owners, for example, have really unique needs, and even there, they range between micro merchants, which in some ways might look almost like individual consumer needs to a woman entrepreneur with employees.

I recently reread a post by your president and CEO Mary Ellen Iskenderian, which notes that nearly 20% of working age women in developing economies are entrepreneurs. She also cited that it’s estimated that if women and men participated equally as entrepreneurs, global GDP could rise by up to 60% boosting the global economy by 2.5 to 5 trillion US dollars annually. That’s a huge number. Again, these numbers are massive. The opportunities here are massive.

So let’s laser in a little bit on women entrepreneurs and specific women business needs. Certainly credit is a need for both consumers and businesses, and maybe a little bit also from a payments perspective too. How are some financial services providers effectively responding to women entrepreneurs’ needs, and what can others do to tap into this huge, huge opportunity?

Sonja Kelly: This is an important issue because financial institutions are always designing for someone, whether they know it or not. So sometimes we talk with financial institutions and they say, Oh no, we’re gender blind or we don’t see gender in our, when we design our products. And so we don’t need women centered design, or we don’t need to design for women entrepreneurs specifically because we’re designed for everyone.

But that’s just not the case. We know that different people have different financial needs and different products are going to meet those needs very naturally. In terms of women entrepreneurs, women are time poor. All entrepreneurs are time poor. Women entrepreneurs are especially time poor because they spend on average two and a half more hours per day on dependent care labor at home than do men. And so they’re working at their businesses just as hard as men entrepreneurs are, but they’re working at home even harder than men are. They need a way to have financial services that are fast. They only want to engage with people at those like critical moments.

Honestly, the model we had 20 years ago of finance where we would bring together people in a group setting, and we would spend an hour working on collecting the loan payments, and we just thought, Oh, women love hanging out together. Women entrepreneurs don’t want to just hang out. They want to be at their business location. And so they want really good onboarding from a human, hopefully. They want that digital financial capability piece that I mentioned, the woman in Indonesia that I talked with. And then they just want to be able to do it themselves.

So we’re working right now on a project in India with women entrepreneurs who have small shops, they just want to be able to put up the QR code for the payment on their shop. They want their customers to come and just pay them. They don’t want to have to go to weekly trainings or whatever. They also want a human to talk to when something goes wrong. They don’t want to talk to a robot or AI, they want to talk to a human when something goes wrong.

And if they don’t, they’re very concerned that they’re not going to get their money back. They’re really afraid they’re going to make a decision and it’s going to have huge financial consequences in part because women are more likely to talk to one another. And so women are more likely to hear like, Oh, this thing happened in the next town over and the woman never got her money back. Negative rumors go a long way.

Women also want safety. I’ll give you an example of women entrepreneurs in both India and Indonesia. When they’re interacting on e-commerce platforms, they are engaging with their customers very boldly. They’re negotiating price on the platform. They’re doing all of these things on the platform, on the e-commerce platform. And then when it comes to the actual item changing hands from the woman, entrepreneur to the buyer, moving from the digital platform to the physical, very often they have to work with a delivery person or a man in their family in order to get that item to somebody.

And they don’t want a man or anyone to come to their house and collect it. They really value and want safety. And it’s funny because digital payments really solves that safety issue. If they’re not needing to take physical money from somebody, they can keep that in their zone on the app where they’re engaging. But it’s not something that women have adopted in a big way on the e-commerce platforms. And I’m looking, I’m watching that space because I know it’s just going to blow up because of women’s needs.

I’ll just share one more and that is women are less likely to speak the dominant language if they live in a rural area. And they’re also less likely to be literate than are men. You and I have even talked, had conversations about interfaces and digital payment interfaces, and it might mean investing in making the digital payment interface in a local language. It might mean using pictures alongside of numbers, like using icons so that they’re not numeracy literate, they can follow the pictures.

And like I said, they’re less likely to have a smartphone, so maybe still use a feature phone interface. Those are just some design principles that would help women entrepreneurs to be more likely to become those early adopters.

Joanna Wisniecka: When I hear you talk about some of these, the design elements, better onboarding, more safety. To me, it sounds like all of these things implemented would also be better for men. So designing for women seems to make better products overall, right? Which kind of turns that, we’re designing things to be neutral, really literally questions that assumption. There are deliberate choices that can be made to be aware of the design needs for women to make products better for all.

Sonja Kelly: Yeah. Yeah, absolutely. I’d love to share a story about a research effort we had in Indonesia where we were trying to understand savings, and we asked this very classic question, do you save money in gold or jewelry? And you, Joanna, you’ve traveled all over the world. You know that in many places in the world, people buy gold or jewelry, and that’s one of their asset-based savings strategies.

It’s a great strategy because it cannot be broken up and it’s less liquid so it’s not tempting to use it unless you have an emergency. So we asked a question in Indonesia, do you save in gold or jewelry? And this woman we were talking with said, Yeah, I do. And I said, Oh, I know what this is. I’ve been to many other places in the world.

And I said, where do you keep your jewelry? Do you wear it? Do you keep it at home? Do you give it to somebody in your family? Oh, no, no, I don’t have my jewelry. I keep it at the jewelry store. And I was like, Okay, this I’m not familiar with, walk me through this. She said, I go to the jewelry store, I give the jewelry store owner my money. I say I want that piece of jewelry.

And the jewelry store owner, he puts it into a locker with my name on it. And he keeps it there for me. And I said, Okay, so you don’t actually have the jewelry, it just sits at the, what happens when you want the money back?

And she said, Oh, well then I just go back to the jewelry store and I sell the jewelry, less the fee, he takes a fee, I sell it back to the jeweler, and then he gives me the money. And I was like, You have literally reinvented a savings account. This is what a gold-backed savings account literally is.

I was like, Why? you know what financial services are. Why aren’t you putting your money in a bank account? She said, Oh, well, when my husband comes to me and says, Do you have any money I could use? I can say, No, I don’t have any money. She’s so savvy. She wants to have an asset. She doesn’t want to have money, she doesn’t want it to be liquid.

She also doesn’t want it to be visible. She wants to have privacy. And that’s one thing we find about women is they’re more likely to want privacy. Guess who else likes all of these things? Like you said, men. Men like privacy. They like security. They want to know the money’s there. They also want to make their own choices.

And so it’s a really good example of how designing for women would make the product so much more specific so that it is useful for everyone. And so to a financial institution, I can give that example and I can say, Why don’t you consider a commitment based savings account where there’s a big fee for taking out money? Or like it’s not allowed to take out money before the end of the time is up or something along those lines. Then you can actually compete with the jewelry store and women get that need or preference met.

And it’s not just financial services. We can think also of spaces like health and safety regulation. Up until a few years ago, crash dummies were mandated to be a certain height, a certain weight, a certain build, and guess what? It was a male height, weight, and build. All of the crash dummies all over the world. And so when they were testing the safety of cars, they were using male bodies. And it was literally like about a decade ago when somebody said, Hang on, women are more likely to get hurt in car crashes. That’s so interesting. I wonder if it has to do with the crash dummy.

And so now you have to test the safety of cars with both man’s and women’s bodies, and it has reduced the injuries that women have had as a result of car crashes. This isn’t about designing for women because it’s the right thing to do and we just really love women and we think they’re so worthy of financial services. It’s because we’re designing for women because it’s smart and it creates new markets for financial institutions and designing for women actually ends up benefiting everybody.

Joanna Wisniecka: Yeah, absolutely. Again, 50% of the population, right, and more in certain places. You highlighted also safety and trust. And that’s certainly a need for both men and women. There’s research out there that suggests women may be more likely to not use financial services, or account, payments after they experience an event of fraud, in particular, that includes losing funds and never getting those funds back. And so preventing fraud is good for all. It’s even more important for women because once you’ve acquired those customers, you certainly don’t want to lose them.

This is so important, both from a public policy maker perspective, lots of action being taken there, and especially in the context of instant payments where that loss of funds could be faster, also some really interesting ways and risk mitigation techniques that are being put in place, and from a private sector perspective, right? Preventing a loss of funds from private providers.

Have you seen some interesting, good, exemplary approaches that have been taken and let’s talk about both public and private sector to preventing fraud and other consumer harm.

Sonja Kelly: And this is one where we’ve seen a lot of progress over the last few years. I’ll give you an example. I was at a closed door round table a few years ago, and there was a policymaker who was asked this question about fraud and scams. And in his market, there were things like women falling for fake digital credit companies, like on the app store, on their phones, getting a small loan. And then it being basically like a digital loan shark loan, like charged huge exorbitant interest rates.

And then because of the permissions they had to give the company before they access the loan, there were companies that were getting hold of women’s photos and putting them on pornographic images, like they got the photo from the camera roll because you accept the terms and conditions and you never read them.

It’s like, We have access to your photos, and then they would put it on a pornographic image, send it to her and say, If you don’t repay your loan, I’m going to send this to everybody in your contact list, which is another permission that she would give when she downloaded the app.

So this was, I think, about five years ago, I was in a closed door round table, this was brought up and the regulator said, We’re working with law enforcement on this. This is a law enforcement issue. I’m not hearing that at all today. I’m not hearing that at all. I’m hearing that fraud and scams is such a systemic issue that the financial sector policy makers and regulators and the private sector cannot ignore it, which is really great that there’s this burden of responsibility that financial sector regulators and the private sector feel.

I just heard a couple weeks ago, and I need to confirm this, but I just heard that in Vietnam, 90% of scams are against women and only 10% of scams are against men. Which, when I think about my own experience with members of my family, I think women are more likely to be targeted for social scams just because they are engaging in more social activity.

So, like you said, preventing fraud and scams is everybody’s job. And also having redress mechanisms. I’ll give a few examples of companies like startups that I know of that are doing this. There’s one called BioCatch that looks at the biomarkers of a real human that’s trying to access financial services, just so they’re not getting bots that are connecting to their systems. So they see how long a person spends on a page, where the mouse goes, and they’re able to try to catch people before they even enter the system, so that’s good.

There’s another company called Scam Ranger in the US where you can, and I was saying I really need this for my parents actually, where you can take a screenshot or a copy paste the text from any app that you’re using and put it into Scam Ranger and it’ll tell you if it’s likely to be a scam.

So my mom just got a text a couple weeks ago that said, Hi, mom, it’s me. I dropped my phone in the toilet. I’m messaging you on a friend’s phone. Can you send me some money? And she called me and she was like, I’m so sorry you dropped your phone. And I was like, Mom, you’re talking to me on my phone. And she was like, Oh, I didn’t even think of that.

She almost fell for it. She almost wired money to somebody because of the phone. And she hadn’t even thought about it. So these kinds of innovations are really important. They’re also saving financial institutions money because tracking down fraud and scams is so expensive for financial institutions all over the world. So these kinds of innovations are helping financial institutions to reduce the incidents of fraud and scams.

I’ll also say as well, there are a lot of great public sector approaches that are being used like increasing digital financial capability to actually avoid those fraud and scams in the first place. I’ve heard of financial sector regulators that are partnering with media companies and trying to insert storylines into soap operas and common narratives that help people connect with characters that are doing something stupid and learn from them. And this is something we saw like a decade ago when it came to overindebtedness.

Like in South Africa, there was a really common soap opera called Scandal. And this woman was overindebted and there was a whole storyline, like multiple episodes about it. And policymakers are starting to kind of use similar techniques to try to increase digital financial capability.

And really there is a recognition that, as you said, there are about a billion women who have inadequate financial services today. Those women, when they come into the financial services system, like when they get a product, they’re entering a totally different world than you and I entered decades ago. Decades ago, we didn’t have really sophisticated social scammers that we had to think about. We didn’t even have passwords that we had to protect.

Joanna Wisniecka: And now passwords are everywhere.

Sonja Kelly: Now they’re everywhere. Yeah. And two factor authentication. And there are all of these things that are meant to keep us safe, but are also really confusing. And so for those women who are just entering the financial system at the first time, we have to be thinking about them when we think about solutions, not about ourselves.

Which I think is important, again, to designing with a specific person or a specific persona in mind.

Joanna Wisniecka: Yeah. Are you seeing financial providers begin to think about dealing with scams and fraud, not just as risk mitigation, right, it’s not just money that they have to spend in order to mitigate something that’s bad, but also think about it as a value proposition. If they do this really, really well, they can attract more customers, whether it’s women or men. Are you seeing any of that transition happening?

Sonja Kelly: I’d like to see that. I think it would be such a winning, maybe this is the outcome of this podcast episode. Dear Financial Service Providers, pay attention. Because if somebody said to me, We’re going to keep you safe. That would be huge. That would be huge motivation for me.

One of the challenges is there hasn’t really been any financial services providers that have demonstrated a great track record here. And so nobody can yet say, We’re keeping you safe. Because all of them have had breaches, have had cybersecurity issues, and the social scams are so hard for financial institutions to combat. Social scams, you’re using the financial tools that they built, but for nefarious purposes. But you’re not using them wrongly, they are being used in the way they were designed to be used.

And so, yeah, I agree with you though. Honestly, if a financial service provider said to me, We’re going to keep you safe.

Joanna Wisniecka: Yeah.

Sonja Kelly: I would recommend them to many people. I would use them myself. I would be thinking about, like I said, my parents who are more vulnerable to scams and fraud, and be setting them up with that.

And so, maybe that’s something we do after we retire, Joanna, we go into business together and do that.

Joanna Wisniecka: I really hope that, I still have a few years towards retirement, I hope this happens sooner than that.

Sonja Kelly: That’s true. That’s true.

Joanna Wisniecka: But let’s look forward too in other developments that are happening and is it the digital currencies transition and potentially new ways of dealing with money, does that offer some opportunities to break through some of these women’s barriers?

You wrote an opinion piece in the American Banker somewhere recently noting that, while nearly every central bank globally is experimenting with Central Bank Digital Currencies and stable coins is certainly a hot topic and they mentioned greater financial inclusion as one of the goals, that they are not sufficiently considering the needs of women in the design of these currencies.

So, are we making these innovations but then replicating some of the challenges that we have in our current payments and financial systems? So what can central banks do, central banks and others to be more deliberate in their design? And do you share the same concerns with other innovations like AI? We touched on AI a little bit. So yeah. How do you think about this?

Sonja Kelly: Yeah, so I think the figure is that almost 200 central banks or monetary authorities are considering or experimenting with Central Bank Digital Currencies. So this is something, this is another thing, we cannot ignore it. It is happening. The uptake is really going to be determined by consumer demand.

Though that’s why I’m a little less concerned, I guess, about Central Bank Digital Currencies than I am about technologies like AI, which is going to move forward whether there’s- the demand is not coming from the consumers, the demand is more coming from the industry.

But this, I feel like is kind of the story of the Emperor’s New Clothes. That fairytale where there’s an emperor and he’s looking in the mirror and saying like, Look at my beautiful clothes. This designer that puts some fake clothes on him, and everybody around him is like, Oh wow, it’s so beautiful. And then there’s this kid who’s like, He is naked. I kind of feel like that was Central Bank digital currencies. Like there’s just so much interest and excitement around it and truly there is a lot of potential there. And I really do feel like Central Bank Digital Currencies will be a big part of our future. Like how can they not, when in the US the penny takes something like four or five times more to manufacture it than it’s actually worth? Central Bank Digital Currencies have to work in our future.

And what you said is absolutely accurate. In so many of the prospectuses of these currencies, they mention financial inclusion and especially financial inclusion for women as one of the goals. But for this to work for women’s financial inclusion when it comes to actual implementation, governments seem to be falling prey to many of the challenges we’ve already discussed.

So, one is lack of trust. People have to trust Central Bank Digital Currencies like they would cash. They have to trust that it’s going to be there when they need it. When your phone is not connected to the internet because you’re in a rural area, your digital currency still has to be available and accessible to you.

It also has to have a high degree of privacy. One of the reasons people use cash is they don’t want to be tracked. It’s something we don’t like to talk about, but it is true. Business owners want to operate in cash because they don’t want to pay the extra fees associated with not operating in cash or they don’t want to pay taxes sometimes and if that becomes a barrier to their accessing financial services, it’s really a problem.

CBDC also have to be accessible. They have to work on every phone. When something goes wrong, people need to be able to get their money back. So what happens if they lose their phone, if they lose their SIM card? They have to have high confidence that they could recover that money.

And then finally, governments aren’t usually direct to consumer institutions. They’re not great at that, like the customer service piece. Everybody has a story of engaging with a government and having poor customer service. And so I think there’s more hope now that there’s a retail CBDC model where governments work directly with financial services providers. Those are delivered through banks and then can use the bank’s designed channels. So I have more hope in retail CBDC than I do in government issued CBDC that are direct to consumer. There’s a lot of work still to be done there.

Joanna Wisniecka: Yeah, yeah. We’re going to be dealing with the same barriers no matter what the solution is, and just being really thoughtful about what problems you’re resolving and what those barriers are for women in particular, just has to be a really focused, deliberate process.

And indeed lots of more work to do. So from a Women’s World Banking perspective, what are some of the highest priorities on your research agenda in the near term before you discover additional ones as you continue to do that work?

Sonja Kelly: One is this piece that is new tech that we’ve kind of touched on. We’re really leaning into exploring AI for women’s financial inclusion, like not just the risks of AI, but more importantly like opportunities and the benefits. Then also cryptocurrency is something I’m really thinking a lot about with the rise in cryptocurrency and looking at how women are using it.

Women seem to be using cryptocurrency more and more as a store of value. I wouldn’t say as like a payment device, but as a store of value. Like in the same way they might use gold or jewelry, like it’s an illiquid asset that’s over there that they don’t have to think about and they wouldn’t necessarily be tempted to use. That’s a space that we’re paying attention to.

The other thing is, that I’m really paying attention to is intimate partner violence. A few years ago, intimate partner violence really spiked in part because people were at home a lot during COVID. And I think taking the lens of what women need in their lives, or what women’s biggest pain points are in their lives, and then saying, How can financial services help her to get there, is a really important dialogue we need to be having as an industry because it considers the whole person and not just their financial life. Nobody wakes up in the morning and says, wow, I can’t wait to engage with my bank today. I just love my bank so much. I can’t wait to send money today.

Joanna Wisniecka: Except maybe some of us payments nerds.

Sonja Kelly: That’s true. Maybe you and I are different. But there are real needs that women have. For example, I need to access my money so I can leave an unsafe situation. Something like one out of every two women in the world has some kind of violence against them at some point in their life. And do you know what money’s really helpful for? Is helping people to be able to make choices. Like if a woman has money, she can make a choice to leave if she needs to. And so I’m thinking a lot about those biggest pain points of a woman’s life and how financial services help her with that.

So if a woman had a payment instrument set up. She might be able to receive an emergency relief payment from a family member who’s far away when she says, I think I need to leave. Can you help me? And somebody could send a payment to her and make it possible for her to leave. She could go to her bank and say, I need to withdraw all my money, please. I need to get out of this situation. That’s something I’m really leaning into.

And like we said, I don’t want to just end on that note because I think that makes it sound like it’s kind of a social good, but instead, I want to come back to the beginning of our conversation, which was focused on the business case. And in 99% of cases of intimate partner violence, there’s also financial abuse and financial abuse has a really significant economic cost.

In Australia, it’s estimated at $5.7 billion for victims, like the cost to victims of financial abuse. And this could be like somebody misusing somebody else’s savings. It could be somebody applying for a loan on behalf of somebody else. It also costs an additional 5.2 billion for the broader economy. So it’s not just limited to the victims or survivors of financial abuse. It’s like the broader financial system. So there is a business case to solving some of these problems and there are massive financial implications.

So we’re not just talking about women exiting an unsafe situation, we’re talking about a more stable financial system as well, which is a really nice byproduct. And again, a good way to remind financial institutions that the work they’re doing is both solving their business case and their business needs, and also a pain point for a woman customer.

Joanna Wisniecka: Well, this has been such a wonderful conversation. I really hope that we’ll have some financial service providers hear some of the really insightful, helpful, very practical, very tangible ways in which they can tap into the opportunities and needs that are here in this space.

And I will very much look forward to continuing our conversation as you do this additional deep research and as we’re seeing the innovations and in AI and digital currencies. So I know this will not be the end of our conversation. We’ll continue it. Thank you so much, Sonja. Thank you for spending the time with us on this episode.

Again, really look forward to collaborating with you in the future, so thanks very much.

Sonja Kelly: Thanks, Joanna. Thanks for having me.

Joanna Wisniecka: And thank you to all of you listening. We hope this episode in this series has shined some light on what’s happening and why in payments aspects of financial inclusion and beyond. And stay tuned for more on this topic in the future.

Thanks for joining us, and until next time, bye for now.