Women make up 40 percent of the world’s workforce. Many of the sectors that are critical for economic growth in some of the poorest countries rely heavily on women. Small and medium-sized enterprises (SMEs) with female ownership represent 30 percent to 37 percent of all SMEs in emerging markets.

Women disproportionately face financial access barriers that prevent them from participating in the economy and from improving their lives. Access to credit can open up economic opportunities for women, and bank accounts can be a gateway to the use of additional financial services. However, women entrepreneurs and employers face significantly greater challenges than men in gaining access to financial services.

When credit recording institutions do not include small loans or transactional histories, such as those from microfinance institutions, retailers, mobile network providers and utility companies, there is less information available for customers to build up a credit score. This may disproportionately affect women who are often the predominant client base of microfinance institutions and transact in small but frequent amounts.

There is a potential interim role for digital financial services in reaching unbanked women. Where women are unable to physically travel to bank branches, being able to receive and send funds using a mobile phone provides them with a means to be able to transact. If women lack the ability to build a credit score through the formal financial system but have a history of transacting digitally, products like M-Shwari are able to use a customer’s Safaricom phone and M-PESA usage patterns to demonstrate creditworthiness for small loans. Digital products also provide some privacy and control over personal finances – the lack of which may partially explain why women are unwilling to sign up for bank accounts at financial institutions, even when they are legally entitled to do so.

The fact that many emerging markets financial institutions have yet to develop sustainable strategies to address this significant market gap represents a missed opportunity and constrains private sector development.