New research by Caribou Digital and the DFS Lab predicts implementation of the Level One Principles will benefit women and help close the gender gap

We are happy to announce the release of a body of research investigating the link between the L1P principles for payment system design and women’s access to financial services.

The gender gap in financial inclusion is stubborn. Between 2011 and 2017, the world saw strong progress which brought 1.2 billion people into the global financial system for the first time. But, the gap between the proportion of men and women who had an account with a financial institution in low- and middle-income markets stayed stuck at 9 percentage points. Why, despite the reduction of financial inclusion barriers overall, do so many women remain outside the formal financial system? What barriers exclude them in greater numbers than men? Is it culture? Institutions? Or a failure on the part of financial providers to design products that interest them? A good deal of research and product market experimentation has tried to address these questions—with only mixed results.

This new body of research—funded by the Bill and Melinda Gates Foundation—explores this phenomenon from a different angle. Can better digital payment system design create the conditions for more women to use digital financial tools?

At first blush, this question may seem out of place. Why would we expect to see some underlying gender bias in the choice between real-time transfers and T+1 settlements or between interoperable and closed-loop systems? While these highly technical choices seem far removed from women’s daily lives, the research indicates that better payment system design can create a financial system that is more open and accessible and, by doing so, creates the conditions for more women to use the system.

We worked with our partners at Caribou Digital and the DFS Lab to conduct research into this question. Their primary aim was to examine the L1P principles for their potential impact on the financial inclusion gender gap through in-depth research consisting of three complementary approaches: (1) qualitative focus group discussions and in- depth interviews with hundreds of women and men in Kenya and Côte d’Ivoire; (2) quantitative population-level data collection and analyses in five countries (Côte d’Ivoire, Bangladesh, Kenya, Nigeria, South Africa); and (3) a global literature review supplemented by a series of expert interviews. The aim was to predict the likely impact of L1P Principles, and payment system design choices more broadly, on relevant gender gaps.

Generally, the analysis predicts that adoption of an L1P system will have positive benefits for women relative to the typical digital payments system. The research shows how women’s exclusion is driven by structural-cultural and socio-economic issues. Such issues include the fact that many societies invest less in building women’s knowledge and trust of financial products. Also, the fact that women are more often budget and time constrained than men and thus more sensitive to cost and time barriers, and they face more specific structural barriers, like owning lower-end phones or lacking necessary ID documents. Better payment system design features and policies can help address these barriers.

Read the final report and other supporting pieces here: www.leveloneproject.org/projectguide/gender-impact