Welcome to our #119 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we spotlight our podcast interview with Mary Ellen Iskenderian, who is President and CEO of Women's World Banking, a global non-profit devoted to giving more low-income women access to financial tools and resources they need for both security and prosperity.
Because we cover so many important topics about women’s wealth, financial inclusion and how financial services can serve the female customer better, we have published a short extract from the interview in this week’s newsletter.
Listen here for the full interview.
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And you can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
Until next week,
Jana
Women’s financial inclusion and why it matters
Mary Ellen Iskenderian talks about women’s financial inclusion and how the financial services industry can serve the female customer better
We recently interviewed Mary Ellen Iskenderian on The Purse Podcast.
Mary Ellen is President and CEO of Women's World Banking, a global non-profit devoted to giving more low-income women access to financial tools and resources they need for both security and prosperity.
Prior to Women’s World Banking, Mary Ellen worked for 17 years at the International Finance Corporation, the private sector arm of the World Bank.
Mary Ellen recently published her new book: There’s Nothing Micro About a Billion Women: making finance work better for women.
We talk about (including) Mary Ellen’s new book, women’s lived experience as it relates to money and power, financial inclusion, how big the opportunity is and what banking institutions need to do to serve the female customer better.
The below is a short extract from the interview.*
*Question: how would you describe women's lived experience as it relates to money and power in today's world? And what's working well and what's not working so well for women?
Mary Ellen’s response:
I immediately think of a piece of work that the World Economic Forum publishes every year on gender gaps.
And they look at what is the gender gap in 193 countries; it is pretty much around the world. And in terms of access to health, access to education, the gap is on the whole quite small, and we're nearly there.
I think there have been some gaps that opened up during COVID, but in relative terms, much progress, much smaller gaps.
But it's when you get to things like economic participation and political participation. …it's just stunning when they say it will take 270 years to close this gap at the current rate of change.
At some level that's all you need to know; that if we are so far away from getting to where power really lies, that probably speaks to how important access to finance is.
And perhaps why it's so difficult for women to reach parity.
I think in terms of lived experience, which at the end of the day, really is the most important, in many countries- there are some fairly restrictive, social and cultural norms that make it particularly hard to close those gaps.
Because digital technology (which has been a total game changer for the delivery of financial services to low income people, to people who are very remote)…
…getting that cell phone in their hands, a smartphone, ideally (internet-enabled), has made an enormous difference in reaching people with financial services.
But in countries that have real restrictions around allowing women's ownership of that technology, it's quite difficult to make that kind of change.
If there is a silver lining or maybe a slightly sparkly lining of COVID, it would be that so many services, so many private sector and government services have been brought online.
So much of COVID relief was made digitally. And you saw women taking up that technology, getting access to those COVID relief payments.
It took that crisis to sort of blow through some of those social and cultural norms. India made their first round of COVID relief payments, only payable to women and only digitally.
And so you saw the country that has the largest gender gap in mobile phone ownership, in the first three weeks of the pandemic: 25m new accounts were opened digitally, primarily for women, so that they could take advantage of the receiving that COVID relief payment.
So I think for us now, the really exciting part: women are formally or by all of the technical definitions, included in the formal system by virtue of having a mobile money account or a bank account opened.
How do we make sure we keep them included?
We design products they want, or the ones that they will use, that they feel confident enough and that we have given them enough instruction in how to use the product; how to navigate the cell phone in order to really take advantage of this ‘lift’ in digital and financial access that COVID has presented.
Question: can you explain what financial inclusion is and how it specifically relates to the female market?
Mary Ellen’s response:
The very formal definition by the World Bank, the IMF, by regulators around the world of being financially included, implies that you have a bank account or now a mobile money account in your own name.
But as you and your listeners can appreciate- just having those things… could hardly really be about what being included in the financial system should consist of.
We really think at Women's World Banking (and this is the case that I make throughout the book), that having access to an affordable way to make payments and to send money to relatives is an essential part of inclusion.
Having a safe place to save and that is an enormously important piece of this inclusion puzzle.
Certainly having access to the ability to borrow is not a sufficient reason, but it definitely goes into that list of things that one needs the ability to borrow, to make a large purchase.
Or if you see an opportunity in your personal life or your business life to be able to get the funds together to take advantage of that opportunity is key.
And then the last piece, and I think it's often forgotten: products like insurance to manage risks and mitigate risks so that a family doesn't lose everything they've built because of natural disaster or the illness of the breadwinner.
So having that full suite of products is so critical. And then I think we push it a little bit further to say having the knowledge and confidence to use those products.
And to navigate the technology that you might need to use those products to their full extent is an increasingly important part of inclusion, as so much of our financial lives moves into the digital world.
And then lastly, I personally feel very strongly that inclusion also implies that you're treated with a certain amount of dignity; that you are not preyed upon and subject to use the various interest rates or predatory collection processes for a loan or banking fees, that you weren't necessarily told about or that you didn't understand; that you're treated as a valued customer and so inclusive.
So the definition.. really does imply joining the community as a valued member of the formal economy.
Question: Now, if you had to quantify the cost of financial exclusion of women, how would you do that? And how big is this opportunity from both the societal and business perspective? Because this is significant.
Mary Ellen’s response:
And that's one of the most exciting parts of the recent research, and was a real driver for me in writing the book, that it used to make me a little crazy (when I first got involved with Women's World Banking)…
…how many people would really double down on the use of the word ‘micro’ and not see how these very small loans, albeit that millions and millions of people, could not see the macro implications of that.
And so it's been really gratifying to see, no one less than the IMF and the World Bank, and a whole range of research organisations, in country themselves say, no, not at all.
Financial inclusion is to use an IMF term, ‘macro critical’ and bringing the most excluded people into the formal system is really the only way that we're going to be able to attack this issue of inclusive growth; growth will continue to exacerbate inequalities if we don't bring the most excluded.
And unfortunately it is very easy to document the fact that women, in every age group, every income group, every demographic category you can think of are the most excluded.
So bringing them into the system really is a fundamental factor in inclusive growth. And from a macro economic level there is a very strong case, particularly as we look at an economy that is facing potentially a global recession.
Thinking of ways to bring about growth and inclusive growth and growth deserves our urgent attention.
As far as the commercial opportunity goes, that's really very exciting.
And we've seen McKinsey and Oliver Wyman and BCG and all sorts of very lofty consulting firms put some pretty big numbers behind the opportunity that's being left on the table.
I think the data that we've seen that speaks to the broadest range of opportunities, there's $700bn of annual revenue across financial service providers that's being missed.
That is anything from $2trn in deposits that are not being made because this population is not being served.
A population that is vocally asking for a safe place to save all the way to $50bn every year in life insurance premiums, if women's lives were insured at the same level that men's lives are.
So there's just a tremendous opportunity across financial services, retail banking, certainly on the lending side, on asset management, there's some, both wonderful data and some really wonderful anecdotes on the wealth management and asset management.
This is the opposite end of the spectrum that I'm usually working at.
It says 60% of women who once they are widowed or divorced or have been in a relationship with an asset manager, will leave that asset manager in search of another client relationship person, because they never felt they were spoken to.
The client relationship manager was always focused on the husband in that conversation, not recognising who might be the ultimate holder of that wealth…
Listen here for the entire interview with Mary Ellen on The Purse Podcast.
News in Brief
Financial news
The World Bank has warned: the global economy may be headed for years of weak growth and rising prices, a toxic 1970s stagflation combination that will test the stability of dozens of countries still struggling to rebound from the pandemic.
US 2 year yields jump 20bps to highest level since 2008 on inflation data jump as Fed hike path repriced.
US May Consumer Prices Increase 8.6% year-on-year, highest since 1981 vs 8.3% expected; Core CPI up 6% vs 5.8% expected.
Hotter-than expected US inflation boosts chances for more US Federal Reserve hikes (another 0.5% rate increase is expected this week). Trader now prices in 3 half-point rate hikes and and two more small steps. Now a key interest rate of almost 3% at the end of the year is priced in.
The ECB’s new projections see faster inflation and slower growth compared with March. Inflation in 2022 expected at 6.8% vs 5.1% prev and in 2023 at 3.5% vs 2.1%, highers 2024 inflation projection to 2.1%.
ECB leaves rates but intends to hike rates by 25bp in July. The size of September rate hike to depends on data. Net purchases under app program to end July 1.
The FTSE 100 took a hit of 2.1% at close of trading on Friday, after US inflation was revealed to have surged to a 40-year high of 8.6% in May this year.
BoE could exceed rate expectations to show it is serious on inflation. MPC meeting (Thursday) to consider 0.5% rise in wake of Johnson’s cost of living support measures.
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin and Ether fell on Sunday amid a broader retreat by the cryptocurrency complex in the wake of data showing US inflation hitting a fresh 40-year high. Ether declined as much as 5% to $1,445.56, its lowest level since March 2021, while Bitcoin dropped to as low as $27,264.65, its lowest since May 12.
The long-awaited Ethereum "Merge" to proof-of-stake got one step closer to its expected August completion when the merge trial successfully went live on the Ropsten testnet on Wednesday.
Lido developer: DAO should sell $17 million of ETH to 'prepare for bear market'
Investors view Polkadot as an alternative Layer 1, Coinbase says.
The market cap of Polkadot’s DOT token relative to ether has been falling since November, according to the report.
Haun Ventures leads $32 million round in Ethereum protocol Euler, a non-custodial protocol that allows users to lend and borrow digital assets.
The Purse Podcast
We cover the following in our conversation:
women, money & power
economic empowerment
financial inclusion
how banks can serve the female customer better
and more
Please enjoy! Listen on Apple Podcasts and Spotify+
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We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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