Does agent gender matter for women’s financial inclusion?

In times of Covid-19 and imposed mobility restrictions in many developing countries, digital financial services (DFS) can fulfill an important function by enabling the distribution of social transfers and remittance payments and providing a means of payment. Yet, DFS and other financial services are not readily available to everyone. A recent report prepared for the G20 Global Partnership for Financial Inclusion (GFPI) focuses on the important issue of gender gaps in financial access. While advances have been made and 240 million more women have banking or mobile money accounts than in 2014, women are still consistently at a disadvantage when it comes to accessing financial services (Findex, 2017).

In Sub-Saharan Africa, women are 11 percentage points less likely to have an account according to the 2017 Findex. Globally, 980 million women still have no financial institution account (Findex, 2017). Women are also 20% less likely to have a mobile money account (GSMA, 2019).

What explains this gap? While factors such as lower phone ownership, literacy, and lack of funds and documentation among women are known to contribute to gender disparities, there are unanswered questions around the role of gender in DFS uptake and usage (see this post by our colleague Leora Klapper). A new research paper fills some of these gaps and seeks to understand the role of agent gender in transaction decisions.

In the study, we provide some novel evidence in support of the policy options proposed in the GFPI report. Most notably, the findings suggest that ensuring sufficient representation of women agents could play a role in promoting women’s usage of DFS. 

What can one million transactions tell us about women’s usage of DFS?

We collaborated with FINCA DRC, a microfinance institution in the Democratic Republic of Congo (DRC) to investigate the salience of gender in DFS transactions. We sought to answer some simple questions: Do women prefer to transact with women agents? Do they transact larger amounts with women agents? And would they even travel further to transact with a female agent? To answer these questions, we analyzed a comprehensive data set of more than one million customer transactions (covering all agent banking transactions at the institution from April 2017 to March 2018).

FINCA’s agent network and customer base are male dominated, as is the case for many microfinance institutions. About 39% of the customers and 23% of the agents are women. Transactions between male customers and male agents account for the majority (56%) of all transactions in the data (and 66% of the transaction volume). Across the different locations (market areas) where FINCA is present, there are always some women agents, but their share can be quite low (the share of female agents in a market ranges from 7% to 34%).

What are the key findings?

We use regression analysis to unpack the effect of agent gender on individual-level transaction behavior, accounting for agent location, customer age, agent age, transaction type, transaction amount, and currency (whether U.S. dollars or Congolese francs were used, as FINCA agents may transact in either currency). The following findings emerge:

• Customers have a preference for agents of their own gender. After accounting for relevant influencing factors, female customers are on average 7.5 percentage points more likely to transact with a female agent  than with a male agent. Importantly, the effect is stable across markets with higher and lower representation of female agents, which suggests a consistent preference of female customers to transact with female agents. In more general terms, our paper provides evidence of gender homophily.

• Clients transact higher value amounts with agents of their own gender. With male agents, the value of female customers’ transactions is only half (53%, US$133) of what male customers transact on average with male agents (US$250, see figure). By contrast, female customers’ transactions are on average 66% larger with female agents than male agents (US$221 on average) and the difference in transaction values becomes small with female agents (female customers transact US$221 and males US$207). Thus, females (males) transact larger values with female (male) agents and significantly reduce their amounts when transacting with agents of the other gender. 
• When they have higher balances, female clients are more likely to go to female agents. This finding is from analysis of more limited data on customer balances. A potential explanation is that an agent can see a customer’s balance during the transaction. This may lead women to seek women agents when they are particularly concerned about disclosing financial information (that is, that they have large balances) to men.

What are the implications?

The findings from DRC show that the gender of the agent matters for how customers use DFS. We replicate these findings with a smaller data set from a randomized controlled trial in Senegal and find the same trends. Although these findings still need to be validated in other contexts across Sub-Saharan Africa and beyond, they suggest ways in which women’s adoption and use of financial services may be accelerated:

• Provide women the option to visit a woman agent. Women in our data have a robust preference to transact with female agents. Yet, since there are fewer female agents, they are less easily accessible. This implies that it is often less convenient (and sometimes more expensive) to visit a female agent to conduct business. Better representation of women agents could promote ease of access and comfort for women to use DFS.
• Make gender part of agent rollout strategies. A key building block for improving access to female agents is to ensure gender diversity at the agent rollout stage. Without an explicit focus on gender equity, women often need to overcome significant obstacles to become agents. We see this in our data, where the businesses of women agents are performing on par with male agents’ businesses. Contrast this with DRC overall, where female businesses had 49% lower profits than the average male business (World Bank, 2019). Creating opportunities for women to become agents and addressing barriers to moving into agent banking could advance parity in agent networks.
• Design products to accommodate women’s needs and challenges. Products and procedures that are designed to meet gender-specific needs, taking into account social norms, are crucial for empowering women with DFS. We hypothesize that when their balances are higher, the disclosure of account balances during a transaction may lead women to seek women agents, presumably to protect sensitive information. Hence, procedures that safeguard women’s financial information could foster trust and usage of DFS.

The findings show that DFS transaction behavior is influenced by agent gender. Understanding gender-lensed usage patterns can contribute to advancing women’s financial inclusion. We hope to see more research on the patterns of women using DFS, to inform the design, implementation, and delivery of financial services and policies that meet and serve women’s needs.

Support for this research was provided by the IFC-Mastercard Foundation Partnership for Financial Inclusion and the World Bank. The full research paper is available here.