Closing Gender Gap Could Unlock US$40 Billion in Additional Annual Revenue
March 8, 2018 by Daisy Prince
Women could be the key to huge untapped sources of income, according to Powering Potential, a report by BNY Mellon released late last week. As much as US$40 billion in retail banking alone could be captured worldwide if the gender gap were eliminated.
According to the data, the gap could be closed by providing greater access to four product areas: checking and savings, credit cards, personal loans and housing loans.
An astonishing number of women worldwide don’t have access to checking accounts (254 million, a missed annual revenue opportunity of US$15 billion), credit cards (79 million, a missed annual revenue of US$7 billion), personal loans for cars or homes (60 million, a missed revenue of US$14 billion) or a mortgage (19 million, a missing revenue of US$4 billion).
Women have long been overlooked for their potential in the investment world, even though they control US$20 trillion in assets globally—roughly 25%-30% of the world’s wealth, according to a study on the female economy by the Harvard Business Review. Affluent female investors are 12% less likely than male investors to be confident in their investment decisions, while 53% of women don’t have financial advisors to help guide their choices, according to a survey conducted by Sullivan and Northstar Research Partners in 2015.
The ones who do use financial advisors appear to be dissatisfied with their service because their male advisors don’t tend to “listen to their needs” the way they wish they did, according to data published by Pershing, a subsidiary of BNY Mellon.
Additionally, 83% of women working with a financial advisor were advised by a man, and when a heterosexual couple interacts with their financial advisor, men are 58% more likely to be the advisor’s point of contact, according to a report from Fidelity Investments.
Another area where there’s a large discrepancy in female and male spending power is insurance. Only 56% of women have life insurance, compared with 62% of men, according to LIMRA.com, a leading life insurance research company. If the gap were to be closed, BNY Mellon estimates the market opportunity would translate to US$290 billion annually. Of those who do have insurance, three-quarters of women report being dissatisfied with the service they are getting.
Part of the problem is the differences in how men and women wish to pass along wealth. Men prefer to leave their inheritance in one lump sum, while women would are happier when money is doled out in regular distributions contingent on certain goals being met by the recipients, like school attendance, says a report put out by Accenture.
Female entrepreneurs are another underserved part of the financial community, despite the fact that women-owned business make up 30% of registered entities worldwide. Only 10% of women entrepreneurs have the capital they need in order to grow their business, according to a 2015 report by Mastercard. The International Finance Corp., the private-sector arm of the World Bank estimates that up to 70% of women-owned small and medium-sized enterprises in developing countries are underserved by financial institutions—amounting to a credit gap of around US$285 billion.
As investors, women tend to be careful and considered, particularly when it comes to family welfare, according to data from World Development,Journal, Poverty Action and the American Economic Review. Women are focused on putting their money to work in financial vehicles that will ensure the long-term success of their family’s health and education.
“It’s just that the size of the opportunity is so great,” Heidi DuBois, head of philanthropy and corporate social responsibility from BNY Mellon notes about the research. “Over time, women’s control and access to financial assets is going to continue to grow. That’s a huge opportunity from both a development perspective and a market perspective so the win-win is tremendous.”
