It’s hard to deny the presence of gender gaps. We see evidence of them in education, income, politics, and business. But there is another gender gap that is less often discussed, and has proven to be incredibly important worldwide: the credit gap. The credit gap refers to the fact that women are still much less likely to obtain credit than men, whether from a bank or informal moneylender.
The World Bank estimates that 1.3 billion women around the world live “largely outside the formal financial system”—specifically when it comes to their ability to obtain financial credit. That number highlights a huge inequality in our society, especially since we now have concrete evidence proving the economic benefits of women’s empowerment.
While lack of access disproportionately affects women, financial inclusion is indeed a matter of concern for both women and men who don’t have formal bank accounts: 2.5 billion people, or half of all adults. As a result of this exclusion, many individuals have had to figure out their own ways to save informally, helped along by new trends in technology that are enabling and scaling these methods like never before. For those who face financial limitations, informal savings options can provide new opportunities and freedom that would otherwise be unattainable.
Traditionally, informal savings were achieved through social groups like Rotating Savings and Credit Associations (ROSCAs) and Accumulated Savings and Credit Associations (ASCAs). ROSCAs work on a predetermined rotation, where each person makes a monthly deposit and the whole monthly sum goes to one member each month. ASCAs, which are slightly more complicated than ROSCAs, collect a fixed sum at regular intervals (weekly or monthly), and offer loans to their members that can be paid back in installments or in whole, and sometimes with an additional interest charge.
But these methods aren’t perfect, and leave some women vulnerable to insecure cash handling and erroneous bookkeeping. Not to mention, it prevents them from building credit—a key element to establishing financial freedom.
Fortunately, financial institutions and entrepreneurs are partnering to create new mobile technologies that offer improved ways to save. Take Women’s World Banking and Diamond Bank, for example. Together with Visa and Enhancing Financial Innovation & Access (EFInA), these organizations are working to address the lack of financial access in Nigeria, where 73% of women don’t have bank accounts. Its initial pilot program “BETA” set women up with mobile savings accounts that had no minimum deposit or monthly fees, awarded weekly cash prizes, and sent weekly text messages reminding clients to save on a set schedule. The majority of women in the program were able to save a portion of their income—many up to 60%. Within six months, a total of $1.5 million had been saved, and more than 38,000 new accounts had been opened.
And BETA is just one of many innovative partnerships. Telenor’s Easypaisa, a mobile wallet company, partnered with Benazir Income Support Program (BISP) and non-profit CARE International to bring financial services to local corner shops through ATM cards in Pakistan. Meanwhile in Tanzania, Vodacom’s M-Pesa has partnered with Mwanga Community Bank to connect community savings groups via phone.
Mobile applications have a lot of potential when it comes to making banking accessible to a broad slice of people. The most successful of these technologies won’t ask people to start new behaviors; they’ll simply provide new mobile tools that help people save in much the same way that they have been saving (informally) for years.
This is also the idea behind my own project, Kitty10, a mobile app digitizing informal savings groups. I was inspired to create Kitty10 after spending time in Mexico, where people have been saving informally for generations. In Mexico, such informal credit associations are often called tandas, but they are similar to the associations used all over the world. In the Caribbean, they are called susus; in India and Pakistan, Kitty Parties; and in other parts of Central America, cundinas.
Unlike traditional savings groups, Kitty10 allows families and friends to save—even if they’re in different countries—with an efficient and easy-to-navigate bookkeeping system. This accessibility is key: Bridging the credit gap isn’t just about providing technology—it’s also about tailoring that technology to the users’ needs. When I asked women what they’d use to help them save, they wanted an app like WhatsApp—something simple and intuitive. Hopefully, by listening to the needs of women and responding in kind, we can work together to provide women around the world one of the most powerful tools technology can offer today: access to credit.