Is Digital Finance the Answer to Giving Women-Owned MSMEs Access to Credit?

The COVID-19 pandemic has had some positive impacts on the financial inclusion of women. Photo credit: ADB.

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Embracing technology for financial service delivery benefits both women-led enterprises and financial institutions.


Women around the world are creating wealth at an unprecedented rate. Yet, owning a business remains a pipe dream for many. Women face significant challenges, including lack of access to financial services.

Studies show women-founded businesses deliver a higher return to investors, and catalyzing them could add up to $5 trillion to the global economy annually. Despite this huge market opportunity, a significant population of women and WSMEs (women-led micro, small, and medium-sized enterprises) are still unserved or underserved by the finance sector. Seven out of 10 WSMEs in developing economies struggle to get loans. Globally, women business owners have an unmet credit demand of $1.7 trillion.

In 2021, however, we saw a positive change. The accelerated shift to digital financial services triggered by the COVID-19 pandemic has had some positive impacts on the financial inclusion of women. The Global Findex Database 2021 showed the gender gap in account ownership in developing economies fell from 9 to 6 percentage points while the gender gap in formal borrowing declined globally with some regions, such as East Asia and the Pacific, seeing its smallest gender gap in a decade (0.9 percentage points).

Recent IMF studies show that financial technology can be a key driver of financial inclusion and that gender gaps are lower on average in digital financial services than in traditional financial services.

Affordability and Accessibility

What gives digital financial services the comparative advantage in closing gender gaps in MSME access to finance?

Affordability and accessibility are the most cited challenges in improving financial inclusion. Technology solutions, such as digital banking, mobile money, mobile-point-of-sale devices, and online lending, are addressing these as well as women’s time and mobility constraints by providing low-cost and efficient ways to pay, save, borrow, and manage cash.

Women are less likely than men to have a credit history, provide adequate documentation, and own land for collateral, which are necessary to access traditional sources of finance. Technology enables lenders to assess credit worthiness based on alternative data, such as cash flows through mobile wallets or behavior patterns on e-commerce platforms. This provides a multiplier effect—the more women use these platforms, the more their data can influence credit decision-making as well as product and service innovations by financial institutions.

A survey showed that fintech firms that collect gender data through e-commerce platforms have found positive relationships between female customers and usage rates, customer acquisition costs, and lifetime values because they are more loyal, have better repayment rates, and refer more customers.

Research also shows that mobile money accounts provide women a safe place to save, which can lead to greater privacy and control over their money, greater resilience against financial shocks, and increased investment in income-generating activities, education, and health care. By contrast, managing money using informal mechanisms, including cash, may be less safe and reliable, and more expensive.

Examples in Asia

There are several examples of financial service providers that serve WMSEs through digital services in the region. One such provider is Bina Artha Ventura (BAV) in Indonesia, which belongs to the Credit Access Asia Group. With support from the Asian Development Bank (ADB), BAV designed and launched a digital customer engagement platform—the BAVku app. Many customers are new smartphone owners or have never used digital channels to access financial services. As of 30 November 2022, 208,404 individuals have registered to install the app; 173,338 of them are existing clients; and just about 168,000 are female entrepreneurs.

Cantilan Bank (CANBNK), a rural bank in the Philippines, serves 12 provinces in Visayas and Eastern Mindanao, where poverty levels are twice the national average and access to financial services is below average. In January 2019, CANBNK became the country’s first bank to go live on a cloud-based core banking system with support from ADB and the Bangko Sentral ng Pilipinas. They also began using tablets for increased field mobility and end-users’ digital access. In October 2021, they launched iCAN, a mobile app delivering cashless financial services to underbanked communities, including fund transfer, bills payment, prepaid phone reloading, and QR code payment. By end-2021, CANBNK increased their client base to more than 132,000 from 95,000 in 2017. They also increased their female client base by more than 60% since 2019 to 35,546.

Margilyn Cosmiano, a fish seller in Surigao del Sur in Mindanao, makes repayments and deposits through her Cantilan Bank officer John Gallega, who shows her account payments through a tablet. Photo credit: ADB.

Examples like these show that it is not only the women and WSMEs who benefit but also financial institutions. Women consumers have enormous influence on up to 94% of household buying decisions, including where to bank. In Asia, women controlled an estimated $13.4 trillion of consumer spending in 2019 ($31.8 trillion globally). Furthermore, banked women have proven to be strong savers, prudent borrowers, and loyal customers.

Challenges and Solutions

However, technology is not without its challenges. Women are more likely to face structural barriers to digital financial inclusion, such as lack of official identification, low mobile phone ownership, as well as poor connectivity and energy access. In addition, cultural or social norms, lack of knowledge and skills, and privacy and security concerns make women reluctant to adopt services provided by digital means. Research found an 8-percentage point gender gap in the use of digital financial service products. To address this issue, both BAV and CANBNK leveraged their field officers, who have a long-standing history and relationship with their customers, to drive adoption and usage of their mobile apps.

Traditional financial institutions could play an important role in bridging these gaps alongside regulators by investing in financial and digital literacy and strengthening consumer protection and data privacy.

ADB launched the Women’s Finance Exchange (WFX) platform in 2021 to help reduce the gender gap in financial inclusion in Asia and the Pacific. It supports financial institutions through innovation and technology, capacity building and knowledge sharing, funding opportunities, and sustainable finance to support climate action so they can better serve WSMEs. The WFX platform aims to bring together a community of stakeholders that share a common goal.


Boston Consulting Group. 2019. Want to Boost the Global Economy by $5 Trillion? Support Women as Entrepreneurs.

Catalyst. 2020. Buying Power (Quick Take).

Financial Alliance for Women (FAW). 2020. How Fintechs Can Profit from the Multi-trillion-dollar Female Economy.

FAW. The Opportunity.

G20 Global Partnership for Financial Inclusion. 2020. Advancing Women’s Digital Financial Inclusion.

International Finance Corporation (IFC). Bridging the Gender Gap in Access to Finance.

IFC. 2017. MSME Finance Gap : Assessment of the Shortfalls and Opportunities in Financing Micro, Small, and Medium Enterprises in Emerging Markets. Washington, DC.

M.J. Silverstein and K. Sayre. 2009. The Female Economy. Harvard Business Review.

P. Khera et al. 2021. Measuring Digital Financial Inclusion in Emerging Market and Developing Economies: A New Index. IMF Working Papers No. 2021/090.

S. Chen et al. 2021. The Fintech Gender Gap. BIS Working Papers No 931. Bank of International Settlements.

Y.W. Tok and D Heng. 2022. Fintech: Financial Inclusion or Exclusion? IMF Working Paper No. 2022/080.

World Bank. Global Findex Database.

Sabine Spohn
Principal Investment Specialist, Private Sector Operations Department, Asian Development Bank

Sabine Spohn is responsible for managing the Women’s Finance Exchange of ADB’s Private Sector Operations Department (PSOD). She also remains active in the implementation of PSOD’s Microfinance Program, expanding it in the Caucasus and Central West Asia region. Prior to ADB, she worked as Deputy Head in Frankfurt School of Finance and Management and was responsible for its Asian project portfolio. She has a commercial banking background and holds a PhD in Development Studies from the University of Melbourne.

Joanna Romero
Gender Finance Consultant, Women’s Finance Exchange (WFX)

Joanna Romero is a gender finance consultant at WFX, an Asian Development Bank initiative, where she drives gender lens investing and technical assistance. She has more than 15 years of development finance experience. At the IFC/World Bank Group, she worked at the intersection between financial inclusion of SMEs, women’s economic empowerment, and climate finance, and advised senior management of partner financial institutions. She has a Master of Arts degree in International Trade & Investment Policy from George Washington University.

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Kavita Sherchan
Knowledge Management Consultant, Women’s Finance Exchange (WFX)

Kavita Sherchan is a communications and knowledge management specialist with 20 years of experience in South and Southeast Asia regions. She is the communications and media expert at the Asian Development Bank’s Women’s Finance Exchange. Prior to joining WFX, she consulted for the World Health Organization (WHO) and various departments of ADB, and worked for the Equal Opportunities Commission of Hong Kong, China.

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Asian Development Bank (ADB)

The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

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