Female-led fintech companies are helping women worldwide gain access to financial services, allowing them to take control of their financial decisions and well-being with newfound confidence.
Women have been historically underrepresented in finance, so much so that financial services firms are missing at least a $700 billion revenue opportunity each year by not fully meeting the needs of female customers, according to research by Oliver Wyman.
Female founders from diverse backgrounds and with different life experiences are ideally suited to create solutions specifically designed to meet the needs of female users. This, in turn, leads to an increased female user base and helps to bridge the gender wealth gaps.
Building A Foundation
Take Tala, for example, a fintech company that uses smartphone data to extend loans to people with little or no borrowing history, which has served over 7.5 million customers in emerging markets, including Kenya, Mexico, the Philippines, and India. Tala’s customer base is 58% female.
“We’re helping improve women’s lives at the foundational level,” said Tala founder and CEO Shivani Siroya. “This creates cycles of improvements in families and other areas.”
The company found that 76% of its customers reported improved quality of life, with 80% saying they could now pay for major expenses they couldn’t afford prior, increasing self-confidence, according to a report by Tala.
That’s a much higher percentage than statistics reported in the U.S., where the majority (57%) of U.S. adults cannot afford a $1,000 emergency expense, according to Bankrate’s Annual Emergency Fund Report. In addition, more than three in five working Americans feel anxious about their current financial situation, according to new Harris Poll research.
“At the core of all of this is the idea of peace of mind for women and having the ability to show up in life in a more confident, controlling way by knowing their basics are covered,” Siroya said.
With access to digital loans, 63% of Tala’s customers reported reduced financial stress. Meanwhile, 58% of women borrowers experienced an increased influence on decision-making, and 67% talked about having more financial independence.
It’s a step in the right direction, proving that fintech solutions are helping women create pathways to wealth.
Women can leverage fintech to gain the financial tools they need to become business owners, creating a new cycle of female entrepreneurs.
Nav.it, an all-female founded and run money management app, is focused on financially empowering its 65% female user base so they can put money back into their community.
“Female founders are more likely to have a social mission built into their companies, and they’re more likely to serve under-represented populations in the market,” said Erin Papworth, Nav.it founder and CEO. “This creates a unique business opportunity to take existing fintech solutions and build innovation on top of the infrastructure we have seen boom in the last seven years.”
Using a behavioral finance-driven approach to money management, Nav.it is specifically designed to help women make the most out of their income, with the knowledge that up to 90% of a woman’s income goes back to her community.
Back To Basics
Fintech companies in the U.S. provide too many choices, leading to an oversaturated market with little effect on financial well-being. Meanwhile, most (79%) of fintech users are looking for finance apps to offer education around starting an emergency fund, improving credit scores, and starting a savings habit, according to Plaid’s 2022 fintech effect report.
Financial mindfulness and literacy is the cornerstone of the female-founded fintech company Aura. While financial access to products is essential, the impact should be felt by consumers in terms of emotional well-being, economic confidence, and peace of mind.
“The next generation of investors looking for more than just financial advice,” said Courtney Cardin, Co-Founder of Aura. “They want an accountability partner and behavioral coach to keep them on track.”
Measuring success by the number of accounts opened is easy, but fintech companies must also consider emotional factors.
Women-led fintechs are changing the game by leveraging digital platforms to curate content and tools to deconstruct systemic issues that have made access to financial services typically cumbersome.
Sure, it’s tough being a fintech company right now, but the industry’s potential to change the future of economic equity for women is front and center this Women’s History Month.
Fintech companies like Tala, Nav.It, and Aura help women take control of their financial futures while spreading awareness of fintech tools to larger groups of women worldwide.
“If a financial service works for one woman, they will tell 10 other women in their community,” Siroya said.
With the right fintech tools, women can access the same playing field as their male counterparts, empowering them to reach their goals while increasing market share for fintech companies focused on serving them.
By providing more women with the opportunity to participate in financial services, fintech companies are helping to create a more equitable world for everyone.