Banks and financial institutions that are attuned to the needs of women clients are seeing fundamental changes to their customer base and loyalty, and growing their bottom lines.
According to a series of assessments conducted by Palladium and Sustainable Finance Advisory (SFA) for German development finance institution DEG, there are competitive advantages to be gained by banks that act early to grow their portfolio of female clients. This is especially crucial throughout and beyond the COVID-19 pandemic, when small and medium-sized enterprises and corporations – including the 30% that are owned by women – will continue to face difficult funding and operational environments.
Palladium Impact Capital (formerly Enclude) is working with SFA to help financial institutions improve their offerings for women, including by supporting DEG’s clients to identify where they can best spend their limited time and financial resources to grow their businesses and support local communities. This is done through the Gender Smart Opportunity Assessment – a quick, data-driven way to assess the business case for expanding a financial institution’s focus to include women. It makes suggestions on the right mix of products and services for women and girls in alignment with the institution’s existing strategy, and looks for high-impact ways to upgrade their gender approach.
Lease Financing in Mexico
One DEG client, Operadora Servicios Mega (Mega), participated in the Gender Smart Opportunity Assessment in 2019. As a leasing company, Mega is particularly well-positioned to serve women, and recognised the business case and moral imperative. Lease financing does not require customers to have assets for collateral, making it a better match for women who typically have fewer assets than men.
The assessment identified strategies Mega could pursue to reach and retain female clients. These included targeting distributors or suppliers in sectors with a sizable proportion of women entrepreneurs, or with a large number of female employees. Mega then developed an action plan to implement the recommendations.
“Empowering women has always been a key priority for us,” explains Mega’s CEO Ignacio Gonzalez. “The findings of the assessment now also demonstrate the economic necessity. Competition in Mexico is tough, and we strive to expand our market share by positioning us as the leading finance institution for women entrepreneurs.”
“No cookie-cutter solution”
Mega’s particular response is unique - no two financial institutions will or should have the same approach.
“We recognise that there is no cookie-cutter solution to enable financial institutions to better serve female clients,” explains Christine Loftus, a gender smart banking specialist at Palladium.
“The Gender Smart Opportunity Assessment enables us to assess our clients in relation to the market in which they operate by looking at data points ranging from women’s labour market participation to unmet demand for finance,” Loftus continues. “Our recommendations are rooted in the financial institution’s strategy and client base to ensure that serving women will be embedded in core business activities in the future. It’s not about what others have done – it’s a targeted initiative tailored to the financial institutions’ priority markets.”
Gender smart banking is becoming more mainstream. The data now show that paying attention to diversity is a dimension of building lending portfolios, spotting opportunities, mitigating risks, and delivering outperformance. For the financial institutions that get this right, significant market value and social impact will go hand-in-hand.
Palladium and its partner Sustainable Finance Advisory support DEG by delivering effective, light-touch assessments for gender results.
Click here to view DEG’s report on the four Gender Smart Opportunity Assessments delivered in 2019 and 2020, and contact Kelly.Robbins@thepalladiumgroup.com to learn more.