Indian banks are potentially sitting on a goldmine of USD 688 billion, which can be unlocked through "gender-intelligent banking" practices, according to a new report. The report, jointly released by MicroSave Consulting (MSC) and the National Institute of Bank Management (NIBM), suggests that by intentionally designing financial products and services to better serve women, banks can significantly boost their bottom lines and contribute to India's overall economic growth.
The report arrives at a crucial time, as the continued underrepresentation of women in the financial system is estimated to be costing India a staggering USD 688 billion, thereby hindering its ambition of becoming a USD 5 trillion economy. This lost potential underscores the urgent need for a more inclusive approach to banking.
Akhand Jyoti Tiwari, Senior Partner at MSC, defines gender-intelligent banking as a "systematic, operational approach to integrate gender within financial institutions; across business strategy, products and services, operations, and policy and governance". Dr. Partha Ray, Director of NIBM, believes that if implemented effectively, gender-intelligent banking alone could contribute 10% towards India's USD 5 trillion economic goal.
The study highlights the increasing participation of women in the labor force, which has jumped from 23.3% to 41.7% in the last six years, presenting an immediate business opportunity for banks and financial institutions. Despite progress in expanding access to financial services, active usage among women remains low, indicating a vast untapped market segment.
The whitepaper identifies four key areas of opportunity for Indian banks:
- Deposits: Women hold 1 billion bank accounts, but nearly 497 million of these remain inactive. Activating these dormant accounts could generate an additional USD 253 billion in deposits, providing a vital boost to banks amidst rising credit growth.
- Credit: Women currently hold only 23% of the total outstanding retail credit, amounting to USD 212 billion, compared to men's USD 692 billion. With 110 million unmet loan accounts, this represents a USD 193.3 billion lending opportunity. The average loan size for women is USD 1,712, while for men, it is USD 2,825.
- Investments: Only 1.8% of Indian women actively invest. Tapping into this segment could unlock USD 242.3 billion, with potential retail Assets Under Management (AUM) growth from USD 235 billion to USD 477 billion.
The report emphasizes that while various efforts have been made to mainstream gender into banking, the results have been inconsistent. A more strategic and integrated approach is needed to fully realize the potential of gender-intelligent banking.
