Much of our world strives for equality, but also for diversity, and these values are at odds. By definition, what is equal isn’t diverse, and vice versa. Women’s financial equality suffers from precisely this paradox. The same financial system, which on the surface treats men and women equally, leads to inequality and disadvantages for women.

For the sake of diversity, it’s necessary to change the financial system to treat women differently, according to their needs and their life situation, to reach equality. A study led by our lovely Accenture Song colleague Lilith Wacker takes a closer look at these systemic inequalities and proposes changes the financial system could and should make.

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Increasing the financial equality of women is hard for a reason! Download the study here.

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The first thing, as Lilith puts it, is that “financial services must put money into a socio-financial context”. What does this mean? Money, as it turns out, is perceived and used by women in their own way. Money is a social phenomenon, but the social context appears to be both more important and different for women.

This has an impact on the definition of wealth. For women, social relationships, besides other basic needs such as securing survival and building identity, are key to achieving wealth. Money needs a greater purpose beyond accumulation for its own sake. Women favour money decisions that support overall value for the community.

But this often leads to unfavourable financial consequences, especially in the long term. The study refers to the way in which social arrangements around financial decisions lead to inequality that is both structurally and culturally hidden. The plain-vanilla financial advisor doesn’t help either, with its focus on selling products that primarily help to accumulate money. In many women’s eyes, there is a lack of purpose.

Money is a family affair

This kind of advisory ignores the social and financial context of women (and men as well, I would add) and lacks awareness of the financial consequences that social arrangements tend to have. Money is a “family affair”, Lilith writes. Many women find themselves fully financially dependent on their partners, present or past ones, or in-laws. Contributing to that dependency is the notorious gender pay gap, and its sibling, the pension gap.

“Money is a social phenomenon but it is not being treated as such. This is what drives the gap that needs to be closed”, she asserts. The three common approaches of key market players and consultancies all fall short:

• changing “bad money behaviour” with digital services
• educating women so that they become proactive
• rebuilding trust in financial institutions.

More context is necessary to get the relationship between women and money right and come up with solutions that work. The social context of money decisions

consequently supports the structural inequalities of our society and economy as long as there is no communication about true and holistic fairness among the people that are directly or indirectly involved in the decision making.

The three human needs – survival, identity, relationships – must always be prioritised and balanced, to avoid pursuing one to the detriment of the others. Financial services should take this into account and translate it into a roadmap to financial autonomy in the long run. In addition, financial advisory needs a completely new, more integrated and, if needed, automated approach.

We should offer more transparency on what products can and cannot do. We also need to cultivate honest communication without sugar coating and sales goals as KPIs for advisors. This challenge is a huge service opportunity for thinking about convenience and financial equality under the same umbrella.

A long-term approach

Banks as institutions, providing accounts and storing savings, still enjoy a high level of trust, often through long-term relationships from an early age. They can leverage this trust to improve the perception of advisory in the long run, creating better experiences around money matters. Currently, the structural, systemic issues are still too strong to trigger lasting change, Lilith concludes.

To solve structural problems, they need to be addressed by societies, economies, and politics, as well as by women themselves in their everyday lives and within their personal relationships. Historically-anchored systems normally require a long time for change to occur.

However, this change can accelerate. Systemic changes don’t need to be slow. In 2021, several international institutions, including the United Nations Capital Development Fund and the World Bank, published a 10-point action plan to end financial inequality for women. This plan has global ambitions, and it includes some points that fit well into the approach we discussed above.

For example, action 8: designing appropriate and affordable financial products specifically for women. “Women have different financial and nonfinancial needs depending on where they are in their lifecycle”, the action plan states.

Products that work for those on low, irregular incomes with high-frequency, low-denomination transactions are especially relevant to women. Built-in savings mechanisms and financial education resources create long-term benefits for women. For example, in Zambia researchers found high demand for savings products designed for pregnant women.

First, the basics

On the global level, much of the work though is still about the basics, like digital financial services in general and digital payments in particular. Reaching financial equality for women starts with having bank accounts, and businesses can help by paying digitally rather than in cash. The same applies to the public sector and social benefits. The action plan sounds quite optimistic here:

Digital private and public sector payments, designed to meet women’s needs and incentivized through policies that make them safe and affordable, can lead to increased GDP growth, increased customer growth and retention, higher labor force participation, improved household bargaining power and freer gender norms.

Arguments like these are important because they show that women’s financial equality isn’t a zero-sum game, but a win-win situation. Squaring the circle of equality and diversity is only approximately possible, but it’s a goal worth pursuing.

Photo by Katt Yukawa on Unsplash