Technology was supposed to broaden access to financial services and help eliminate economic inequalities. But so far the explosion of banking and investment apps has failed to narrow one persistent divide: the gender gap in financial inclusion. Policymakers should take note. In the post-pandemic recovery, they cannot entrust the market forces of fintech to support female economic empowerment.

There are many ways in which women’s financial inclusion lags that of men. They own fewer assets than men, for example, but they are also less likely to invest in riskier, higher-yielding assets, such as equities. A 2019 analysis by Germany’s Comdirect, which offers online stockbroking, showed that for every female investor on the platform, there were three male counterparts. Robinhood Markets, the U.S. trading app that took the stock market by storm this year, reports that women make up roughly 30% of its active customers.

One frequently given explanation for these differences in investing is that women have lower financial literacy. But recent studies suggest that even if women on average are less familiar with the jargon and intricacies of financial products, this only partly accounts for the gender gap in financial participation.

Using data from the Dutch central bank, an April paper from the National Bureau of Economic Research shows that confidence also plays a role. When answering multiple-choice questions about finance, women were more likely to choose the “do not know” option than men. But absent that option, women often got the answer right, narrowing the gap in financial literacy substantially. In fact, the researchers concluded that as much as one-third of this gap can be explained by lacking confidence.

Another study found that attitudes toward tech and pricing can also make a difference when it comes to adopting financial tools. Using data from a survey of 27,000 people across 28 countries, a working paper from the Bank for International Settlements showed that 29% of men reported using fintech products and services compared with 21% of women — a gap of 8 percentage points, similar to the divide in traditional bank account ownership.

The gap persisted among respondents who lived alone, undermining the idea that women leave money decisions to male partners. It also held among people who are employed and have multiple financial accounts, suggesting the gap wasn’t due to not having funds or being unfamiliar with financial services.

The researchers found other differences, however, that can help explain it. Women appeared less comfortable with sharing data and less interested in cheaper offerings. Women were also less willing to try out a fintech bank even if it offered a product better suited to their lifestyle. Strip out these differences, and the gap in fintech adoption narrows from 8 to just over 2 percentage points.

It’s hard to draw conclusions about what lies behind these different attitudes, according to the report’s authors. There’s some evidence that women are more risk-averse than men. If that’s the case, it’s possible that as fintech products become more established and better regulated, they might appeal more to women. Measures such as the European Union’s GDPR data-protection law — now a global standard — can help. But fostering that trust will take time. Women have often suffered discrimination as borrowers, and a greater use of tech in credit decisions has fueled not abated their concerns. There’s still a long way to go before women and minorities feel tech isn’t working against them.

Meanwhile, finding ways to boost women’s confidence in their financial know-how could also drive them toward a broader range of investing services. Even a small deficiency in confidence can lead to large wealth gap over a lifetime.

There is one relatively straightforward policy tool that could support women: Direct more funds to fintech startups founded and led by them. Fintech products are primarily designed by the same crop of individuals: young white men, often former consultants with MBAs. Funding more female-led firms could go a long way toward broadening existing services and products and making sure they address women’s specific financial concerns.

According to the Global Gender Gap Report 2021, the pandemic has widened gender inequality along several dimensions — economic participation, educational attainment, health and political empowerment. As the fintech revolution continues to sweep the world, policymakers have to ensure that one half of the population doesn’t continue to be left behind.

ELISA MARTINUZZI is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.

Recommended for you

See what people are talking about at The Community Table!