BankThink: Women's Financial Empowerment Has Come a Long Way, but Work Remains
By Einat Steklov, AMERICAN BANKER – September 20, 2024
As we approach the 2024 presidential election, a critical yet often overlooked issue demands our attention: financial independence for women. Despite existing antidiscrimination laws, many women may continue to encounter significant barriers in accessing traditional financial services such as personal loans, credit cards, auto loans and mortgages. This gap underscores the need for systemic change in our financial systems to help increase equitable access to financial resources for all, including women.
Historical milestones such as The Equal Credit Opportunity Act of 1974 allowed women to independently apply for credit cards in their own names, marking significant progress. However, numerous challenges remain and the journey to financial independence for women is fraught with structural biases that continue to impede their economic empowerment.
Women today are influential as business leaders, entrepreneurs and community leaders, and continue to significantly contribute to the economy. Despite this, disparities in credit access for female entrepreneurs and the persistent wage gap hinder their full financial autonomy.
Implementing transparent pay structures at work, like those that have been enacted in ten states thus far, can help to ensure women are compensated fairly. Beyond fair pay, mentorship programs tailored for women can offer invaluable support, and may help them navigate their career paths and ascend to leadership positions.
Another significant consequence of the financial gender gap is the disparity in retirement savings. Despite living longer, women are less equipped to retire comfortably due to lower wages, career interruptions and lower risk tolerance. This can result in greater challenges in achieving financial security in later years.
Additionally, to bolster the success of women in the workplace, it is equally important to enhance hiring practices to prioritize diversity and inclusion so that more women can enter and succeed in industries such as the financial and technology sectors. These strategies are not only fair but are also smart business practices proven to drive innovation and growth.
Improving workplace flexibility, including offering benefits such as paid maternity leave, can help to enable women to remain in the workforce while balancing the responsibilities of caring for their children. According to a recent report from McKinsey, 38% of mothers with young children said that without workplace flexibility, they would have to work reduced hours or leave their jobs. These benefits also play a crucial role in helping women achieve financial wellness goals, such as saving for retirement and other financial needs, as our society works to close the gender pay gap.
These combined efforts — fair compensation, mentorship, inclusive hiring and parental leave — create a robust foundation for both women and businesses to thrive.
This pivotal election year should serve as a call to action for industry leaders to work actively to deconstruct biases that may restrict women's professional growth and seek to champion a more inclusive environment.
Candidates and policymakers must prioritize initiatives that foster financial empowerment as leadership plays a significant role in shaping the country's economic policies and regulations. Political leaders should support measures that ensure equal pay, fair credit access, affordable childcare, paid family leave and retirement security. In addition, by fostering a culture of innovation and collaboration, fintechs and other stakeholders can create solutions that address women's specific needs and challenges.
The fintech sector is in a unique position to enact change. By harnessing technologies, fintechs can offer personalized financial services that meet women's needs and help them in managing their finances, investments and credit. More importantly, these technological solutions should be inclusive and address the specific barriers women face in financial contexts.
Fintechs can play a role in reducing the financial gender gap by providing innovative and accessible financial products that support women's financial goals. Creating platforms that offer financial education, budgeting tools and investment guidance can empower women toward improved financial literacy and independence. Financial literacy is essential for women to make informed decisions, plan for the future, and overcome financial challenges.
Furthermore, by leveraging alternative data for credit scoring, fintechs can obtain an expanded view of an applicant's creditworthiness, which may benefit borrowers who may be disadvantaged by traditional credit evaluation methods. This approach can promote fairness and enhance overall financial health by broadening access to credit for all.
Looking to the future, our strategies must focus on sustainability and inclusivity to help ensure that financial solutions are accessible and beneficial for women. Advocating for policies and legislation that support financial education from a young age will better equip future generations of women to access credit, manage finances, and achieve financial independence.
The pursuit of financial equality for women is a complex, multifaceted challenge which requires a comprehensive approach involving various sectors, stakeholders and technologies. Financial institutions, businesses, governments and individuals must collaborate to create an environment where resources and opportunities are accessible to all women.
As we gear up for the 2024 election, let's place financial empowerment high on the national agenda. It is also a crucial foundation for a thriving, equitable society that values diversity, innovation and social justice. By advocating for financial policies and embracing innovative fintech solutions, we can ensure progress toward equality continues.
Einat Steklov is CEO and Co-Founder of Kashable.
Comments