Understanding Money Matters

With rapid economic transformation sweeping the country, there is a need to promote greater participation of women in the economic process to not only enhance their well-being but also ensure their meaningful contribution towards realising the full potential of the country.

I believe we need to address this challenge in a two-pronged manner - one, make financial literacy an integral part of our education system, as a practical life skill that stands in a good stead for the long term. And two, especially for women, go beyond the ‘knowledge’ aspect of financial management to providing the tools that make it easier for them to apply their learnings.

While women are emerging as an important force to reckon with in both formal and informal sectors, a large segment of them, however, have limited financial capabilities. This lack of financial knowledge is not restricted to women in the underserved communities alone, even for a large number of salaried women, personal finance is handled by the husband or a male member of  the family.

Interestingly, however, a study conducted by J.P. Morgan along with Grameen Foundation India founded that although women in the underserved communities were less likely than men to own a bank account or a mobile phone, when they did have access to digital financial services, they more actively sought out information to guide their financial decisions. Women are, therefore, important agents of change when it comes to engaging with formal banking channels, particularly in the digital world.

Traditional financial literacy initiatives consider that women-focused interventions have a multiplier effect on the education and nutrition of children. They therefore invest resources in teaching women how to save, plan for larger expenses and grow their businesses. However, what is often missed out is the one big challenge that women face, the socially imposed lack of mobility. You can teach someone the importance of saving but if you cannot give them access to a product that helps them save and withdraw without going to the bank, you impede the impact of the intervention.

Fortunately, mobile technology has grown significantly in the last few years. One only has to look at the rise of e-commerce in India to appreciate the potential of technology in addressing the issues of mobility. For instance, one of the start-ups is developing technology interfaces for semi-literate people that can make mobile banking applications more context appropriate and provide voice based guidance. Imagine the potential for this in India where there is a much higher proportion of low financial literacy among women.

While mobility, quality of access and affordability of products are important, we also need to look at financial literacy as a life-skill that should be ingrained in every individual right from the early years of education. Imparting financial literacy in schools can go a long way in helping women to sharpen their basic banking, investing and  saving skills.

The Government of India recognises this and the National Financial Literacy Assessment Test that was launched in 2013-14 encourages students of Class VI-XII, to acquire basic financial skills necessary to make informed and effective financial decisions throughout each stage of their lives.

As young people prepare for the workforce, we need to make sure that skills training program include practical financial literacy for young women so that they can understand their salary pay slips, manage financial risks by investing in insurance and also build financial assets for their future needs. Our ultimate goal should be robust financial health for all women in the country.

The author is CEO, South and South East Asia, J.P. Morgan