Jane: [00:00:00] Welcome to the Sustainable Growth Podcast, where we talk about issues that straddle both sustainability and finance. I'm your host, Jane Goodland, and in this episode, we hear from Mary Ellen Iskenderian, president and CEO of Women's World Banking, which is a global non-profit organization devoted to achieving security and prosperity for women and inclusive economic growth for all. So, let's see what Mary Ellen had to say. So hello, Mary Ellen, and a very warm welcome to the LSEG Sustainable Growth Podcast. Thank you so much for joining us. I've got literally gazillions of questions, so thank you so much for joining today.
Mary Ellen: [00:00:43] Thanks so much for having me on the on the podcast, Jane.
Jane: [00:00:46] You've been at Women's World Banking since 2006, I believe. And then before that you were with the International Finance Corporation for a long time and before that in investment banking. So, I'm curious, how does someone with that sort of background find themselves spearheading Women's World Banking?
Mary Ellen: [00:01:03] So you have to admit that I'm very loyal. I tend to stay at places for very long periods of time. But no, I started my banking career at the dearly departed Lehman Brothers, and I was an investment banker. And the story I often tell is I had this real come to Jesus moment a couple of years into my career. I was working on the first project. It wasn't even a deal, but a project that I was not the most junior person on the team, and we'd been retained by a large trucking company who wanted to make an acquisition in the United States, and they asked us to find potential targets for them. And so, I had an analyst who did a series of pro forma balance sheets of, you know, what would the combined companies look like? And a couple of days before our meeting with the client, I went to see how he was doing. He had this very elaborate model he was very proud of. And I could see at the bottom of the balance sheet there was a row of numbers. It was different for each combination and the sheet would change when he would make different changes to that number. And I asked him what was he using as his plug figure. He said, well, that's the number of people that need to be laid off in order to make the deal work. And I fully admit this was extremely naive on my part that I may not have really ever put that together in my head before, but it just hit me like a bolt of lightning that I am not in this business to make deals work for companies or for the firm that are really going to be put out of business people, out of business that are really going to drive that kind of negative change in people's lives.
Mary Ellen: [00:02:43] And so I had done an undergraduate development economics degree and think I'd always had this idea that I would eventually end up working in development finance. Again, another sort of serendipitous, the next deal that I was staffed on happened to be with a woman who had run the Young Professionals Program at the World Bank for many years and one late night working on a on the deal I confessed to her that I was really lost at Lehman and really had this passion about development finance. And she really encouraged me to apply to the Young Professionals, even though they very rarely take Americans. And it's really a way to bring professionals from all over the world. And it's a hard program to get into. And to my utter amazement, I got into the program and the rest is history. But it was an extraordinary time. I'm really dating myself here. But about six months after I joined the World Bank, the Berlin Wall came down. And so, I spent really the next decade always going further east and to colder places seemingly, and just working on rebuilding or building for the first time financial services, financial institutions, financial infrastructure to support these changed economies. And that was really the first time that I actually saw in action what finance could do to change people's lives in a really positive way.
Jane: [00:04:14] And like you say, the rest is history. But you've been a busy bee, right? Because not content with leading Women's World Banking, I believe you've also written a book, I think it's incredible when people manage to hold down a full time job and write a book. So, I want to know your secret. But part of the title is saying ‘There's Nothing Micro About A Billion Women’. Brilliant title. Makes you want to know more. Tell me, what are we talking about when we're talking about a billion women? And what do we mean by financial inclusion?
Mary Ellen: [00:04:41] Well, thank you for all of those kind words and the plug for the book. Thank you. So there's a little bit of a double entendre in there in the sense that when people think about, or the majority financial system thinks about providing financial services to low income people, it seems almost axiomatic that they start to think about microfinance and microfinance for most of the world, and still very much the way that it's practiced for all of its really revolutionary ways of showing that very poor people could be banked, could repay loans. That's all it is for the most part. Loans and loans at very high interest rates. So, what I was striving there was to say people need a lot more than just small, high interest rate loans in order to accomplish all of their financial goals and to be true economic citizens. But then there's another part to it that there does tend to be the sense of if it's for women, it needs to be small. And we typically see that women's businesses, if they can raise capital at all, we know that they're receiving less than 2% of venture capital around the world. A third of the enterprise lending goes to women's businesses. If they're receiving it at all. It's always in smaller amounts and in smaller packages, if you will, than men owned companies. And so I really wanted to get at that sense of the lost opportunity of not serving women with a full suite of services and at parity with men. And just to just quickly touch on that billion, there are 750 million, give or take, women around the world with no financial services at all, no bank account, no mobile money account, no nothing.
Jane: [00:06:34] So just checking that number, 750 million?
Mary Ellen: [00:06:37] Correct.
Jane: [00:06:38] Wow. Big, big number.
Mary Ellen: [00:06:39] And then another 250 that just have that bank account and it's likely not being used. It's a likely a dormant account. So, we look at that total really as about a billion unserved or dramatically underserved clients that the financial system really could be engaging.
Jane: [00:06:59] So when we talk about financial inclusion, is this about more than just access to financial services? Is it about access and enablement? Because it strikes me that to have a bank account is one thing, but actually to be able to use it in a way that then changes or has the potential to change one's life and one's family's life, they are different things, right?
Mary Ellen: [00:07:21] Brava! You got that? You nailed that. The formal definition of financial inclusion by regulators around the world, by the World Bank is having that account in your own name. But as you rightly point out, it's both a combination of feeling comfortable and confident using it, particularly because for the vast majority of the developing world, financial services are delivered by cell phone. And so having access to the technology and feeling really confident in navigating that smartphone, using those services is a critical part of inclusion. But then also having ING services to use, being able to have a safe place to save, being able to get a business loan or a loan to allow you to take advantage of an opportunity that's the right size, that is not egregiously overpriced. And then having insurance to allow you to protect all that you've built, being able to retire with a safety net, all of those financial services that you and I use and take for granted are needed by the world's lower income population. And now with digital financial services, they can be developed and priced at a point that's really affordable.
Jane: [00:08:48] The focus is obviously on women. And I'm curious to dig into that a bit, about why the focus on women and whether or not there's a multiplier effect by tapping into the women's market. And I'm also curious to know how you tackle the issue when you get to a country where the cultural norm is for women not to have that empowerment, where the norm is for the man in the relationship to absolutely take charge of the finances. So sorry, I’m throwing two questions at the same time. So, let's tackle the women as a multiplier and then we can come to the cultural context.
Mary Ellen: [00:09:24] We certainly can take them separately. But you're absolutely right about how intertwined culture and finance often and, you know, economic participation tends to be. But you took the word right out of my mouth. There is ample evidence now. We really have literally decades of research that show that if women are given access to financial services that allow them to control financial resources, that more members of the household that they may be sharing those resources with are eating more nutritious meals, are likely to have education, are receiving health care, have better housing options. The things that women spend money on when they have control over it, or I can say universally, are more empowering, more available to more people in the household. Men are, and I am absolutely not a male basher, I'm just quoting the research, men are just more likely to spend money on themselves or on things that are not necessarily beneficial for the rest of the household.
Jane: [00:10:36] But presumably there must be, you quoted the number around about a billion women not included in the financial system. Do we know how many men are not included in the financial system? And is it a similar sort of number or far fewer?
Mary Ellen: [00:10:49] No there's still a real gender gap in in inclusion. But you're right to bring up the fact that, you know, think I should know this number off the top of my head, but I think we're still sort of in the high 60s in terms of 60% of the world's population. So, there's still a very big gap to go. There are still men that do need to be served for all of the same reasons. But I think that's a great segue into the second part of your question, that there are very often cultural reasons, social norm reasons that keep women from gaining full access to those resources. The mobile phone industry association, the GSMA, does a wonderful piece of research every year on the gender gap in mobile phones and use of digital financial services. And only women say things like, oh, the reason I don't have a cell phone is because my family wouldn't approve, or I'm not allowed to because of my family. But the really good news, and I don't think there were many silver linings to the COVID pandemic, but financial inclusion really was one of them because so many countries around the world, I think it's 93 countries, had some sort of COVID relief payment that was in many cases made only digitally because we wanted contactless payments. And it just ushered in hundreds of millions of people, including women, into the financial system. You saw the biggest drop in the gender gap in terms of cell phone ownership down to only 15% coming out of COVID. Unfortunately, we've seen that bump up again now to 18% now that the immediate emergency is passed. But it really was that sort of wonderful, serendipitous thing of not letting a crisis go to waste and being able to push through change in terms of access to technology, access to financial services in the moment of crisis.
Jane: [00:12:52] That's fascinating. I've never even thought about that could have been one of the consequences or one of the, I guess, the knock-on impacts of a global pandemic. And these types of knock-on effects just keep on coming out the woodwork, don't they, as the years go by, and we can look back at trends then and trends before and afterwards. So, it's a fascinating insight. One of the things I was curious to know about is thinking about this cultural aspect is, is this just a developing country issue or do we see women being left out of financial services around the world? And if so, why are we seeing that?
Mary Ellen: [00:13:27] It's a slightly differently shaped issue in the more industrialized world in that many people, most people, the majority of people have bank accounts, have that account, which as mentioned before, is the sort of formal official definition of financial inclusion. But we as soon as you sort of get past that, you start to see the same kind of fissure in terms of equality of access, equality of usage. You know, in the United States, all women only control 40% of the wealth, and that is measured by things like home ownership, investment assets, savings accounts, 40% of what men do. But when you start to add race or ethnicity, you see black women owning only 12% of the wealth, Latino, only 8% of the wealth of men. And that's very much driven by financial services and the access to them. In the United States, where I'm from, very significant gaps in terms of retirement savings. And as we know, women tend to live longer. So, you've got this triple whammy of earning lower wages over the course of a career, often coming in and out when children are born, or to take care of elderly parents and then lower retirement savings. So, in the United States, women over 60 are the demographic that are falling below the poverty line at the fastest rate.
Jane: [00:15:01] So all of these are staggering figures, actually. But what it actually makes me think of is how important financial literacy and education is, right? Because if you give people knowledge, then they can do something with that knowledge. But if they simply don't have that kind of literacy, then it makes it harder for them to be able to then access and provide for themselves and plan for the future. So, is that something that your organization gets involved with?
Mary Ellen: [00:15:28] Absolutely. And I'd say today you can't even really just call it financial literacy. It really needs to be digital literacy as well. As I mentioned earlier, so many financial services are now delivered by cell phone technology. And so, first of all, as I mentioned, gender gap in mobile phone ownership, not so much in the basic flip phone that we all had a decade ago, but as soon as you get into the area of smart phones where apps are developed, where the mobile Internet is so crucial to full economic participation, you see a real gap in terms of women's ownership. If a household in Africa has a smartphone, it is almost invariably owned by the male in that household. And women, very interesting, women are much more likely to share a phone for getting information or making phone calls, but they won't bank on a shared phone. They know that they want to keep that secure. So, getting access to the technology and confidence in using it is as important as understanding the financial concepts. And that, you asked about Women's World Banking, that's at the heart of any of the products that we design. We really insist that the financial service provider make sure that that client that they're trying to serve really understands what it is that they're engaging with what they're using.
Jane: [00:16:53] So actually, this is a great point to ask what does your organization, what are your key deliverables, as it were?
Mary Ellen: [00:17:01] So Women's World Banking is hard to believe, it's a 45 year old non-profit, which we're very proud of having that longevity. Ever since we were created, we've been dedicated to the idea of providing access to financial services to low income women. I always find it quite remarkable that some of our founders were coming from places where they themselves couldn't sign for a loan or get a credit card or buy a house in their own names. They would have needed a man's signature. But they had the vision of all women everywhere having those kinds of rights themselves, which is always very inspiring to me. And I'd say we have three sort of main businesses, if you will. The first is we work with; I think the number now is up to 63 financial service providers in 36 countries. Together, they serve about 140 million low income women. And they are everything from big mainstream commercial banks to fintech's to insurance companies to mobile network operators to neo banks. And we work with them to design, deliver, market, distribute financial products and services that really meet women's needs that are designed to address whatever pain points women might be finding in getting access to a product that might be working fine for men or might be working fine for a more affluent population, but isn't reaching that low income woman We made a real commitment five years ago to trying to reach women at scale, that billion women number is just so big. And we really wanted to not just be a drop in the bucket.
Mary Ellen: [00:18:36] So we have a very active policy advocacy engagement, both locally with governments, we're the only NGO that sits on the Financial Inclusion Working Group for the G20. We have our own G20 flag now, which is very exciting alongside the countries, and we have a program actually with Oxford University where we train regulators, we bring them together, a senior executive, usually a sort of a deputy central bank governor, and then a high potential woman. The senior exec can be a man or a woman, and they go through some training together, some separately. But the really exciting part, I think, of the training is they bring a policy initiative that will drive greater financial inclusion for women in their own countries. And we've seen some really exciting projects come out of that that program. And then the third leg of our stool is about a dozen years ago we became an impact investor, and we first raised a $50 million fund that invested in ten inclusive finance organisations. We're now in very far along in our exit mode. And then last year we closed on a second impact fund for $103 million, and that's really investing in some fascinating companies, several fintech's. My favourite in the portfolio is an affordable housing finance company in India that requires the woman's name to be on the title to the property that's being financed, which is such an important, it's sort of back to that asset ownership point I mentioned. But it's such also an important moment of empowerment for a woman to own that asset in her name.
Jane: [00:20:16] That's fascinating because I think your work is clearly trying to influence the way in which providers of financial services are operating, but also the policy context within which they operate. And also putting your money where your mouth is on the impact fund. So, I think it's fascinating and it's sad to think that an organization like yours needs to exist. But clearly that billion number is still quite big, right? I was looking on your on your website and I saw that up until the end of 2022, I think you'd managed to reach 20 million. Is it 20 million women? I think so. You're slowly getting through that billion. So, we really do need the financial services industry and governments around the world to kind of make a step change, right?
Mary Ellen: [00:21:01] Exactly. But, you know, I would say that there is a piece that all of us can do, and it's not just down to the financial service providers and the governments, because we can be much more conscientious consumers of financial services. There is now, again, ample evidence that when women are in the leadership governance, boots on the ground of a financial service provider, that organisation. tends to serve more women clients. And so, I mean, do you even know the makeup of the board of directors of your insurance company, for example? You know, are these organizations likely to be ones who are going to be really inclusive?
Jane: [00:21:41] I think that's a really nice link, actually, between why it's so important that diversity and inclusion remains a top issue for all corporations, regardless of whether or not they're active in the developing countries or not. Because actually this is root and branch. The way an organization thinks about its suppliers, its customers, its workforce, right? So, this is not just about the makeup of a workforce. It's about the mentality of an organization, isn't it?
Mary Ellen: [00:22:08] Absolutely. Well put.
Jane: [00:22:11] Mary Ellen, I think we could go on forever, but I think we'll spare the audience because there's enough for a whole other episode. But thank you so much for sharing your insights with us today. It's truly fascinating work that you and the organization is doing. So, I wish you all the best of luck. And if ever there's anything I can do to help, then just give me a call. Thank you so much for your time.
Mary Ellen: [00:22:31] Will do, Jane. Thank you so much.
Jane: [00:22:37] So that's it for this week's episode of the Sustainable Growth Podcast. If you're not already following us, then do follow us and rate us on Spotify, Apple Podcasts or any other podcast platform. And of course, if you've got questions, comments or someone that you'd like us to talk to then drop us a line at fmt@lseg.com. Thanks for listening to this truly fascinating episode and we'll see you next time.
