news - Non-financial services to women are a win-win for banks

A new study done by IFC and FMO shows that banks that integrate non-financial services (NFS) into their women-led business plan not only see a positive ROI (return on investment) within 2 years but also give women SMEs the essential tools to unlock growth potential.

Data show that women are good savers, responsible and loyal clients, and a gateway to household spending. Small businesses need more than just finance. Training, mentoring, networking, and other non-financial services can give entrepreneurs a vital leg up. For women-owned enterprises, the benefits of these non-financial services can be particularly profound, helping them to overcome systemic barriers that limit their access to finance and markets. This is especially important in emerging markets.

This report surveyed 34 banks worldwide on their approach to and measurement of non- financial services, with a focus on their offerings to businesses owned by women. The report also features interviews and further in-depth analysis, from KCB Bank in Kenya to NatWest Group in the United Kingdom. As this report’s unique new dataset shows, non-financial services aren’t just a good deal for SMEs. They are also good for financial institutions that offer them. These institutions generally see a return on their investment in one to two years, resulting from the acquisition of new clients and a deeper engagement with existing clients. When non-financial services are provided to women entrepreneurs, the returns outperform those from offering these services to men.

The study’s results are particularly meaningful in uncertain times. The COVID-19 pandemic has impacted economic growth and jeopardized millions of businesses in developing countries. By adding non-financial services to the typical suite of products for women-owned businesses, financial institutions can help solidify the economic recovery, protect the businesses in their portfolio, and improve their bottom lines. As much as $5 trillion could be added to global economic growth if women and men participated equally as entrepreneurs. We need to tap into that economic potential now more than ever.

Non-Financial Services: The Key to Unlocking the Growth Potential of Women-led Small and Medium Enterprises for Banks