Ravi Lalwani: What percentage of your customers are women? What percentage of your overall business comes from women customers? How have both these figures changed over the last few years?
Purvi: As a prominent microfinance institution, most of our clientele comprises women borrowers from rural or semi-urban areas, many of whom possess limited literacy. These women borrowers encounter significant challenges when seeking loans from formal entities such as banks and other financial institutions, primarily due to the absence of formal income documentation and the inability to provide tangible assets as collateral.
Through our microfinance loan product, we extend collateral-free loans to empower these enterprising women. Additionally, they can participate in group loans, wherein a collective of women serves as guarantors for each other, relying on social collateral rather than tangible assets.
Our active membership encompasses over 500,000 women customers, and we take pride in positively impacting the lives of more than a million women borrowers since our inception.
Priti: 80% of the customers are women and 20% are relatives of these women. This number has increased over time. While we are sustaining the 80/20 ratio, our platform is experiencing rapid growth in the number of women users, primarily due to strong word-of-mouth referrals, making us an integral part of their coffee conversations.
What changes in demand for financial services are seen among women customers in the last 2 years?
Purvi: From a microfinance standpoint, the predominant emphasis has traditionally been on financing women borrowers to catalyse economic activities such as initiating small businesses, engaging in cattle rearing, and obtaining agricultural loans. However, a noteworthy shift in focus has emerged as of late, with increased attention directed toward vital sectors such as water and sanitation loans, education loans, house repairs, and extension loans. This pivot reflects an evolving commitment to address diverse socioeconomic needs and foster holistic development within the communities we serve.
Priti: Traditionally men have been the bread earners. Hence, matters of money have always been left to men starting from saving to investing. While the society around women is changing and making way for a more progressive work culture, women are gradually starting to participate in money conversations. Along with this, with an increase in digitization, availability of easy-to-consume information, increased awareness, and a mindset shift from traditional instruments to mutual funds, financial literacy is improving and therefore leading to an increased demand for financial services in the country.
For example, in the mutual funds industry, women’s participation has increased to over 7.45 million at the end of December 2022 as compared with 4.95 million in December 2020, indicating an increase of over 2.5 million women investors, according to the data from Association of Mutual Funds of India (AMFI). Women investors in the age group of 25-35 saw a significant increase, as the number moved from 0.98 million at the end of December 2020 to about 2 million at the end of December 2022. The higher participation rate in this age group suggests that women are choosing mutual funds as a preferred way to invest money when they begin earning. There is still a huge potential for women and investing in India.
What changes in demand for financial services do you expect among women customers in the next 2 years?
Purvi: The nation is experiencing a surge in economic activity, with significant developments in rural regions. Aspirations of the populace have evolved beyond mere subsistence, now encompassing ambitions for upward mobility. This shift can be attributed, in part, to rising levels of education and the growing impact of social media, which are reshaping mindsets and elevating the expectations and demands of individuals within the bottom of the pyramid segment.
Looking ahead, it is evident that women customers will exhibit a heightened interest in availing of house repairs & extension loans, vehicle loans, consumer durable loans, and education loans, among other financial services. This changing trajectory underscores the need for financial institutions to remain attuned to evolving customer preferences and offer tailored solutions to cater to the evolving aspirations of this dynamic demographic effectively.
Priti: The future of financial freedom for women is the onset of an evolutionary change, and it begins with a simple adaptation of money management, as a life skill. Therefore, going forward, with increased awareness and a rise in the participation of women in the workforce, we will see this trend gaining even more momentum. I believe that women will play a crucial role in the growth of financial services in the country as they take a step towards making their own financial decisions to plan for achieving their dreams. At LXME, India’s first financial platform for women, which is a fast-growing robust community-led expert-backed hassle-free platform curated for women, we’re working to inspire a wave of financially fearless women by providing them with the right knowledge and tools to take charge of their finances offering the ability to ask, learn, plan, borrow and invest as per their goals via a simple mobile app.
Compared to men, what financial products do women prefer more and prefer less?
Purvi: From the vantage point of microfinance, which predominantly caters to women customers, it becomes apparent that their preferences incline towards savings products. Such offerings assist them in navigating through challenging circumstances and enable them to plan, particularly concerning their children’s well-being. While women borrowers demonstrate genuine concern about family emergencies, it is noteworthy that their awareness, affordability, and accessibility regarding insurance products continue to present formidable obstacles. Addressing these aspects will play a pivotal role in enhancing financial security and fortitude within this essential yet vulnerable segment of the population.
Women are great at saving money, and the top investment options preferred by them are gold, fixed deposits, and PPF. Recently, we’ve seen an inclination of women towards investing in equity through mutual funds to generate inflation-beating returns over the long-term period to achieve their financial goals. These days, women are making smart money choices. They are saving money but instead of keeping it in silly places like purses, cupboards, or even savings bank accounts, they are saving by investing in gold but in a smart way through Sovereign Gold Bonds and Gold Mutual Funds.
Priti: As we know that women are goal-oriented and as per LXME’s Women and Money Power Report 2022, the key investment drivers were planning for their child’s education, there and their family’s financial security, buying a house, etc. On our platform, we’ve curated products as per goals where women are investing for their child’s education, long-term and short-term goals! We have also seen the evolution in woman’s behaviour after they became a part of LXME. For example, one of them was only investing in traditional instruments, and after joining LXME, she diversified her portfolio in equity and debt instruments through mutual funds.
Women are risk-aware and invest their money after carefully understanding the products. Consequently, they tend to exhibit less inclination toward putting their money into trading in stock markets and cryptocurrencies.
What parameters in your credit evaluation system are more prominent for women customers than for men customers?
Purvi: Our assessment process does not rely on specific parameters; instead, we adopt a holistic approach considering the family’s overall income and their fixed obligation-to-income ratio. This comprehensive evaluation allows us to make informed and nuanced decisions, ensuring prudence and accuracy in our financial considerations.
Priti: In credit evaluation, two broad categories cover – the ability to pay and the intention to pay. Women are generally considered and proven to be more disciplined in their intention to pay on time and hence making for good borrowers. Therefore, even the new to-credit women can be considered. With regards to the ability to pay, while they might have thin files, we are also building user behaviour-based analysis specific to women including investing habits that can help evaluate creditworthiness. Women are also generally comfortable and have investments in Gold. In the absence of a credit score or need for higher values, gold loans are often a good fit.
Have you created any financial literacy campaigns targeted at women customers? If yes, please share content samples.
Purvi: In our steadfast commitment to empowering women borrowers, we have spearheaded several initiatives to enhance their financial literacy.
The ‘Samavit’ application is designed exclusively for conducting financial literacy programs among borrowers. This pioneering app has already benefitted over 12,000 borrowers, promoting greater financial awareness, and understanding.
We organize workshops with invaluable technical assistance from ADB and IFC to raise awareness about credit bureau functionalities and instil a sense of credit discipline among our clientele.
We have conducted digital literacy workshops to equip women borrowers with essential digital skills, empowering them to navigate the digital landscape.
We have conducted financial literacy workshops in underserved backward districts. We plan to host 60 workshops this year, with 20 completed workshops impacting the lives of more than 1200 borrowers.
Through similar initiatives, we strive to foster financial empowerment and resilience among the women we serve, elevating their financial well-being and xpanding their horizons for a brighter future.
Content that we cover as a part of the financial literacy workshop covers basics of (i) benefits of savings (ii) bank v/s home savings (iii) choosing bank and account, types of accounts (iv) how to avoid fictitious schemes (v) grievance redressal (vi) ATM self-operation (vii) beneficial government schemes (viii) schemes for elderly and disabled and (ix) digitization in banking.
Priti: We’ve conducted financial fitness bootcamps for 200,000+ women around the country equipping them with the right knowledge of personal finance. LXME platform has 50k+ women in the community, a safe space for women where we have witnessed more than 10 lakh money conversations. One of the key goals for a woman is to plan for their child’s education and understanding this need, we launched the child education plan on the LXME App, which offers the opportunity to a simpler approach to invest for their child’s education needs.
Women are great savers, and they want their money to be accessible. As per the LXME Women and Money Power Report 2022, 37% of women kept their money at home for emergencies, 65% of them kept it in a savings bank account and 16% gave it to their family members. In today’s time, women need to become smart savers. This is the reason we introduced LXME Gulluck, first-of-its-kind digital piggy bank for women, unveiled by LXME & DSP, under the campaign ‘Savings mein don’t be Silly’. Here, you can start investing with as little as Rs100 and access your money anytime!