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<p style="text-align:justify;">In the early 90s’ in India, my grandmother helped women entrepreneurs finance their ventures. The women preferred my grandmother as a lender over banks as she took no collateral. My grandmother too preferred this as women always returned their loans. Women may not be big risk-takers but when they do, they have a well-formulated execution plan to turn a profit.</p>

<p style="text-align:justify;">Historically, traditional finance has ignored women and their credit needs, as they are unable to provide security due to limited access to wealth, education, job opportunities, and property rights. As of 2017,&nbsp;<a target="_blank" href="http://www.ras.org.in/women_s_access_to_banking_in_india">only</a> 5% of Indian women had access to bank credit. While government efforts have improved this, true financial inclusion remains a distant goal. The All India Debt and Investment Survey (AIDIS)&nbsp;<a target="_blank" href="https://www.livemint.com/opinion/online-views/shes-yet-to-log-in-let-s-fix-india-s-gender-gap-in-financial-inclusion-11635959100151.html">administered</a> by the National Statistical Office shows that about 80.7% of women in rural India and 81% in urban areas had bank deposits, but other research indicates that 55% of these bank accounts are not in use. The AIDIS survey further indicates that barely 20% of rural women have a debit or credit card as compared to 64% of men.&nbsp;</p>

<h2 style="text-align:justify;"><strong>Rising number of women retail investors</strong></h2><p style="text-align:justify;">These barriers have impaired women’s ability to become retail investors. As a result of the pandemic, the proportion of women investing in equities has increased from 16% to 24%, according to&nbsp;<a target="_blank" href="https://economictimes.indiatimes.com/markets/stocks/news/more-women-join-the-stock-market-party-on-d-street/articleshow/88926277.cms">data</a> available with top brokerages.</p>

<p style="text-align:justify;">The last decade has seen a surge of women in the workforce, increasing their financial knowledge and the want for economic independence. More women are saving and adopting investment vehicles, even if they are not tailored towards their needs. According to Fidelity&nbsp;<a target="_blank" href="https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/about-fidelity/FidelityInvestmentsWomen&amp;InvestingStudy2021.pdf">data</a>, 67% of women in the US are now investing their savings in the stock market, signifying a 50% increase in the volume of women investors active since 2018.</p>

<p style="text-align:justify;">The global investment arena is male-dominated. In India,&nbsp;<a target="_blank" href="https://www.business-standard.com/article/markets/female-investor-participation-in-india-below-global-average-shows-data-121100300792_1.html">women</a> account for just 21% of investors. This trend is expected to improve over time with greater participation from women aided by digital technology adoption.</p>

<p style="text-align:justify;">More women are also inheriting wealth. According to a McKinsey&nbsp;<a target="_blank" href="http://file:///C:/Users/user/Documents/mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management">report</a>, an unprecedented amount of assets will shift into the hands of US women over the next three to five years. The shift represents a US$ 30 trillion investment opportunity by the end of the decade. While there is no official&nbsp;<a target="_blank" href="https://www.livemint.com/news/india/as-property-prices-rise-more-indian-women-claim-inheritance-1552462132830.html">data</a> on inheritance claims made by Indian women, the 2011 census data shows that only 13% of farmland across the country is women-owned.</p>

<h2 style="text-align:justify;"><strong>Creating a level playing field</strong></h2><p style="text-align:justify;">For women, the wage gap creates a difference in how they save time. The question then is how the women’s savings can be brought at par with men. In the asset management sector, for example, the wealth manager or financial advisor plans a portfolio based on the risk profile of the person. Risk profiles vary depending on age, gender, and personal preferences. To design financial products and services for women, the weighted average of allocation in the risk profiles needs to be tailored for them. The aim must be to create an equitable field for all genders.</p>

<h2 style="text-align:justify;"><strong>Designing women-centric financial products&nbsp;</strong></h2><p style="text-align:justify;">Globally, more women are inheriting their ancestral wealth. These women are digitally native and connected. As a demographic, these women will find digital assets an attractive investment option as the sector gives greater control over assets owned.&nbsp;</p>

<p style="text-align:justify;">Often traditional financial instruments are packaged to attract female retail investors but are not inherently structured to benefit them. This practice of gender washing must be discouraged. Efforts must be taken to truly understand the needs of women retail investors.&nbsp;</p>

<h2 style="text-align:justify;"><strong>Tapping rural women investors using DeFi&nbsp;</strong></h2><p style="text-align:justify;">The demographic of rural Indian women remains underrepresented in traditional finance. They can leverage Decentralized Finance (DeFi) based crypto as a retail investment tool. It provides them the option of earning interest from investments by lending their crypto assets and accessing credit from other lenders.&nbsp;</p>

<p style="text-align:justify;">With greater Internet penetration into rural India, these women can leverage the next wave of financial disruption through DeFi, which does not have biases in terms of who it serves. Retail women investors can access DeFi apps enabled through Decentralized Autonomous Organizations (DAOs) that run on the blockchain. DAOs are communities based on transparent rules written in code and defined by smart contracts.&nbsp;</p>

<p style="text-align:justify;">They are decentralized, unaffiliated with any specific nation-state or central banks, and do away with traditional bureaucracy. For example, MakerDAO, a crypto lending credit facility, allows lending and borrowing using the DAO’s native DAI token. This stable coin defines the lending rates and repayable amounts.</p>

<p style="text-align:justify;">DeFi enables charitable organizations to form their own DAOs to fund women entrepreneurs. For example, Pussy Riot, Russia’s political protest art collective, is&nbsp;<a target="_blank" href="https://nftevening.com/pussy-riot-to-launch-dao-aiming-to-empower-women-and-lgbtq-artists/">launching</a> a DAO to further foster inclusivity in the Non-fungible Token (NFT) space. Their goal is to promote and protect women and LGBTQ+ artists.</p>

<h2 style="text-align:justify;"><strong>Investing in ESG to be a major attraction&nbsp;</strong></h2><p style="text-align:justify;">In 2020, ESG funds for traditional finance captured US$51.1 billion of net new money from investors, according to Morningstar&nbsp;<a target="_blank" href="https://www.cnbc.com/2021/02/11/sustainable-investment-funds-more-than-doubled-in-2020-.html">research</a>. These investments were largely led by women who are wealthy and socially conscious.</p>

<p style="text-align:justify;">Complying with ESG goals is a priority in the crypto space too. An industry-led effort will help bring women as a demographic to the forefront of retail investing. A&nbsp;<a target="_blank" href="https://www.rbcwealthmanagement.com/en-us/newsroom/2021-04-06/women-are-leading-the-charge-for-environmental-social-and-governance-esg-investing-in-the-us-amid-growing-demand-for-responsible-investing-solutions">study</a> by RBC Wealth Management found that women are more likely to invest in companies that incorporate ESG factors into their policies and procedures.</p>

<h2 style="text-align:justify;"><strong>Educating future investors</strong></h2><p>An industry-led effort to encourage financial education among women investors on the financial types, styles, vehicles, returns, and risk profiles is essential. The drawbacks and risks of financial investment tools also should be communicated.</p>

<p>These financial literacy programmes should aim to help women achieve their financial goals, akin to the role played by financial advisers. The objective should be to make financial literacy less confusing and daunting for potential women retail investors and empower their financial decision-making capabilities.</p>

<p>These efforts must be complemented by changes in society itself where women start making their own financial decisions. This shift will be gradual, as more women enter the workforce earning more, they naturally would want to have more say in their finance.</p>

<p>The crypto sector should aim at creating and incorporating a feedback mechanism from women. This will help understand the risk profile, appetite, and future goals of women retail investors and design better financial products catering to these needs.</p>

<p><i>Priya Suhag is Head of Strategic Development at CrossTower. She specializes in product strategy and distribution for wealth and asset management with a focus on the digital asset domain.</i></p>

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