. For a long time, financial service providers have focused on high net-worth individuals, salaried individuals and business owners to increase their profitability.
This is attributed mainly to two factors. One, a lot is known about these segments because they leave large financial footprints and rich data. This enables financial service providers to make accurate decisions, create targeted products and manage Know Your Customer (KYC) risks. Two, the cost of customer acquisition, maintenance and service costs in retail banking business is high.
However, digitisation is enabling inclusion of customer segments, which have been historically excluded from the financial service provider gamut. Effective implementation of Aadhaar-based eKYC collection and authentication lowered barriers of entry to the formal financial system. It has allowed the Jan Dhan-Aadhaar-Mobile (JAM) trinity to lay the foundation to bring 230 million unserved and underserved women into the formal financial services ecosystem. Women Jan Dhan customers constitute a cumulative ₹61,000-plus crores of deposits in these accounts.
First, women are decision-makers for spending and savings in most low-income households. They are thus more committed and disciplined savers than men. In our pilot project, we found 32% of women who were committed to saving versus 25% of men. These women grew their balances by 36% during the project period of five months (versus 24% by men). This showed that when given the opportunity, women save and by doing so build financial resilience.
Two, women value relationships over deals, special offers and rates. As their interaction with the bank improves, women can be encouraged to avail overdraft loans and micro-insurance, which enable them to invest in their families and create revenue opportunities for financial services. Thus, the bank will see better cross-sell and larger lifetime value in serving women customers.
Three, the Government of India sent ₹500 as direct benefit transfer (DBT), each month between April to June 2020, directly to women Jan Dhan accounts as Covid-19 relief. This has led to the activation of dormant women accounts and a spate of new accounts being opened by women. Families now want women to have and use their accounts, since they want to receive government benefits being sent to women.
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