As a young woman living in the UK right now, I spend a lot of time confused about my finances.... To the extent that, often, I just avoid dealing with them all together. And apparently I’m not alone; recent study found that 83% of women would like to become more engaged with their finances, but 8/10 are uncomfortable discussing it with even their close friends and family.
Worryingly, we're also saving less than men – typically, 38% less – and a woman’s average retirement income is likely to be around £5,000 a year lower than a man’s. With women living around four years longer, we actually need to find an additional £100,000 for a retirement income of £25,000 a year.
So, how can we swot up on planning for the future, on interest rates and the benefits of ISAs?
Sarah Pennells, founder of money tips website SavvyWoman, believes that the financial services industry just isn’t providing for women properly as is. “When I was launching SavvyWoman I was told by more than one investment company that ‘women don’t invest’ and that their customers were men,” Pennells told Refinery29. “That, to me, speaks volumes about their lack of success in engaging with women, not women’s lack of interest in investing.”
But before we get to the nitty gritty, let’s take a step back and look at the wider problems affecting the much maligned financial industry. A report by the Competition and Markets Authority was released earlier this week, after a two year enquiry into UK banks and their practices. The main finding was that we're being short changed by our loan providers.
As a result, the CMA have proposed what they call an ‘Open Banking Programme’ – a central feature of which is an app that will show customers which banks can offer them the best accounts, based on their borrowing patterns.
The CMA hopes these moves will make the industry more competitive. But Boring Money founder Holly Mackay echoes popular opinion when she says it just doesn’t go far enough. “Unfortunately, the banking sector too often gives off the impression of being one great big cartel, acting exclusively in its own interests rather than those of its customers” says Mackay. “I'm not sure the results of this enquiry will necessarily change that very much."
But while fans of the reforms are praising the CMA’s call for a ‘banking revolution', the real revolution is happening elsewhere – outside the heavily regulated, giant conglomerates that are the high street banks. Enter the ‘challenger’ banks.
Before 2013, no bank had been granted a licence in the UK for a hundred years. But thanks to the loosening of regulatory requirements, fourteen start-ups have obtained licences in the last three years. One of these newbies is Starling Bank who, like their fellow contenders, are promising to transform banking as we know it.
In doing this, they’re aiming to tackle the country-wide problem of disengagement. “Our research tells us that people of all genders, age ranges and backgrounds want to be more engaged with their finances,” says Starling’s CEO Anne Boden.
“What our research has shown though is that in households, between couples or even flat-mates, women are most often in charge of managing the budget,” she continues. “And for that reason, you could extrapolate that trying to manage your own personal financial health, alongside a household’s, would involve added pressure.”
Mackay touches on another reason why women might be banking differently to men. “I think women want to get more on top of their finances because – typically – we take more career breaks and earn less,” she says. “So we’re starting from behind when it comes to investing. And I think we get that moment in our 40s where we’re old enough to be “doing something” but also old enough to feel a sense of shame that we haven’t done it sooner. So we stick our heads in the sand and hope that it will go away!”
Caroline Evans, Content Marketing Manager at Money Farm, has a similar point of view, but is firm that the responsibility still lies with us as individuals. “People will argue that the industry should do more for the consumer. But ultimately it’s your wealth, it's your financial well being, and you should take control of that,” she says, while acknowledging that, "historically, it hasn’t been very easy to do that.” Which is where the challenger banks come back in, along with the multiple other fintech startups like Money Farm who are attempting to humanise banking.
And beyond the opportunity for fintech to transform our relationship with money? Well, there are much wider social implications of these transformations both at home and abroad. Economists say financial services like savings accounts, insurance or loans are just as important to escaping poverty as improved agriculture and education. Fintech could help women all over the world find their own independence. In some places it’s already starting to happen. "The World Bank has a financial inclusion strategy designed to improve women's access to financial services,” offers Mackay.
“It has found that in countries such as Pakistan, access to loans often have to be signed off by a male relative,” she elaborates. “It has helped women across the world gain independent access to financial services. This is vitally important: UN Women has found that giving women control of a greater share of household income, changes spending in ways that benefit children."
From making expert financial advice available to everyone, to giving women living in poverty direct access to savings accounts through their mobile phones, we are on the brink of a revolution that will improve women’s lives everywhere.