Why financial institutions should make investments more attractive to women
Investing is still a man’s job. In 2023, this sounds absurd – nevertheless, the offers of the financial sector are currently mainly tailored to a male target group. This circumstance describes the financial service gender gap.
This article first discusses the reasons why women have hardly appeared as investors so far:
- Lack of self-confidence and financial knowledge
- Financial products are not adapted to the life phases of women
- Unsatisfactory advice and approach as well as lack of confidence in financial services
We then explain what financial institutions can offer to tap into the untapped potential of the female target group and cite best practices for each point:
- Creating networks and counselling services
- Recognising and planning for volatile life phases
- Addressing and communicating with target groups
Women represent a high, as yet untapped potential on the capital market. Not only do they represent a significant factor in the global economy, but they will also be much more strongly represented in investment and financing projects in the future, on the one hand because of their further increasing income, and on the other hand as a result of their growing willingness to invest. In order to establish themselves as a long-term partner for this target group, financial market participants must now create offers that take into account the individual needs of women.
The average net household income of women is growing steadily. Eight out of ten women say they want to invest more in the future. If they were to invest to the same extent as men, the additional investment potential would be over three trillion euros, which would also increasingly flow into impact-oriented investment products  that have a positive social and ecological impact. Although women have long since ceased to conform to the image common in the past and their role has changed in many areas of life, financial institutions have often not adapted their product and service offerings to the needs and desires of a female target group.
In order to design offers that are target group-oriented, it is important to shed light on the backgrounds that lead to the existing inequality in the investments of men and women. What are the obstacles that still stand in the way of women investing?
Why do fewer women than men invest money?
1. Lack of self-confidence and financial knowledge
Women participate in career and education issues much more equally today than in the past, and as a result, they are also more involved with finance and investing. However, research shows that women have less financial knowledge than men and are less likely to see themselves as investors. This is partly due to a different socialisation and less contact with financial topics within the social sphere. “There is too little talk about finance with young women,” emphasises Prof. Dr. Alexandra Niessen-Ruenzi, who researches gender-specific differences in the capital market at the University of Mannheim. 
This is also reflected in self-perception: seven out of ten women cite lack of financial education and lack of income as reasons why they do not invest or invest little. For example, according to a study by BNY Mellon in 16 selected markets, women believe that they need around 4,000 euros of disposable income per month to be able to successfully invest part of their money. In comparison, men already consider investing at a lower income, while women invest less at the same income. 
2. Financial products are not adapted to the individual life phases of women
The touchpoints of today’s customer journeys do not address the individual circumstances and life events of women. Possible interruptions and changing life circumstances in which childcare, part-time employment, re-entry into the workforce or retirement planning with regard to longer life expectancy play a role are not taken into account. The life phases that women go through are not only more volatile, but can also trigger uncertainties regarding the long-term financial situation, crises or failures. Since these contingencies are neither part of the product design nor of the personal approach and advice, 80 percent of women do not currently feel adequately advised by their banks . This not only reduces satisfaction, but also the trust placed in banks and financial service providers on the part of women.
3. Dissatisfaction with advice and approach as well as lack of trust in financial services
The female target group is becoming increasingly heterogeneous. 13 percent of those under 30 say they also want to invest in speculative and risky products.  However, empirical studies show that women generally invest less riskily. They attach importance to financial security and usually link investment decisions to clear goals that include social components, for example education or provision for the care of relatives. ESG-compliant  and impact-driven investment products , which generally aim for a longer investment horizon, are therefore popular among women. However, these preferences are currently not reflected in either product design or client approach, which means that women often feel unappreciated in the financial industry and lack confidence in financial services. Although professional advice is preferred by women, 67 percent of them feel misunderstood in advisory situations and would like more information and transparency. 
What can financial institutions offer women?
Financial institutions should view women as a large, heterogeneous target group for which specific solutions need to be designed according to subject areas and segments. In the case of lending, flexible instalments might be needed during parental leave, for example, while in the case of investments it is more a matter of addressing the target group specifically, but not other products.
Based on various studies, pilot projects and Consileon project experiences, three main proposed solutions can be summarised.
1. Creation of networks for exchange and advisory services for knowledge transfer
In order to change the self-perception of women as investors and to increase the self-confidence to invest that goes along with it, educational and awareness-raising offers are necessary, for example on the part of financial institutions. They help to open people’s eyes to the fact that the aforementioned concerns and misconceptions as well as the resulting reticence are ultimately unfounded. Missing financial knowledge can be built up and expanded with the help of financial blogs, podcasts and knowledge platforms, but also through seminar-like educational offers. In addition, women can exchange information about similar needs and challenges in corresponding networks and learn from the experiences of others. Individual coaching offers and knowledge transfer in advisory services also help to establish a trust-based client relationship and strengthen women’s self-confidence in investing. This accommodates the desire for transparency and well-thought-out decisions and ultimately leads to confident participation in the financial market.
Die Direktbank Comdirect hat sich mit den „Finanzheldinnen“, einer Initiative, die verschiedene Produkte zum Aufbau von Finanzwissen und zur Finanzplanung anbietet, als eines der ersten Geldinstitute diesbezüglich aufgestellt. Die Sparkasse zieht mit verschiedenen Veranstaltungen und der 2021 vom Sparkassen-Innovation-Hub veröffentlichten Studie „Female Finance“ nach. Daraus entstand jüngst „Blooom“, eine Lösung, die die Bereiche Finanzwissen, Mindset sowie Finanzmanagement und Planung für Frauen vereint.
The direct bank Comdirect has positioned itself as one of the first financial institutions in this regard with the “Finanzheldinnen” (eng. Financial heroines), an initiative that offers various products for building financial knowledge and financial planning. The Sparkasse is following suit with various events and the “Female Finance” study published by the Sparkassen Innovation Hub in 2021. This recently resulted in “Blooom”, a solution that combines the areas of financial knowledge, mindset and financial management and planning for women.
2. Recognising and including the volatile phases of life
The individual life phases of women lead to different needs in the design of financial planning, some of which only become apparent upon closer examination. They need to be identified and addressed in the approach, product design and advice. “Every customer should be advised individually according to her respective phase of life and the resulting needs. However, this is currently not the case,” says Milena Rottensteiner, head of the S-Hub.  Research shows that gender-specific products are not necessary for this, but rather access and counselling in this context are decisive. 
Fintech Vitamin, funded with 1.7 million euros, was founded in 2021 and offers two different models to help women with financial planning and management depending on their current life situation: “Saving Sara” helps women to save early in their working lives through tools and an investment plan. “Learning Lea” offers financial knowledge for women who have already saved. The first step is an orientation test on investment preferences; later, goals and different impact fields can be selected.
3. Target group-oriented approach and communication at eye level
In order to successfully address women as a target group, it is important to create more personal and trust-based client relationships and to take into account the individual goals, experiences and needs of female clients. In doing so, it is important to address their preferences such as long-termism, ESG compliance and alignment with personal values not only in the advice but also in the customer approach. In order to facilitate decisions, customer journeys should be created that address those points that have held women back from investing up to now. For example, an included risk assessment creates trust.
The digital finance company Ellevest was founded in 2014 and specialises in financial planning and advice for women. The company offers customised investment strategies, portfolio management and financial planning, as well as educational resources and financial literacy tools. In its client communications, Ellevest focuses on targeting women and their specific financial needs and challenges. In addition to placing online and offline advertising, webinars and formats such as blogs, podcasts and learning videos are offered.
The Call-to-Action for Financial Institutions: Making Better Use of the Investment Potential of the Female Target Group
The aforementioned studies, assessments by female experts and the solutions that have emerged show that traditional banks and financial service providers not only enjoy a low level of trust among the female target group, but are also not sufficiently customer-oriented when addressing and offering their financial services. Especially for women, there is often a lack of customised solutions that are adapted to their individual circumstances. Female fintechs succeed in one thing in particular compared to traditional banks: recognising the individual life phases of women, understanding the resulting customer needs, and creating customer-centric solutions and authentic brands that inspire trust in the target group.
One approach for financial institutions can be to expand their existing mandated solutions such as individual custody advice to take into account the needs and preferences of women described here. Within the framework of a three-phase model, the path to a long-term client relationship can be prepared step by step. In the first phase, the focus is on knowledge building and exchange as well as the introduction to investing – for example in the form of savings plans. Then, with the help of individual custody account advice, it is important to enter into a closer discourse and provide assistance as well as investment proposals that are adapted to the individual life situation and tailored to the preferences of the client. In the final step, this can lead to a trust-based mandate business and a close client relationship in which the female target group feels well taken care of and understood.
In summary, there is a need for a holistic approach to better address the female target group, which in particular takes into account the crucial phases of life through custom-fit and specific offers. Although diversity is already an issue for many financial service providers, many products are not designed with the female target group in mind. What is certain: Female finance will establish itself among financial service providers – either through the banks themselves or through specialised fintechs.
In any case, female finance should be seen as an opportunity for banks and financial service providers. By acting in time, financial institutions can thus unlock the enormous potential of more than three trillion euros on a global level and generally enable impact-oriented investments in people and the environment.
If you also want to deal with the topic of female finance, if you are already rethinking your savings and investment products with a focus on female customers or if you want to put existing business models to the test, Consileon’s experts are looking forward to an exchange.