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Closing the Gender Gap in Financial Literacy
Blog Closing the Gender Gap in Financial Literacy
Sibylle Fischer November 18, 2022 Innovation

Improving women’s financial literacy can help insurers build and maintain trust.

Do women build trust differently from their male counterparts? Multiple recent studies have sought to answer this question, looking at a host of ways gender dynamics can influence trust – from how we build it in the workplace, to how it influences our political participation, to how we regain it in the aftermath of betrayal

But as for how this question applies to financial services, including insurance, we know that building and maintaining trust is fundamental to the industry. And since the use of financial service products involves both trust and risk – it’s essential for all customers to have both confidence in, and an understanding of, the markets and investments they participate in.

Because of this, trust has been closely linked to financial literacy, or an individual’s aptitude for various financial skills and concepts, as both have a correlating impact on investment behaviors and preferences. However, disparities between men and women have also been observed when it comes to financial literacy. A 2022 study revealed a financial literacy gap between genders, with women registering lower financial literacy rates than men. According to the study, women correctly answered 45% of financial-related questions vs. 55% for men taking the same test. 

Similarly, an American College of Financial Services literacy study of men and women found that 35% of men passed a quiz on retirement income literacy, compared to just 18% of women. Distressingly, those who passed were also more likely to have a retirement plan.

Add to that sobering realities like the widening gender pay gap; the persistence of women’s smaller pensions (when compared to men’s), and the fact that women still live longer and spend a bigger part of their lives caregiving than men do and you’ve got a fairly troubling global financial prognosis for women.
 

Improving financial literacy for women

However, a fresh crop of apps and industry entrants are focused on solving this issue,  creating financial literacy platforms, products and services that directly address some of the biggest challenges today’s women are facing. 

Swiss financial company ElleXX is offering its legal protection insurance alongside a subscription service which provides advice and support for a range of situations which can commonly impact women – unequal wages, labor disputes, and divorce. 

Other companies, like Talia, have set their sights on closing the pension gap by developing customizable retirement products that help put women in control of their investing futures. 

Juno, an app and company whose mission is to give women and non-binary people the financial knowledge and confidence to build their wealth, has created an assortment of learning modules featuring content specially geared toward improving women’s financial literacy and addressing some of their most common questions, for example, “Building an Emergency Fund;” “Investing in Crypto”;“Changing Your Money Mindset”; and more. 

 

Adding value, building trust

Closing the persistent gender gap in financial literacy can be an incredibly valuable and effective way for insurers and others within the financial services industry to make an impact and add effective trust-building strategies to their value chain. While financial education isn’t a cure-all, it can almost certainly help broaden opportunities for women and improve their overall financial well-being. As more companies (and that includes insurers) create products and services geared to improve and strengthen women’s financial literacy, we can hope to see more and better access to appropriate financial services and products, and greater trust in the financial institutions that serve them.

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