Can Banks Reverse a Complicated History with Women?
While women play a serious role in the economic landscape — whether via their control of household finances or in their consumer spending habits — they don’t have as much trust in banking institutions as men do. In the United States, this distrust is closely entwined with women’s sociopolitical positioning and experience. Banks that take proactive steps to help women customers navigate their unique challenges are more likely to have a better relationship with them.
By Ranica Arrrowsmith
While women play a serious role in the economic landscape — whether via their control of household finances or in their consumer spending habits — they don’t have as much trust in banking institutions as men do. In the United States, this distrust is closely entwined with women’s sociopolitical positioning and experience.
It was only in 1963 that the Equal Pay Act, which prohibits same-sex wage discrimination, was enacted. Almost 60 years later, the gender wage gap still exists — and is even more exaggerated for women of color. In 2024, the U.S. celebrated the 50th anniversary of women receiving the right to open a credit card or other lines of credit under their own name without a male signatory. Other laws enacted later around reproduction rights and family law made it more feasible for women to remain in the workforce on their own terms.
Most of these legal, social and political milestones for women occurred recently enough that they are still in living memory, and the problems they intended to solve remain to varying degrees. In fact, women’s financial progress has plateaued since the turn of the century, according to research from the Financial Health Network. Their participation in the workforce has stagnated, the gender wage gap has held at 82 cents on the dollar with a wider gap for women of color — and the wage gap exists in 98 % of occupations.
Trust in banking institutions has been low since the crash of 2008, regardless of gender, according to Mariel Beasley, principal at the Center for Advanced Hindsight (CAH) at Duke University and co-director of CommonCents Lab, a sub-center of CAH and a research lab that focuses on financial decisions of low- to moderate-income households in the U.S. But barriers to banking that affect everyone tend to impact women even more because of the external social and political landscapes of their lives.
"Anecdotally, just two months ago I needed a cashier’s check for about $250," Beasley recalled. "I went through the drive through to save time and they insisted that I had to come inside. Several months before, I needed a much larger cashier’s check — several thousand dollars. I went through the drive through then, and they made an exception for the inside rule because I had two sick kids in the car. So if they could make an exception for several thousands of dollars, why exactly did I have to go into the bank for just $250? Some restrictions and limits are driven by federal regulations and some are old policies that are just in place because they’ve always done it that way. Both those policies — whether truly federal law or just status quo — can be extra burdensome on women."
A Gentle Hand on the Shoulder
The distrust women experience with banks affects banking relationships in more ways than is obvious. For instance, because women are less likely to view financial health information from their bank as trustworthy — 52% of women versus 55% of men – they have far less recall of the advice and guidance interactions they do have with their bank, according to the 2024 J.D. Power U.S. Retail Banking Advice Satisfaction Study. And only 21% of women are even interested in receiving advice or guidance from their bank, compared to 28% of men.
This data point is of particular interest to bankers: Women are more likely to prefer advice on demand versus advice pushed routinely from the bank at regular intervals. They are significantly more likely than men to only want advice when they request it or when their financial situation changes.
"It’s about the welcome mat that you set out for customers," says Jennifer White, senior director, banking and payment intelligence for J.D. Power. "When you get a new customer, you need to convey that the account they’re in is best for their needs. There should be good standards of advice delivery – ask questions before making recommendations. Give pros and cons when making recommendations."
One of the primary ways to impact trust for women, White says, is a different approach to providing advice. "Move beyond being a transactional partner," she advised. "The approach should be like a gentle hand on the shoulder, with topics that have less to do with moving money from one place to another, and more to do with real life experiences. For example, quick tips on budgeting accessible when needed, or advice around how saving for tuition is different from saving for an emergency."
Read more: Should Banks Ramp Up Budgeting Tools After the Demise of Mint?
A Precarious Position
Women remain significantly less financially healthy, and therefore more financially vulnerable, than men. The J.D. Power study found 60 % of women to be financially unhealthy, compared to 53% of men; and 38% of women are financially vulnerable, which means they do not have enough money on hand to meet unforeseen circumstances or emergencies.
Data from the Financial Health Network corroborates the same: Even after controlling for income and other demographic factors, women are still percentage points less likely to be financially healthy than men.
According to recent data from the Center for American Progress, in 2022 women were less likely than men to be able to pay their bills on time and in full (79% for women versus 84 % for men); Less likely than men to be able to cover three months of expenses in an emergency (52% versus 56%); and more likely than men to have increased credit card debt (15% versus 12%).
Banks that take proactive steps to help customers avoid these pitfalls are more likely to have a better relationship with them, White says.
"Women are more likely to respond to banks that are proactive, alerting women when they’re in a danger zone – for example being in danger of paying a fee, or an account balance has gotten too low, or they’re close to overdraft." White says. "They are also more likely to respect banks who offer grace periods."
CAH’s Mariel Beasley agrees.
"Most banks are leaving a lot of potential on the table for really driving financial health for their customers, regardless of the quality of the relationship," says Beasley. "They tend to be reactive to customer needs rather than proactive. I like the analogy of comparing a bank to a doctor’s office. If you walked in and told your doctor that you needed a prescription for Amoxicillin, any good provider would do an exam, talk about your symptoms, possibly run some tests, and look at your medical history before prescribing you something. But if you walk into a bank and tell them you need a credit card, they ask you which one and then see if you qualify."
According to White, the COVID-19 pandemic exacerbated existing factors of financial vulnerability across the board, reversing financial progress for many demographics including women. Traditional friction points customers experience in banking, such as overdraft fees and lack of high interest savings options, became more troublesome during a time when people desperately needed access to money. Banks can move towards rebuilding trust with women customers by treating the relationship with more care — showing that they are truly looking at customers as individuals with unique needs.
"Personalization of interactions is not just a buzzword for banking," White says. "There are too many experiences in women’s digital and retail lives where partners in whatever we are working towards can demonstrate they know who we are. Amazon knows what we buy, and what we want. Social media algorithms know what we want to see. As primary consumers in households, women have more interactions with those services and apps, and so they know what they’re missing."
What Women Want
Women are significantly more interested than men in the following topics, according to results from the J.D. Power study:
- Saving for a goal or large purchase;
- Lowering loan payments or consolidating debt (women hold significantly more student debt than men);
- Quick tips and information to help improve your financial situation;
- Advice regarding a will, estate planning, or trust;
- Ways to help save for emergencies; and
- Quick tips to help stick to budget.
In contrast, men are significantly more likely to seek:
- Investment and retirement related advice;
- Borrowing and credit advice;
- Insurance related advice;
- Ways to reduce fees paid to the bank;
- Ways to help prepare or lower taxes; and
- How the bank’s tech/digital services can benefit them.
It’s telling that men explicitly named technology as a factor in banking that interests them, and women did not. Technology can be a great tool to deliver better, more personalized services to customers, both men and women. However, women tend to value personal relationships more, which technology can seem in opposition to.
Bank customers tend to want to receive advice digitally, but at the same time report dissatisfaction with advice when it is received digitally, the J.D. Power report found. Satisfaction is significantly higher when the advice is received via a personal contact, compared to self-service interactions through an app. When received via a personal relationship, data shows that the advice is more likely to meet customer needs and customers are more likely to act on the advice, benefiting both parties.
Dig deeper:
Building Out a Personalized Banking Structure for Women
This is not to say technology simply can’t meet customer needs fully. Many banks provide apps with deep functionality and personalization options. But for women, the tech needs to exist in tandem with personal relationships and context.
"Personal financial management tools, cash flow displays, spend management tools, especially with features like trending data, and comparison to norms or your own month to month patterns, give customers a sense of where they fit into something larger than just monitoring their own pennies and dimes," White says.
"Technology can really help overcome some of the time barriers that women face in banking," Beasley added. "It can more readily provide just-in-time information to make a bank a stronger partner for financial wellness. However, women also are more likely to rely on relationships to build trust, which technology can obfuscate."
Beasley also noted two specific areas in which banks can really support women who bank with them: better joint accounts, and proactive responses when a relationship ends (death, divorce or other).
"A joint account should always come with two individual accounts that are connected to the main account but invisible to the other partner," Beasley suggested. "The bank should work with couples on how best to set up and manage their joint and individual finances for the household. Because women are more likely to be the subject of financial abuse and control, and more likely to be a lower earning spouse, banks can do a lot to set up accounts to help balance the power and create a more equitable distribution of assets."
Similarly, when customers go through death of a spouse, or divorce, banks can do a better job of guiding customers, particularly women, through the financial implications.
"Households tend to appoint a household CFO who deals with most of the finances and financial decisions for the household," Beasley says. "While this is good for the household, the non-CFO household member’s financial literacy and financial knowledge actually atrophies overtime and they end up knowing less than they did at the start of the relationship. This is particularly relevant to women because they are more likely to outlive their spouse, which means that if their spouse was the household CFO, they are going to feel extremely lost and overwhelmed with their finances and likely a higher risk for fraud."
Ultimately, when bank services fall short, customers feel the effects — but financial health and vulnerability determines just how much a customer is impacted. Improving bank services, especially in the areas of personalization, will benefit all customers, but especially vulnerable ones, of which women make up a greater proportion.
Ranica Arrowsmith is a freelance writer based in New Jersey, focusing primarily on the technology, finance and accounting industries. She has written for Accounting Today, MarketWatch Picks, and other publications in the medical technology space.
