Women, Risk, and Banking

By Liz O’Donnell, Founder of HelloLadies.com

The day before the Simmons Leadership Conference in Boston last week, Mary Ellen Iskenderian, president and CEO of Women’s World Banking, was fired up. Iskenderian was reflecting on a story in the Financial Times that ran with the headline, “Women bankers linked to rise in risk-taking.“ The article, based on research from the German Deutsche Bundesbak, reported that according to a study of German banks, boards with higher proportion of female executives “lead to a more risky conduct of business.”

Iskenderian knows risk. Women’s World Banking (WWB) is a network of 39 financial organizations from 27 countries that provide credit and loans to low-income women worldwide to fulfill their dreams by starting their own businesses. In addition to providing microfinancing, WBB works to empower and educate women to build financial safety nets for themselves and their families. That can be pretty risky business in some parts of the world.

The report on which Iskenderian was focused, actually looked at three variables on boards: gender, experience, and education. “Level of experience is what influences performance,” said Iskenderian expressing dissatisfaction in how the media had framed the report.

“I don’t think the genie is going back in the bottle,” she said addressing the idea that homogenous boards make better decisions and that women disrupt the “cozy” board environment. She cited a University of Michigan study that shows heterogeneous groups produce better outcomes. “You can’t take this (Bundesbak) study in isolation,” she said, also citing the mandate in Norway to fill 40 percent of board seats at publicly traded company with women. “The Norway mandate had teeth,” she said, and women received training to bridge any experience gaps. “There is a roadmap drawn for us. Train more women to serve on boards and it can be a very virtuous circle.”

Microfinancing and Diversity

Iskenderian is working on creating that virtuous circle in the world of microfinancing, something she spoke about at the Simmons conference. As the industry shifts from NGOs (non-governmental organizations) toward regulated financial institutions Iskenderian says, “There is danger and opportunity.” While organizations see microfinance as a growth opportunity, there is a different cost structure with commercial banks compared to NGOs. Therefore loan sizes are getting larger and organizations can offer a broader range of products.

The dangers, in a regulated, institutional model, she points out, are that often these organizations have, “strict profiles of what a CEO looks like and it’s hard to find a woman,” who meets the criteria.  And from the customer perspective, women are purchasing the products and many mainstream bankers aren’t familiar with the customer profile. While the influx of money and structure allows for better technology infrastructure and new innovations such as mobile banking and other cell –based technology, “Pakistani women tend to be more comfortable memorizing a PIN,” says Iskenderian as an example. New entrants into microfinance need to understand when a plastic bank card may be preferred over a mobile app.

To bridge that gap, WWB launched The Center for Microfinance Leadership. The center offers CEOs and senior managers leadership development and diversity programs through workshops and coaching. “We train leaders to both bottom lines,” says Iskenderian. Recognizing the social mission, she says, is integral to the overall objectives of microfinance. And a commitment to gender equity, is integral to the mission. “Outreach to the base of the pyramid is so unlike what (traditional bankers) know.”

Through training and development, Iskenderian says she is hopeful the world of microfinance can maintain a tradition of men and women at the helm.