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Exus Blog Article

Gender: Is it sexist to customise your debt collections approach based on sex?

4 minute read


On the surface, the finance sector might seem equitable: over half of the world’s employees in the financial services sector are female. Drill deeper though, and a new picture emerges.

While the gender split, in terms of sheer numbers, is about right, leadership positions take on an altogether more masculine veneer. Women hold only 25% of senior management roles in the global Financial Services industry.

The tech industry, while a bit better, struggles with the same imbalances. In terms of leadership positions, the status of women in the technology sector is roughly on par with the 25% figure present in the rest of the economy.

The effects of this lack of diversity are numerous. Most obvious is the fact that women are paid less and there are many lurid stories of office cultures incredibly hostile to women. But often overlooked is how the imbalance trickles down to customers.

Gender imbalances often lead to subtle biases being implanted in financial and tech products, with default settings being skewed towards male customers. “These little slights add up ”, writes Sara Wachter-Boettcher in her book, Technically Wrong. “Day after day, week after week, site after site — making assumptions about who you are and sticking you into boxes that just don’t fit.”

Debt and gender

For heads of collections at major banks, gender might seem like a minefield they’d rather avoid. But it can’t be avoided because debt patterns often have a gendered component.

In South Africa for example, it’s been noted that single women have more unsecured debts than their male counterparts. That is, riskier sources of credit like credit card debt, personal loans, and payday loans. The implication is that they are struggling to make it to the month’s end.

This trend holds true in the rest of the world: of the 8.8 million people struggling with debt in the UK, 64% are women. Meanwhile, in the Global South, the world’s poorest regions, women bear the brunt of financial strife, often taking on debt to care for family members, pay school fees and medical bills.

If the experience of debt and debt management is demonstrably different between the sexes, then is it right for collections to offer a cookie-cutter approach?

Should you segment by gender?

The insurance industry segmented its customers by gender for years. Certain car insurers went so far as to only ensure women because, statistically, they have fewer accidents and make fewer claims.

While banks should be careful, it’s certainly worth asking: could collections teams get better results by segmenting by sex and adjusting the collections strategy to cater better to women?

Women are, after all, more likely to encounter debt trouble. While it’s true that men do have more debt, they also have higher credit scores and earn more, on average. Women have lower credit scores and, despite having less debt, they are more vulnerable to debt issues. At its base, it comes down to income: women make less than men.

This disparity holds true globally. Data from the World Bank shows women comprise just 38% of a nation’s value in “lifetime earnings”, while men make up 62%. It’s worse in low-income and lower-middle income countries, where women account for one-third or less of that wealth.

Women are more vulnerable to debt problems, then, not because of runaway shopping habits, as the stereotype goes, but because of structural challenges like the gender wage gap. If your collections process isn’t taking this disparity into account, you’re not meeting the needs of your entire customer base.

But while gender is an important consideration, it’s shouldn’t be your explicit focus. Instead, a holistic, data-driven segmentation of customers is the best way to create a fairer collections system.

To return to the example of the insurance industry, it’s actually the case that insurers have been banned from explicitly charging different premiums based only on sex since 2012. But this had a rather counterintuitive result.

Instead of focusing on something basic like gender, insurance companies broadened their scope. They segmented on occupations, vehicle class, how much you drive. As the data sets became richer, the system actually became fairer on women, rewarding them for making safer lifestyle choices. As a result, women pay lower premiums now than before 2012.

The lesson collections can learn from the insurance industry is to move away from basic segmentation - like gender - towards a hyper-personalized, ‘segment of one’ approach. By looking beyond demographics to individuals’ values and interests, you create a more complete profile, tailored to individual needs.

Gender bias in the debt collections process

Fairer collections don’t begin and end with just segmentation, however. If women are more vulnerable to debt, it’s worth wondering how the design of the collections process might disadvantage them.

Product design has generally struggled with inclusivity. And even when products are designed “for women”, they often focus on aesthetics, not substance. A classic design example is power tools: when a woman uses a power tool, the handle is often ergonomically incorrect and too heavy. They need to be lighter and easier to hold.

But design ‘for women’ often leads to tone-deaf, lazy design playing to feminine stereotypes like Bic’s disastrous attempt at creating a pen ‘for her’ in 2012. There's also the price difference - razors designed for women can be more expensive than the male equivalent, despite being the same product with a different design. So how can you create an inclusive collections process - without patronizing customers?

Technology has had an enormous impact on collections. Certainly, it’s created a collections process far more enlightened than the frocked debt collectors that roamed the streets of Spain post-2008 financial crisis.

But while technology and self-service have reinvigorated the collections process, making it more convenient and human, it doesn’t miraculously solve all issues – especially gender. Technology often reflects the biases of its creators.

Even the most advanced tech is susceptible, carrying through biases implanted in its creation. In one study, an artificial intelligence (AI) algorithm learned to associate women with pictures of the kitchen by analyzing the pictures shown deliberately shown to it by researchers.

Improving the experience of female customers is a conscious effort. How we use tools like collections software is an important part.

It starts with using software that empowers customization and self-service. It’s extremely difficult to create a core offering that caters to everyone. If you don’t want to change your collections approach entirely, think about what can be done to customize it and increase satisfaction for all users.

Collections software can identify the accounts that need to be worked more intensively and prioritize action rather than punishment, offering suitable restructuring plans, customizing the interaction and the timelines, and skipping entire steps. Combined with segmentation, you can offer a service that’s less hostile to people’s unique circumstances.

Inclusive collections

We’ve made the case before that collections aren’t just a loss mitigation activity. It’s a critical part of the customer life cycle. When your customers are struggling, that’s when they need you most.

Knowing what we know about how debt disproportionately affects women, it’s perhaps time that collections departments consider how gender plays a role. Women are more likely to struggle financially, they earn less, and, as such, they are more likely to become delinquent.

These issues have their source in deeply embedded societal problems, far beyond your collection process. You can’t fix those issues or eradicate them, but you can create a process that reflects the financial reality women face.


Written by: Romina Tsouni

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