Fintechs may be transforming financial services in terms of tech, but the sector’s progress is distinctly less notable when it comes to tackling gender equality. In fact, the lack of diversity at C-suite level is arguably as archaic as the legacy systems the industry seeks to disrupt.
The fintech sector promotes and thrives on diversity; indeed one of the key benefits of open banking and PSD2 is the ability to personalise financial products and tailor them to individual users’ needs. Yet this vision of the future in terms of product is out of step with company practices.
In the UK, a mere 17% of fintech companies have female founders and women account for less than 30% of the sector’s overall workforce, according to Innovate Finance. In addition, women receive just 3% of VC funding in the sector.
Some trace the blame for the gender inequality problem all the way back to the classroom, rather than the boardroom. Women have long been underrepresented in the ‘STEM’ subjects of science, technology, engineering and mathematics – skills that are traditionally highly sought after in the financial services sector. However, there are now various initiatives which seek to address that, from a young age to university level.
But many think it’s reflective of a wider societal issue, particularly when it comes to the notoriously slow to modernise financial services sector. In 2019, women held just 21.9% of leadership positions in financial services, according to Deloitte and on boards this number is even smaller. This is expected to rise to 31% by 2030 but that’s still well off meeting any 50-50 target.
Given that many now working in the fintech industry have come from the financial services or technology sectors, it is perhaps unsurprising that gender inequality remains a challenge in both. “I think it’s a hangover from financial services,” says Amy Kroviak, co-founder of Open51, an organisation promoting the role of women developing open finance and the new data economy.
“There’s been less embracing of a culture change and the diversity and inclusion agenda. When you look at fintech, a lot of people come from the FS sector and is it a matter of employing people you’ve worked within the past and it’s just a cumulative effect that the issue hasn’t been attacked head-on?”
Akoni CEO and fellow Open51 co-founder Felicia Meyerowitz Singh agrees. “I think there’s also something about perception. Women are primarily in caretaker roles and financial services and financial technology are both perceived to be very family-unfriendly.
“Working hours, building relationships out of hours and things like that… I think the risk element of it puts people off,” she adds. “There’s an element which may not be palatable to many people, especially women who have to take care of kids. You can’t be ‘I’ll stay until 10pm’ when you’ve got children at home.”
But what of the women who do work in financial services and fintech and how can the industry itself address gender inequality? There are a number of female big hitters – NatWest Group CEO Alison Rose, Starling CEO Anne Boden and Sarrah Cherhabil, VP of technology at Marcus by Goldman Sachs, to name but a few. Yet a quick glance at many fintech event line-ups highlights how male-dominated the industry still is.
Kroviak believes there are more women leading fintech than people are aware of but they need to be given greater prominence. “Because the whole sector is very focused on conferences and networking and speaking engagements, and we’re still seeing male-dominated panels or the token women here, or the token woman on the board.
“That needs to stop. We would argue that the women who already are successful, leading and have developed an expertise need to have a shared voice,” she adds. “From the other side, looking at the impact that will have on attracting other women to get involved, or to get an interest in setting up their own business, and driving that forward. But there needs to be a change in culture and how companies are approaching this.”
Culture change also needs to be driven by action from the very top – both through policy and investment, according to Meyerowitz Singh. “It’s a societal issue which is far more broad than ‘let’s just speak to a few investors and hope everyone changes’.
“I think that there’s a lot of talk, especially by the government and the big banks in the UK, and very little action that backs it,” she adds. “In my experience, if there’s no woman at the top in management pushing some sort of agenda that’s important, then you’re not going to see women further down the chain – especially not in senior roles,” she says.
But of particular importance is investment, she adds. Meyerowitz Singh cites the 2019 Rose Review, which reported that only one in three British entrepreneurs was female and only 5.6% of UK women run their own companies, despite the country attracting more venture capital than any other European country.
Investment is the lifeblood of any industry and women have been shown to raise far fewer funds across every stage of investment and part of this is down to VC funding bias. Researchers writing in the Academy of Management Journal showed that venture capitalists tended to ask male entrepreneurs about fueling growth while their female counterparts were asked about loss prevention, putting women at a disadvantage.
So when asked how to address such imbalances, Meyerowitz Singh’s main piece of advice is simple: “Invest. Invest in businesses with minority founders – whether that is a gender-based minority or otherwise. Put your money where your mouth is.”
After all, addressing gender inequality and boosting diversity will only ever benefit the entire industry – from inception to product launch. As Noorneet Singh, fintech engagement manager at Deloitte, observes: “When creating products and solutions, it is important to understand the mindset of the consumer.
“You need diversity in thought to emphasise and understand consumer requirements and needs for when you’re building that solution. Without it, you may struggle with that part of the market.”