Despite decades of the gender equality movement progress, many business industries still have a wide pay gap and gender-biased career opportunities. Being an innovative facilitator of financial inclusion, has fintech managed to create gender equality in its own industry?
Financial technologies aim to solve global issues related to unequal access to banking services. At the same time, the industry itself lacks equal representation when it comes to gender diversity.
Where does fintech stand on gender diversity?
According to the latest study by Deloitte, less than 30% of the workforce employed in the UK’s fintech is female. Moreover, only 17% of senior fintech executives appear to be women, not to mention the tiny (5%) share of female fintech founders.
On the one hand, the hiring choices merely reflect the statistics of job applications. Most of the CVs truly are received from male applicants. Both finance and technology, which merged to create an innovative fintech segment, are two industries historically dominated by men.
On the other hand, there is certainly a trail of gender-based discrimination in wider society, which also persists in the fintech industry. Thus, fewer than half (45%) of women founders surveyed by EY and Innovate Finance feel able to raise equity capital, compared to 62% of men. Less than a third (31%) of those women feel able to access debt funding, compared to 44% of men. Besides, many female-led fintechs claim they face gender-related obstacles to success, particularly while scaling up their businesses.
However, that doesn’t mean that’s the way it should remain forever. In fact, some progress towards gender equality is already visible in the segment.
On the bright side, female executives and co-founders make up nearly 30% of the 2022 FinTech Top 100 Leaders list. Most of the Top 100 comes from the financial services sector (60%), with IT services and IT consulting hitting 27%.
Besides, in some regions, where the demand to help the unbanked is high, like Latin America, for example, the number of female-founded fintechs is five times higher than the global average.
Other encouraging signs are that over three-quarters of women (76%) in fintech believe their firm is inclusive and 56% find their workplaces diverse.
The vast majority of the junior to mid-level female employees in fintech says
- they are able to express their views and suggestions at work (94%);
- they are motivated to do their job (89%);
- they feel able to be authentic at work (78%);
- they feel valued for their work (78%);
- they are treated with dignity and respect by their team, whether in a start-up (86%) or a scale-up (97%).
Nevertheless, there are still many problems connected with the lack of gender diversity in fintech companies which need to and can be addressed
Why female underrepresentation in fintech is bad for all stakeholders
There’s a number of ways lack of gender diversity negatively affects all the participants of the fintech ecosystem.
Companies are less effective. Organisations with greater diversity within their teams generally tend to be more successful and create more versatile products. When it comes to finance, it is estimated that greater shares of women on bank boards and banking supervision boards are associated with greater bank stability. Accordingly, fintech companies that are mostly male-represented miss opportunities to develop and prosper.
Fintech products are not suited for the target audience. The majority of the unbanked and underbanked population is female (55%). Moreover, 73% of women globally are unsatisfied with their banking services. At the same time, fintech products created by men aren’t always catering to women’s needs. Although some solutions may be suitable for all, the example of crypto-related services shows that from 75% to 95% of the user base consists of male customers. That means a range of fintech products, including crypto platforms, are either ill-suited or poorly marketed to women.
The industry misses innovation and profitability opportunities. With a striking gender gap, the fintech industry becomes less competitive and less profitable. According to a McKinsey study, businesses, where women in top management prevail, have a 41% higher return on equity (ROE) than the average. One reason is that women have different social skills, view the problems from fresh perspectives and hire diverse teams, which further enhances productivity.
What would gender equality bring to fintech?
Having a unique position to accelerate progress and support women in their striving to reach financial and social parity, fintech can reap multiple benefits from gender equality.
Firstly, women in leading roles more frequently make their businesses stable and create sustainable business models. Such companies also bring higher revenues – even with lower access to funding, women founders manage to make more than twice as much per dollar invested than startups founded by men.
Furthermore, women can better comprehend female financial and commercial needs. It is important since 80% of household buying decisions globally are either made or influenced by women.
If the company’s ultimate aim is to increase financial inclusion, it should create more women-centric fintech products. However, modern “financial products are not designed with the needs and constraints of low-income women in mind, because little is known by financial institutions about these customers,” according to Mary Ellen Iskenderian, President and CEO of Women’s World Banking.
Besides, 68% of female-led businesses in emerging economies have unmet credit needs which should be addressed by innovative lending companies. Various data sources, analysed by the IMF suggest that lending to women leads to lower write-offs and lower portfolio-at-risk.
In addition, gender diversity on the boards of both non-financial and financial firms positively correlates not only with the financial performance of firms, but also with performance of share prices and higher return on sales. Moreover, female-led finance and investment firms are more likely to reinvest, create jobs and innovate than their male-led counterparts.
How to reach gender equality
Although every particular fintech company should take individual decisions, based on its mission, target audience and operations mode, there are a few common tips that could improve diversity levels at any type of organisation.
- Start with education. To have more female applicants, fintech companies should encourage gender-diverse professional education and training at relevant universities or courses. Collaborating with educational institutions, fintechs might create specific campaigns or programs to attract female students and offer internships.
The interest towards the industry may be nurtured even at school age, so business owners can figure out multiple ways to inform young girls of the exciting prospects waiting for them if they choose to pursue a career in fintech.
- Change recruitment methods. Simply recruiting more women to fill the gaps and improve stats won’t do. To be successful and diverse, fintechs must alter the way they attract talent in the first place.
Review all job descriptions to ensure the language appeals to female applicants. Do the same with the structure of the interview process. Make sure your interview questions are not gender-biased.
Remember that women are statistically less vocal about their skills and more hesitant to try themselves in new roles. Moreover, some studies suggest assertive women are often perceived as aggressive, unlike men who demonstrate the same fervour. Take that into account when hiring.
Conduct relevant psychological and ethical training for your HR professionals. Create new project teams with healthy gender balance in mind, and try to avoid all-male or all-female teams.
- Create inclusive workplaces. It’s not a secret that societies still attribute most of the family care to women, so it’s harder for them to maintain a work-life balance in a demanding environment such as fintech. Therefore, employers must improve the flexibility of their working schedules, consider daycare benefits for the employees, and propagate corporate values that cherish every gender, ethnicity, etc. perspective.
Expand visibility of successful female role models, to inspire women in fintech to be more confident and assertive when it comes to promotion chances. Consider mentorship for female talent to help them overcome career challenges.
- Ensure there’s no gender pay gap. The implementation of strong measurement and regular reporting processes will help fintech management see if the remuneration is distributed without bias. Gender-based pay gap also occurs when women are under-represented in senior positions. Traditionally, finance, insurance, and tech are among the industries with the widest pay gaps worldwide. Therefore, fintech firms need to try hard to create opportunities for female professionals to rise to the top managerial positions.
When the number of women in positions of leadership increases, it will naturally bring additional benefits such as genuine changes to the recruitment and company culture.
- Support female founders. Currently, the lack of finances from big banks and venture capitalists discourages many women from starting their own fintech businesses. Changing that is the job for the whole industry rather than separate companies. The task also requires close cooperation with the VC representatives. Only together can we remove gender barriers around critical startup funding.