I’m black and female, and entering a career in fintech. And yes, I have concerns – by Chisom Ezeilo
I am a black female who is enthusiastic about emerging technologies and how they can be used to solve basic human challenges in the financial sector. In essence, I am looking to become a thought leader within Fintech. But upon entering the industry, I am made aware that I am disadvantaged because I am black and female. This directly implies that I have to work 10 times as hard to get noticed or to give myself an opportunity to be heard. Ideally, I am a hard worker so this doesn’t bother so much.
I am mostly concerned about the percentage of women founders who get funded by investors, the percentage of companies that focus on building products especially for women, and also those who struggle with getting employment in a male-dominated field. The Nordics report here showed that only 1% of women founders get funded by venture capitalists compared to the 88% that went to the all-male founder’s team and the 11% that went to mixed gendered teams.
Fintech has a bigger problem than it realizes when diversity and inclusion are being addressed. Research by Crunchbase showed that statistically, only 7% of VC partners in the top 100 VC firms are women and this is a contributing factor to the challenge at hand. The industry no doubt needs to step up its game when engaging more women.
Mixed teams = better products = better results
Statistics show that diverse teams are still more productive and effective than its counterpart. Essentially this conversation must be had because now more than ever, organizations need a financial breakthrough and evident growth to recover from the impact of the COVID-19 pandemic. If growth is paramount in 2021 and beyond, strategies to make it possible should also be addressed.
A way to go is by evaluating organizational diversity because it breeds growth and ultimately encourages the release of innovative products and services. Therefore if this is the case, there is no silver bullet that can tackle this challenge. Conversations around the subject must be encouraged and strategies and solutions that include women as decision-makers, team members, and product users should also be implemented.
The focus of this article is how fintech companies can begin to serve women better. It cuts across women being customers for fintech products/services, engaging more women in the workforce, and eventually making them key decision-makers for the organization. The diversity engagement graph imagined here is, because users make good team members and good team members translate to A+ C-level executives, the problem must be addressed from the root which is ‘building more products to address women’s financial pain points’. Finding a balance for women as fintech customers, team players, and C-level executives is the goal of this article.
Women as customers
In a lot of scenarios, men and women have been said to have different needs. This is because both genders are wired differently. The case is not different when it comes to the financial products they use. A myth that has become almost an anthem in fintech is the belief that all that is required to tackle the challenge head-on is ‘more feminized products’. But in actual terms, all that is required of fintechs is to begin to take a more gender- intelligent approach when building products.
This article by Financial Alliance for Women highlighted that currently, fintech companies build products for early adopters of technology and these early adopters are usually not women. On a yearly basis, almost $700 billion revenue opportunities are lost because of an unintentional effort to implement efficient strategies that engage more women as users. Fintechs are yet to take advantage of this opportunity. Moreover, building gender-neutral products immediately translates to building products that precipitates toward meeting the needs of the male gender.
To address the root of the diversity issues, fintech companies who want to take advantage of the trillion-dollar opportunity that lies in this market should either begin tailoring their products from the start by actively engaging women who are likely to be customers during the product design phase. Additionally, surveys, interviews, and having conversations with women who are likely to have similar characteristics as the final end-users of the products should be an approach to be greatly considered.
Examining it from another perspective, these fintech companies can begin to engage more women as team members. The ideology behind this thought is that employees are usually a true reflection of the customer’s company targets. Therefore to enable products to be tailored more to the needs of women, the inner circle must engage more women to effectively address their pain points. The article by Sophie Krishnan puts it this way, ‘Homogenous teams will naturally design and problem solve in a way most helpful to users and customers who look, sound and behave like the team members themselves.’
Women in the team
The diversity problem faced by the fintech industry results in products not being built to meet the needs of women. Today, only 29% of the staff in fintech are women. In addition to this ridiculously small number, the ratio of women in leadership or critical design/decision-making roles is even smaller.
Why might this be the case? The reality is that companies are most likely to be in a hurry to hire and retain talent to keep the business running. Building diverse teams at the time of founding is therefore often a secondary goal.
Diversity typically gets considered somewhere down the line. If not well planned for and implemented as an intentional strategy, the matter of having a diverse team – bearing in mind that one of the goals is to tailor products to the needs of women – may become wishful thinking..
The issue of having female team members in my understanding plays a significant role in the subject of diversity in the fintech industry. This implies that women can only be actively involved either as founders or customers if fintech founders take time to bring more women to their team. The experience of working in a fintech company will give these women sufficient confidence to become founders themselves.
Also, having more female team members provides companies with the ideal customer persona, in-house, i.e. female team members who can put themselves in the shoes of the customers. After all, women are more likely to know where it hurts their fellow women the most. In essence, the issue of gender diversity in the fintech industry rises and falls first and foremost on the number of team members within that team. The power lies in the inner circle.
Women as founders
At the root of the diversity issue lies the scant figures of women at the top. This Nordics report tells us that, not only are there not enough female founders, but the few existing ones scarcely get funding to forge ahead in the entrepreneurial endeavour. One would expect that, if there aren’t sufficient female founders, then existing VCs should look at and challenge their own make-up.
Rather, the case is ‘female founders get one in three per deal on average in contrast to all-male teams who get proportionally one in one? ’. The lack of funding is sufficient enough to discourage any woman from founding a business. Coupled with the fact that the current model used for today’s accelerator programs is designed in such a way that they are extensively time and energy-intensive for a certain period of about 3, 6, or even 9 months. With women being defined as the homemakers, this form of model design and the intensity it requires to succeed does not accommodate or put into consideration the realities of today’s woman. These reasons and more are some of the root causes of the lack of female fintech founders.
Another subtle angle to address is the lack of self-confidence of many women to start a company due to a lack of prior knowledge of the industry. I initially stated that good team members make good decisions makers. These decision-makers can also be considered to be founders as well. At the moment, research in the UK showed that only 17 % of fintech founders are female. Another study also revealed that less than 30% of the fintech workforce in the UK is female. The alignment and evident relationship between these stats must not be ignored.
Without having a diverse workforce, there is almost no chance of having more women leading fintech companies. Amongst the fintech companies selected for fintech 50, this fintech magazine article revealed that only 5% of the selected companies had female founders. This percentage directly amounts to only 6 women compared to the 118 men that were selected. Simply put, this lack of diversity needs to be addressed particularly because we have found ourselves in an age where women are breaking barriers and challenging the status quo.
Finally, as leaders in fintech, we need to actively begin to tackle this challenge. Gender diversity in fintech or any other industry does not happen by accident. Initial plans and strategies need to be put in place to make this happen.
To realise the promise of fintech, we need data that is relevant, up to date and validated, combined with a transparent way in which to measure and monitor success.
We’re setting out to build the Fintech Diversity Radar – launching in 2021 – the world’s first global platform gathering progressive data on women in fintech to understand their impact and contribution to the digital economy.
For more information and insight – get in touch at firstname.lastname@example.org
Download The Global Fintech Index 2020 City Rankings on http://bit.ly/2020GFI