The financial technology sector has grown rapidly in recent years and it shows no signs of slowing. But while fintech is taking the world by storm, the industry is not free from the issues that still plague the industries from which it was borne. In fintech, as in the veteran tech and finance sectors, women still hold a disproportionately small fraction of leadership positions. The tide, however, may be turning, and not a moment too soon. Some agile fintech enterprises are jumping on the opportunity to gain from the knowledge and experience women bring to the field, and are reaping the rewards from it.
Despite making up over half the workforce in financial services, women occupy less than a quarter of board positions in the sector. The “Old Boys’ Club” problem in tech is just as prevalent. With fintech, the situation is even direr. London-based recruiters Astbury Marsden revealed that only 9% of board positions in the UK’s top 50 Fintech firms are filled by women.
This seems incredibly myopic, especially in light of the fact that when it comes to household spending, women really do control the purse strings. A report by Innotribe and Sam Maule of Carlisle & Gallagher Consulting Group shows that the market of female consumers is worth some $20 trillion with women holding 70% of household purchasing power worldwide.
Of course, there is no reason why a man couldn’t come up with a fintech app or service that these female consumers would love, but excluding half the population from the innovation process is nothing but shortsighted. Fintech claims to be changing not only the financial and business environment, but the social landscape as well. Without tackling these imbalances this is not a claim to fame that fintech can make.
Kathryn Petralia, co-founder of a U.S. fintech firm called Kabbage, which offers customers small loans, told Politico that, “Women are consensus builders … Those companies with more women are more successful [as] women focus on long-term benefits.”
For fintech, this is vital. In order to reach the most consumers, transform old paradigms of shopping and spending, and to fully capitalize on these changes, fintech companies must build a new consensus around how money is spent. To achieve this, Fintech needs to get women on board and in the boardrooms to utilize the unique knowledge and expertise they bring. The responsibility here lies not only with the fintech industry, but with investors too. According to a survey from Wayra and Astar-Fanshawe, who specialize in getting startups off the ground, male founders are 86% more likely to get venture capital backing.
Luckily, things have been on the upturn. According to Berlin’s Startup Monitor, only 3% of startups founded in the country were headed by women in 2012. By 2014, this number grew to 10%, and 13% by 2015. This was good news both for society and for the industry itself. Research consistently shows that firms with more equal gender distribution gain significantly from it. Findings from Credit Suisse, for example, show that companies with women on the board outperformed their male-only counterparts by five percent between 2012 and 2014.
If this trend continues, and better yet - accelerates, the industry can only benefit. The biggest trends in the financial world are about interconnections and cooperation. Europe's Payment Services Directive (PSD) 2.0 is designed to achieve just that - greater cooperation between financial institutions to the benefit of the consumer. Reshaping the industry to have more successful dialogues can only aide in these aims, and female leaders are just what the industry needs to achieve them.