There should be no mistake. Financial technology (fintech) is fundamentally transforming the old world of financial services. Change is already well underway, but we are currently witnessing the genesis of a new industry which will almost entirely replace the one we have at present.
Modern banking was born in London in the 18th century, and the UK and its capital are once again at the very heart of this latest revolution. Three hundred years ago, it’s fair to say that the need for gender equality, and wider diversity in fact, within financial services was not keeping anyone awake. This helped create the male-dominated industry we have today, where it’s taken until 2019 to see the first female CEO of the UK’s big four banks.
Yet current signs suggest we are making the same mistake. Women make up just 29 per cent of the employee base in fintech, and the inequality is even starker at a leadership level, with men holding 83 per cent of executive roles. By way of comparison, men make up 71 per cent of directors’ seats on FTSE 100 executive boards. It’s nothing to shout about either – but it’s still better than the fintech industry.
This matters because the winners of this fintech race could replace the incumbents. The number of UK fintech firms is due to double by 2030, with thousands of new jobs set to be created across design, developing and marketing.
Meanwhile, the companies that wholeheartedly embrace gender equality within their diversity and inclusion programmes are far more likely to attract and retain the highest calibre of staff in an increasingly competitive work pool. The fintech start-ups of today are the financial institutions of the future, and it’s time to ensure they are more representative of the population.
Of course, lack of diversity in the fintech sector does not stop at gender – fintech should be seen as the future of financial inclusion, allowing for better access to finance across society, yet not everyone is given a voice in the sector. Ultimately, people from every social economic background need representation, and diversity on a wider scale needs to be considered to build a fairer and empowering financial sector for everybody.
But while gender is not the be all and end all, welcoming women into the fintech world is one of the big steps we need to make to better societal representation in the industry.
Time is of the essence, and if we don’t solve the gender problem now, we risk repeating our past mistakes. So what can we do to fix the lack of female representation in fintech?
There are lots of great female fintech leaders who will be fundamental to inspiring the next generation of female fintech leaders.
Elevating their voices will help to inspire more girls to learn how to code, study economics or launch their own fintech start-up. If you can see role models who look like you, achieving your ambition suddenly becomes far less daunting.
Innovate Finance, the industry body that serves the UK’s financial technology community, is already doing lots of great work in this area. Its Talent and Skills programme spotlights the industry and inspires young women to think about a career in fintech. It also helps articulate why fintech can be an agent for social change by empowering women and young people through technology and finance.
A more diverse venture capital industry
A diverse venture capital (VC) industry is crucial to creating a more diverse fintech industry. Without funding and investment, it is almost impossible to compete with incumbents, especially financial services, and it’s the VCs who decide which businesses to back.
As a VC investor myself, I am keenly aware that those making the investment decisions inevitably, and often subconsciously, bring their own perspective and personal bias. If they mostly come from the same background, then the industry will reflect this.
Yet the 2019 Alison Rose Review of Entrepreneurship found that only 13 per cent of senior people on UK investment teams are women, and almost half (48 per cent) of investment teams have no women at all. It’s this lack of gender balance which helps to explain why less than 1 per cent of UK VC funding goes to all-female teams.
And this principle extends beyond gender. We need investors who represent society as a whole, which means diversity of race, economic background, sexuality, disability and more. Only then do you have the breadth of knowledge and perspective that ensures the whole of society is being served and empowered by fintech.
Improved access to networking
Networking is crucial for early-stage fintech entrepreneurs. According to a recent report from the British Business Bank and Diversity VC, warm introductions from someone in an investor’s network are 13 times more likely to receive funding than from a cold approach. That’s why it is crucial that we create more opportunities for female entrepreneurs to build relationships with investors.
At present this is made more difficult due to a lack of platforms for them to voice their ideas, and a male-dominated networking culture which continues to value traditionally male forms of socialising: golf, being a common if stereotypical example.
In order to propel female-led fintech businesses forward, we need to change the culture of networking more broadly, while also creating empowered female communities within fintech that help women support one another.
The Innovate Finance Women in Fintech programme is a brilliant example of this and does an amazing job of showcasing women shaping the industry and facilitating those all-important networking opportunities.
Yet the challenges faced by the UK fintech industry are not country-specific. With that in mind, the Department for International Trade (DIT) has also set up the Women in Fintech Global Initiative, which promotes international collaboration between female fintech leaders. The initiative has already been hugely successful in bringing together like-minded women working in fintech, and supporting women who want to bring their enterprises to the UK with female entrepreneurs that have previously. It also connects female entrepreneurs with a supportive investment community and business incubators that understands the challenges that women face.
British fintech is exciting, innovative and growing: the potential is undeniable. But let’s make sure that the path to success is not a narrow one. With the increased visibility of female fintech role models, a venture capital industry with more female voices and a truly national and global network of female fintech entrepreneurs, this is much more likely to happen. For a British fintech sector leading global disruption and progress, everyone should be at the table, and we need to lay the groundwork to make that a possibility.
Juliette Souliman is an early stage investor and part of the Future of Money team at Octopus Ventures