Women-led fintech businesses perform 3 times better than men-led ones, producing equity returns 226% greater than other companies. Venture capital firms and investors are therefore making a poor business decision not investing in women entrepreneurs, and are missing out on opportunities because of unconscious biases.
The question should not be “what are the advantages of being a woman in fintech,” but “what advantages does the fintech industry gain from having more women?” My belief is that Fintech’s key asset are the women entrepreneurs, and that they will ultimately make the industry more consumer-oriented, competitive and successful than the traditional financial services. Public policies need to be adopted to promote better financial literacy, to design continuous training programmes, and to support mother entrepreneurs.
Prior to joining Early Metrics, I worked for JPMorgan in the Private Banking division, and had co-founded a proptech company, which was more fintech than proptech. I really enjoyed working for an incumbent bank, but it also made me realise how far behind they were at the time regarding technology, and how innovation was deeply hindered by mentality and legacy infrastructure. The driver behind launching a fintech business was the firm belief that fintech will have a transformative impact on millions of individuals by allowing them to gain knowledge and control over their finance. I wanted to contribute to that positive change.
The UK, and more specifically London, is a good hub to start a fintech company for two main reasons: you have a strong mix of finance and tech professionals, bankers with several years of experience who understand financial systems inside out, and developers who have worked on banking infrastructures, and understand its complexities. When they meet, that combination of talent can develop real disruptive solutions. The perfect example is Nikolay Storonsky and Vlad Yatsenko, Revolut’s co-founders. The tech ecosystem is also quite mature in London, making it relatively easy to fundraise and find the support you need to scale. The fact that there is a successful fintech legacy, with unicorns such as Transferwise and Funding Circle, or companies like World Remit, is proof of that ecosystem maturity.
Fintech is representative of the financial services industry overall: less women than men in general, and the closer to top management, the fewer women still. At Early Metrics, less than 7% of the companies rated are led by women, and within that group, only 5% are fintech ventures.
Three factors to that: one, women are less financially-literate, essentially because of the way we are being educated. There are many complex factors I won’t expand on, but we need to rethink the way we educate girls. Two, finance remains a highly male-dominated industry, making it harder for women to find internal support and peers to mentor them. Three, the intensity and demand of a career in financial services means that professional mothers need to step down at some point if they wish to raise their family.
I actually believe fintech is a huge opportunity for women, because factors 2 and 3 can somehow be taken out of the equation: as entrepreneurs they don’t necessarily face the glass ceiling they would hit in a corporate environment, and have the freedom to arrange their timetable. Factor one remains however, and women need to be encouraged to take more risks and not be “intimidated” by numbers, whether in their education, when they are pitching or fundraising. Fundraising also remains a big challenge, only 6% of European VC-backed startups have women CEOs; in the UK, only 15% of women entrepreneurs get funding.
I don’t really like the term “female in fintech”. Female refers to the sex of a individual, we are not speaking about “male in fintech” are we? I also find the question sensitive. Certainly, you stand out if you are a woman in a room full of men, because you are a curiosity. But that in itself is worrying. And being a curiosity does not mean you are being taken seriously, nor does it give you respect.
The real question should be:
What are some of the advantages the fintech industry get from having more women?
And I can see many, amongst them long-term financial benefits, customised products, and creating a collaborative ecosystem. Regarding the first point, data shows that return on equity for companies with women in more than 10% of senior positions is 27% higher than companies that have less women in leadership (Credit Suisse’s Gender 3000). Quantopian run a comparative study that showed that over a 12 years period, women CEOs of Fortune 1000 companies performed almost 3 times better than men-led ones, producing equity returns 226% greater than other companies. Regarding the second point, women use many products that are designed by men, for men, by default. The more women in fintech, the more financial services designed to serve the need of half the world’s population. It’s about understanding and service a customer base whose purchase power is increasing. Finally, although I don’t necessarily like to generalise, women are usually more inclined to collaborate. In an financial environment that is getting completely transformed with regulations such as PSD2, collaborative approaches rather than competitive ones may ultimately be more rewarded.
Many things can be done: first, encourage women to get a tech and business education though sponsorship opportunities and programmes, and providing them with the right training to convert research into a viable business. Second, develop public policies with a long term plan – it’s not just about getting X number of women in the workforce, but maintaining them there as well; provide extra financial support for mother entrepreneurs, for instance specific child care schemes, maybe tax incentives for companies supporting plans for women to come back to work. Third, although controversial, adopting positive discrimination policies, specifically to get more women at board level.
This article was originally published here.