The rules of attraction
Written by Kate O'Flaherty
FinTech is an industry driven by innovation. So, asks Kate O’Flaherty, why are gender equality and diversity still an issue in the sector?
During the Second World War, Bletchley Park employed more female than male code breakers. But in the years since, there has been a decline in the number of women seen in technology focused roles. Combine that with the legacy of the old boys' club seen in many financial services firms and it stands to reason that gender equality and diversity remain an issue in the FinTech sector.
In this male dominated yet fairly new industry, women-founded tech businesses are still finding it challenging to raise venture capital (VC) investment, and more men than women are in senior positions. However, the good news is, this is starting to change. Some financial firms - such as JP Morgan - are implementing initiatives to shorten the gender gap and promote more women.
Additionally, a growing generation of women CEOs are challenging the male dominated boardroom model. Anne Boden is CEO of Starling Bank, which is poised to launch a mobile-focused, data-driven current account designed for smartphones. A computer science graduate and chemist, Boden has worked in the financial services industry for 30 years. "Most women have to work harder and smarter to get to the top," she admits.
Other trailblazers leading the charge include Essentia Analytics CEO Clare Flynn Levy, CEO of the Trillion Fund, Julia Grove, and co-founder of Azimo, Marta Krupinska. But Boden estimates the average board table is still currently only 15 per cent women. "This has been the same for a while and it's flat lined. It's a question of women managing to get to the senior route through support functions. Fewer women have a profit and loss (P&L) role so it's difficult to get to the top."
One of the issues is funding, which continues to be a challenge for many women-founded FinTech businesses. So why do men still receive more funding opportunities than women? There’s a "huge imbalance" between men and women’s chances of receiving VC investment, says Clare Flynn Levy, founder and CEO of Essentia Analytics.
This is not helped by the fact that both the financial and technology industries are alpha male dominated, says Liz Lumley, MD at Startupbootcamp. Women face more obstacles, Flynn Levy says. "While there’s a lack of senior women at VC investment firms, female FinTech entrepreneurs remain at a disadvantage. From my experience on similar leadership teams, I would say that two or more women are needed for the real value of gender diversity to be felt. When there is more than one woman at the table, we all speak up more and our opinions are considered on their merits. We cease being 'token women' and become just more experienced voices at the table."
According to Lawrence Wintermeyer, CEO, Innovate Finance, funding can be an issue of "chemistry": connecting with the VCs and getting them passionate and onboard with what a startup is trying to grow as a business. "I've been told by members that the VC and start up relationship is very important: the VC needs to have a connection with the idea, understand what the product is about and have good synergy with the person pitching it to them. Otherwise, it will never work."
He admits that male VCs may not see the potential of investing in a product because they are "evaluating it through a biased gender lens…What women think could work as a business may not be what men might think could - even though women might know their target customer much better and have tested their ideas already."
However, he thinks this reaction is becoming less common: "Women are getting better and more confident at pitching their ideas to the VCs. They are researching who to target and making sure their business model is easy to understand."
Flynn Levy advises: “Perhaps the most important thing for any woman in FinTech is not to get disheartened by the obstacles in place right now. Dwelling on the problem won’t make it go away; instead, focus your resources on those who are truly open to funding a female-led FinTech start-up.”
The first step is to encourage more women to become investors themselves. She cites the example of companies such as Oak HC/FT and Angel Academe doing a great job in promoting this. "But we can do better. The established VC funds need to promote gender diversity at their most senior levels before we begin to see the trickle-down effect that will lead to more funding of female FinTech entrepreneurs."
Attracting female talent
The UK is already improving in this area - and is more open to funding women entrepreneurs than its US counterparts: “It’s fair to say that we’re ahead of the US in terms of gender diversity, with London-based tech entrepreneurs three times more likely to be female here than in Silicon Valley," adds Flynn Levy. But she admits that overall, the divide is still deep.
In order for change to be significant enough, it's widely agreed that the FinTech sector needs to attract more women in the first place. However, mindset is also a big part of the problem: "It's not, how do you attract women, it's about how do you employ more women," Lumley argues. "I think we should stop thinking about women as a minority and start thinking about the fact that they make up half of the population."
Wendy Jephson, chief behavioural scientist at Sybenetix, thinks the issue arises at an early stage in education. She says: "Our most recent hire - a post-grad with a computer science and maths BSc and a mathematical finance MSc - tells me approximately a fifth of the BSc and a third of the MSc course participants were female. So there is already a smaller pool of women going into these sectors."
Changing this starts in education, observes Wintermeyer. "I think we need to push science, technology, engineering and maths (STEM) courses and make them compulsory until the age of 18. Young people - both male and female - should know about the exciting opportunities that exist in the FinTech sector and how they can play a part in shaping their digital future. We need to engage with them more, and make it relevant."
Wintermeyer also underscores the need to tap into apprenticeship schemes. "The FinTech sector requires people with different skills to make it grow successfully - it's not just about science, maths and engineering professionals." thinks the FinTech sector should "engage with female students" to encourage them to pursue STEM courses. Women should also actively be recruited at university, he adds.
Gender diversity is integral to the ongoing success of the UK's FinTech industry - and its status as a fairly new sector gives startups every opportunity for a level playing field. There are experts who believe education and attracting women to appropriate courses in the first place is key. Yet others think gender equality will simply change with a new generation.
As successful female entrepreneurs are proving, the industry is already feeling the benefits of this shift, says Julie Lake, founder of The Fintech50, adding: "The best way to overcome the VC side of things is to be a brilliant business. In a different generation, the gender conversation isn't something that will even occur."