Bella Burtin
Impulse4Women
Fintech has been transforming lives for over a century. The financial landscape would be unrecognizable without the innovation of those who dedicate their time to it, yet behind the scenes demographics often go overlooked. Does the forward thinking, innovative nature of fintech reflect the diverse world that we live in? If fintech is driving the future of finance, it is imperative that it does so in a way that is equitable. Gender equality is one of the most important steps in ensuring a sustainable world, and fintech has the power to promote this transformation. Investment in women has immense potential that expands economic gain and innovation.
The drive and potential of women in fintech does not reflect their current presence in the industry. According to the International Monetary Fund, the global average share of firms with women founders has only been around 10 to 15 percent for the past 20 years. While regional differences are present, they are generally small. In 2020, the share of women executives in fintech firms was only seven percent. According to Slayton Search Partners, 42 percent of all entrepreneurs are women. This number is not mirrored in the field of fintech, where women make up only 6 percent of CEOs and 4 percent of CIO/CTOs.
According to Anthemis, throughout 2023 female-led tech companies raised 1.2 billion dollars across 151 rounds. Despite this growth, there is untapped potential for investment in women in fintech. In the first half of 2023, only 2.2 percent of venture investment went to female-founded fintechs in the UK (EU Startups). According to Slayton Search Partners, average funding for women-founded tech startups falls by as much as 50 percent of what male founders raise. There is a positive correlation between the share ofwomen on executive boards and the funding received by the firms, while firms founded by women tend to get considerably lower funding (International Monetary Fund).
Gender diversity (and diversity in general), has been shown to spark better problem solving, superior innovation and performance, better alignment with a diverse customer base, and higher retention and attraction rates (Slayton Search Partners). According to Ravio, companies with gender-diverse executive teams are 21 percent more likely to experience above-average profitability. Diverse and inclusive work environments are more attractive to talent, which is crucial for the fintech industry’s growth and innovation. The diverse perspectives generated by a gender-diverse executive team caters towards the unique goals of clients, extending the potential reach of fintech firms.
In order to break down gender barriers and promote investment in women-led tech startups, it is imperative to create new opportunities. Access to venture capital and other funding sources is key for the success of female entrepreneurs. According to Womentech Network, one of the foremost ways to create capital is to establish more women-focused venture capital firms and funds specifically targeting female founders. Another step is to encourage existing Venture Capital firms to diversify their investment teams and actively seek out women-led tech startups. Initial traction can be gained through options like crowdfunding platforms, which can be furthered through grant programs and competitions specifically for women entrepreneurs in fintech.
Encouraging women to make investments is one of the best ways to promote capital, especially for entrepreneurs in fintech. According to Fidelity, only about a quarter of women have money in the stock market, and less than five percent of women take a significant amount of risk in their investment portfolios. When women do invest, outcomes can be remarkable. One study found that women’s investments outperformed the FTSE 100 by 1.94percent, compared to men’s 0.14 percent over a three-year period (Female Invest). There is promise for the future as investing is most popular among younger women, with 71 percent of Generation Z women and 63 percent of millennial women investing (Bankrate).
Networking and mentorship are crucial for startup success. Women can excel through the creation of women-focused business groups, incubators, and accelerator programs. Facilitation of mentorship programs can help pair experienced entrepreneurs with women who are just starting out, working out any of the inevitable challenges that come with entrepreneurship. The organization of networking events and conferences focused on women in fintech can promote a valuable community which propels innovation (Womentech Network).
When promoting women in fintech, it is important to address barriers. Tackling unconscious bias in the investment process is essential, which can be done through providing training for unconscious bias for investors and decision makers. Implementing blind review processes for initial startup applications can help eliminate negative outcomes associated with unconscious bias. This can also be done through setting diversity targets for investment portfolios and tracking progress. Ignorance of social barriers does not promote an innovative workplace. Through conversation and strategy, a diverse workforce and investment allocation can be promoted.
Barriers for future generations can be mitigated through creating an ecosystem that supports women in technology. This can be done through the promotion of STEM education and opportunities for girls, while highlighting diverse role models in tech. Advocating for family-friendly policies that support work-life balance can provide support for women balancing entrepreneurship with family responsibilities (EU Startups).Investing in women-led fintech startups is not just a matter of equality; it is a strategic imperative for the industry’s growth and innovation. As seen through statistics by International Monetary Fund, Slayton Research, and EU Startups, there is a significant gender gap in fintech leadership, funding, and workplace representation. Although these factors can be discouraging, they also reveal the untapped potential and benefits of gender diversity in the fintech sector .
Diverse perspectives, innovative solutions, and a deep talent pool can be unlocked through the promotion of investment in women-led tech startups. In addition to addressing current imbalances, this approach will position the industry for stronger financial performance and improved customer alignment. A multi-faceted approach of increasing access to funding, building support networks and addressing unconscious biases, all contribute to fostering an inclusive environment for growth.
As we look towards the future of fintech, it is important to recognize that gender diversity is not just a social responsibility, but a business imperative. Investing in women is an enormous step in investing in the success of fintech. Through breaking down gender barriers, fintech can realize its full potential of innovation and financial inclusion for all.
