Article: Women in FinTech

Greta Arsego
Impulse4Women

The past decades have seen a considerable increase in the number of women working in the financial sector, especially in financial technology (or better known as FinTech) which is an industry that is evolving and changing rapidly, thanks to the improvements made in terms of diversity, equity and inclusion. Nevertheless, several barriers still exist within the industry that limit women’s growth and gender parity. The aim of this paper is to provide a general overview of the gender-based disparities in the digital financial sector.  

A study conducted by EY United Kingdom and Innovate Finance highlights two important factors that are linked to the challenges female workers meet in FinTech. One is lack of transparency during the promotion process and the second is low collective bargaining of women in senior roles. In the first case, after interviewing 120 nominees from the Innovation Finance Women in FinTech Powerlist, it emerged that 25% of them believe in the existence of non-clear mechanisms regarding promotion in their firm. This ambiguity on the criteria and selection may lead to biases against women which would ultimately block or slow down their career advancements¹.  

According to the Economic Forum², low representation of women is actually common not only in the FinTech industry, but also in consumer services, healthcare and real estate, just to name a few. It becomes crucial to be considered by workers unions and policymakers: it is important that women are present to the negotiations of salary, benefits and contractual terms so that they can ensure fair and equitable conditions that otherwise might not be guaranteed.  

As a result, EY has detected an average gender wage gap equal to 22% in FinTech, compared to a general average of 14.9% gap across all industries of the UK³.  

The situation is not very different in the rest of Europe. According to a study of the European Commission (2023), for every 1€ that a man earns, a woman would earn only 0.87€, which represents a wage gap of 13% on a wider scale across the EU.  

Moreover, finance is still considered a man’s job, a systemic issue that persists in several societies, which indeed plays a role in women’s career advancement. A recent study carried out by the International Monetary Fund (IMF) has found that, across 97 countries, only 13% of leadership positions in FinTech are occupied by women. This situation was not much different two decades ago. As research shows the share has been virtually stagnant.  

Previous research has shown a positive link between women in leadership positions and greater resilience and stability in the financial sector, particularly in commercial banks. Another paper by the IMF⁴ reports a positive relation between female-led executive boards and revenues of the firm. Empirically, a 10% share of women in senior roles is linked to a 13% higher revenues (Christiansen et. al 2016).  

In some instances, the disparity could be linked to human capital factors such as education or work experience. Nonetheless, recent research (Blau and Khan, 2017) shows that since 2010 these factors have respectively reversed – on average, women have higher education levels than men – and explain very little of the existing gap. But to what extent is gender-based discrimination driver of the disparity? If this were the case, there would be a need for proper policy intervention to tackle the issue by further implementing and improving inclusiveness in the sector. An alternative approach on gender disparity within FinTech revolves around the gap in usage of digital financial services (DFSs)⁵. The Global Findex discovered that women are less likely to have a bank account in a financial institution, and in developing countries the difference between men and women with an account is 20%⁶ Interestingly, although these differences are particularly marked in developing countries (Burjorjee and BinHumam, 2018), they still exist in virtually all countries in the world. While in some instances there are factors such as education, financial literacy or personal characteristics that push women away from accessing financial services, in others there are social and institutional constraints. It is clear that these limitations have deep implications: struggles to reach economic independence and barriers to growth of women-led enterprises are just a few. Analyzing the variables that may explain the gender gap – discrimination, approach to risk aversion, attitude towards technology for example- is of extreme importance because it helps identify  solutions that can foster inclusiveness⁷. For instance, if there are more factors than gender-based discrimination that determine the gap, then mere improvements of policies may not be sufficient, and there would be a need to complement with improvements in the financial sector. On the other hand, policymakers should address gender-based discrimination and social norms that limit women.  

There are initiatives taken as well from international organisations, such as the World Bank, that promote inclusiveness for women and girls in the usage of digital financial services. In 2013, the World Bank Group (WBG) launched a programme called Financial Inclusion Support Framework⁸, in which the WBG has committed to support and assist 10 IDA countries⁹ in reaching their financial goals, including financial inclusion for women. Additionally, the WBG has been partnering with prominent NGOs, IGOs and more to put in place concrete and comprehensive measures that establish the ground for women to get an education, work towards their financial independence, and be able to use DFSs, such as online banking, investments, or transfers. Some of the partners include the G20, the UNCDF, the OECD, the Bill and Melinda Gates Foundation, and regional development banks.  

In conclusion, even though the gender gap in financial services has been narrowing, both in terms of wage gap and access to DFSs, the problem persists. Multiple empirical research shows the existence and the factors that contribute to it. As discussed, it cannot be merely attributable to gender-based discrimination, because education, financial literacy, collective coverage and personal skills play indeed a role that cannot be disregarded. This becomes fundamental to have a clear understanding of the current picture, so that eventually policymakers can better direct the efforts done at governmental level. However, this is not enough to tackle this issue: there must be a global movement based on inclusiveness that pushes women to embrace the new emerging technologies that are reshaping the financial sector, so that no one is left out.