The fintech sector has a gender equality problem. However, some firms are making significant progress, raising the bar for the industry at large
When it comes to the gender gap, fintech firms have a poor track record. However, the rapidly growing sector has a unique opportunity to address the problem, with a number of firms seizing the moment.
The statistics make for grim reading. For example, women make up barely 11% of all board members and 19% of company executives, according to the recent Fintech Diversity Radar report from Findexable. The finance sector as a whole suffers from a 25% average gender pay gap, with the fintech element a particularly poor performer, at 31.5% in 2019.
The problem? Financial services have been “built on a historic system that isn’t fit for purpose for a modern society”, says Michaela Jeffery-Morrison, whose company Ascend Global Media ran the recent Women of Silicon Roundabout conference. She thinks fintech firms have a unique opportunity: by addressing their own internal equalities, they could help build a more equal society by creating wealth-building tools and services that represent more people.
“Addressing the talent pipeline is imperative to improving areas such as the gender pay gap,” she says. “While the industry needs to address the reasons why minority groups are disadvantaged in the workplace, it is also critical for the future workforce to rebuild systems that they are kept out of in the first place.”
Closing the gap
A handful of firms are already breaking the mould, demonstrating how tangible efforts can result in real change. For example, challenger bank Monzo has slashed its gender pay gap from 20% in 2019 to just 4% today. It attributes its success to a number of instrumental changes within the business, including a combination of hard policies and incremental shifts at manager and individual level.
It’s one of the reasons chief operating officer Sujata Bhatia joined Monzo in June last year, aiming to drive that 4% right down to zero as part of Monzo’s Women in Finance Charter commitment. This included a target to increase its proportion of female board members to 40% by 2020 - it’s now 44%.
Monzo examines its promotions and pay reviews with a diversity and inclusion lens, Bhatia says,
“looking at whether we have the right level of diversity coming through the company”. While the company has diverse hiring committees and runs a structured process, it’s also willing to experiment, she says.
“For example, our head of writing knew he needed to improve the diversity on his team. He made a personal commitment to it,” she says. “One of the things he did was rewrite job descriptions, taking away some of the classic filter criteria around certain educational biases or experience. He built a diverse interviewing panel and ended up making two diverse hires. It took a bit more time in the process, but it yielded results.”
The role of ERGs
It’s important to encourage individuals to enact change in all the areas they can feasibly influence, in terms of gender equality and more broadly. That’s one of the factors behind the recent rise of employee resource groups (ERGs).
These are voluntary, employee-led groups connecting people with similar backgrounds and experiences to help foster a diverse, inclusive workplace by providing personal or career-related support. The groups are now found in 40% of all companies, a 9% increase from last year, according to Sequoia’s Employee Experience Benchmarking report.
Buy now, pay later company Clearpay has established two ERGs, one for women and one for the LGBTQI+ community, as part of its target for 50% of senior leaders to be women by 2025.
It’s early days, says Bindy Edelman, Clearpay’s director of diversity and inclusion. The first steps have been to capture interest, create planning teams to establish purpose, priorities and focus, and build internal communications channels. So far Clearpay’s ERG for Women has held a negotiation workshop, while its LGBTQI+ ERG has worked to raise awareness of events like the Transgender Day of Remembrance.
Sponsorship from senior leadership helps give ERGs visibility and credibility, says Edelman, and to engage leadership as active role models and champions for ERG causes. It enables senior leaders to continue to grow and learn from others and contribute to their success. They also contribute to diversity and inclusion progress more broadly.
“Senior leaders who choose to be an ally of an ERG often appreciate the particular impact they can have by using their position to champion and bring visibility to issues, and also engage with other leaders on the ERG’s activities.”
A nuanced approach
A combination of top-down policy setting and empowerment at an individual level will “really move the needle”, says Bhatia.
“When I stand up in front of the company I talk about our goals, and diversity and inclusion is a big headline within that,” she explains. The other big driver is a “cottage industry of people coming up with their own solutions”, she says. “Pushing only from the top is never going to be successful if people don’t really believe it and they’re not able to find their own solutions and their own path to contribute to that.”
What Bhatia calls the “big, sweeping work” is underway, she believes. It’s now down to “nuances” in terms of refining internal action to further equalise gender numbers and pay levels across Monzo – a good example for fintech firms at large.