There has been an increasing focus on the importance of diversity in the financial sector recently. We have covered this development on our blog, including in our articles ‘Measuring Inclusion in the Financial Sector’, and the ‘new FCA Policy Statement’, both published earlier this year.
The focus is now expanded to include diversity in the FinTech sector. This month, EY and Innovate Finance collaborated to publish a report on gender diversity in the sector (the Report) and what can be done to support women working in FinTech.
FinTech sectors
Given the prominent place of the FinTech industry in the United Kingdom, and the great prospects this gives the British economy a broader perspective, the British Ministry of Finance has shown great interest in understanding what the future of the FinTech industry may look like. As such, it commissioned an independent study, which resulted in the Khalifa Review. This review highlighted the lack of available talent and diversity as the main risk to the prospects for FinTech’s development. It suggested that better engagement with skilled workers at all levels and of all genders, races and ethnicities would support the continued growth and development of the industry.
The report
Following the publication of the Khalifa Review, EY and Innovate Finance jointly published the report following a survey conducted between July and September 2021. As part of this, 240 industry participants were surveyed, six focus groups were created and 15 top executives participated in a roundtable discussion to capture a broad and representative demographics of respondents.
The report highlights a number of differences between men and women working in the FinTech sector. For example, it shows that companies led by a female leader have reduced access to equity and debt financing. The report also identified that female employees are less likely to negotiate salaries and bonuses, which can lead to or contribute to pay gaps between the sexes in the industry.
What can employers do to change this?
As one of the fastest growing sectors in the UK, the importance of supporting women in the FinTech workspace is under greater scrutiny. The daily ratio between men and women in the sector is reported to be 2: 1. In a sector where lack of talent and diversity has been identified as the greatest risk to development and growth, it is important for FinTech companies to introduce new ways of working to support women to advance in their careers in the sector. Ultimately, running a business in a way that is conscious of diversity and gender at work can only help companies by offering a wider range of talents to choose from.
The report continues with a number of recommendations, focusing on four main areas.
- Support female founders as they grow their business
The report explains that female leaders face more challenges when starting and expanding their business, as they have access to fewer resources than their male counterparts. Removing these blockages to resources for women leaders provides an opportunity to rebalance the foundation from which all FinTech companies can grow, making the sector more dynamic and robust.
To meet some of these challenges, the report flags that the support of male advocates, such as investors and industry leaders, may be the key to demonstrating the value that women bring to the sector. This trust in the female staff, and the support of the male contingent, has the potential to filter positively through an organization as employees are encouraged by the example set by their managers.
2. Create more inclusive work environments
The report emphasizes the importance of promoting a more inclusive work environment. This is a problem that is not limited to the FinTech sector, as it is often a reason why employees decide to leave their role in any industry. Due to the speed with which the FinTech sector has grown, existing work environments may no longer be suitable for everyone working within it. Employers can look to change the nature of their work practices by updating HR policies and procedures (along with talent management and reward processes), ensuring appropriate support for all part-time and full-time employees, and ensuring that flexible work arrangements are in place. place to respond to a more diverse demographic of workers.
3. More robust and targeted recruitment and career support programs
Employers in the FinTech sector should also consider evaluating their recruitment practices to address gender and diversity in the workplace at the beginning of their employees’ careers. By implementing changes at the recruitment stage, and engaging with students who are considering a career in FinTech, it is possible to build in such changes further as employees advance their careers. It can also affect the attitudes and behaviors of existing employees. For example, companies can introduce a mentoring program between existing employees and students or new employees to let employees share their thoughts, and create a more open and collaborative work environment.
4. A data-driven business case for change
The report encourages employers to collect and use diversity data. Diversity data allows employers to gather information about wages and benefits as well as working conditions, to identify any differences that exist. Diversity data has proven to be a valuable resource in other industries where it is used to gain a real insight into the workplace and how certain conditions can be improved for the benefit of the company and its employees. The process of collecting data can also give employees an anonymous opportunity to address any concerns they may have about aspects of their role, or the way the business operates, where they may not otherwise feel they have the opportunity to do so.
Although the report acknowledges that some progress has already been made, it concludes that there is a positive opportunity to do more to improve gender equality in the sector. In addition to adopting the recommendations of the report, employers in the sector can offer training and seminars to all workers at all levels to educate them about the benefits of working for gender equality and the benefits this can encourage. Such sessions can not only help raise awareness of the importance of gender equality, but can also create a forum for discussion between individuals, and open up the conversation beyond the current boundaries. This can encourage employees to assess their own attitudes and behaviors that can lead to positive changes at work.
The key message is that in an industry that is fluid and rapidly evolving, it is important for employers to adapt to ensure that top talent is recruited, retained, rewarded and supported. Without this, any progress towards gender equality will lose momentum, and the UK’s prominent position as a leader in the FinTech sector could lose its outstanding reputation, along with a strong pool of current and future talent.
