Stripe, a processor of online payments, is an example of a thriving company in the nascent fintech industry. By marrying financial services with cutting-edge technology, fintech is meant to inspire the development of new companies by people and communities that have been shut out of the traditional financial system.
But the new industry is falling woefully short in creating opportunities for women.
Firms founded solely by women attract 1% of fintech venture funding, according to a study by findexable, a global research and analytics firm. Its survey is part of the Fintech Diversity Radar, the first global big data initiative to track diversity in fintech.
The survey of 1,032 private fintech firms found that 5.6% of chief executive officers are women, and less than 4% of chief innovation officers or technology officers are women.
“Tech and financial services at the executive level are male dominated,” says Susanne Hannestad, who holds a Northeastern MBA and chairs the Diversity Radar. “So when you combine them, it’s no surprise that fintech is male dominated.”
Hannestad, a Norwegian whose leadership roles include chief executive officer at Fintech Mundi, a global supporter of fintech startups, discussed her findings and hopes for improved diversity over the next decade in a recent conversation with News@Northeastern. Her comments have been edited for brevity and clarity.
You’ve set a goal that 30% of fintech founders will be women by 2030. How can this happen?
Investment is an absolute key. To scale and grow your business, you need investment upfront—and that’s another area where it’s male-dominated.
For us [at Fintech Diversity Radar] it is to collect the data, stimulate [entrepreneurship], have a scorecard, and communicate. And then, of course, you need all kinds of stakeholders to be part of it: Government with legislation and stimulating investment in general—and then females in particular.
In the Nordic countries, they have stimulus packages for tech, innovation, entrepreneurship, and so forth. They could add a portion also to stimulate tech companies with female founders, and fintech in particular.
I also think the banks need to be conscious about which fintechs they support—if they have a female team or a female founder, maybe that should be a trigger to reach out and buy the [financial services] that they are producing.
The promise of the industry was to knock down the barriers in finance, technology, and entrepreneurship that have traditionally excluded women. What did you learn about the women who have emerged as leaders in fintech?
We have been very focused on role models: Female founders, female board members, female executives. We want to find the good role models and then stimulate and highlight and celebrate these founders.
All of these founders that we have interviewed or done analysis on—they have the go-getting [attitude] and they want to succeed. So they’re not any different compared to male founders in that aspect. They know how to recruit, they know how to build up the products, they know how to go to the market. It goes back to the type of person who has the courage and does the relentless work, because starting a company is hard work.
Why is diversity important to the development of fintech?
The data proves that when there are females among the executives and the board, you have much more sustainable businesses. You have better return on investment, you have better profit and loss. Bottom line, more money.
In Africa, 7.4% of fintech founders are women, while North America features 4.8% women. What explains the disparity?
In Africa they are more pragmatic. I think that they are freer in the sense that they don’t look at the barriers; they just start their business and move on.
Tech is very male-dominated in the U.S. and Europe, and that has mirrored over to the fintech side as well. So I think that goes with a culture that is in the U.K., Europe, and the U.S.
What was an unexpected finding in your study?
Even though it’s very male-dominated in the Middle East, it is changing its mentality because oil is not going to last for many years going forward—so the whole society is looking for other means. In technology, and in fintech in particular, there’s a lot of activity in the Middle East and quite a few women are coming forward. Not a lot, but still I think it’s very encouraging that in such a [region], which is so male-dominated when it comes to business, that the females are stepping up into fintech.