Luvleen Sidhu, CEO, BM Technologies on Diversity in Fintech
Luvleen Sidhu is the Chair, CEO, and founder of BM Technologies, Inc. which is among the largest digital banking platforms in the US providing access to checking and savings accounts, personal loans, and credit cards. As a member of the BM Technologies (BMTX) Board of Directors and Director and founder of the BankMobile Foundation, Sidhu identifies and funds budding entrepreneurs and organisations that promote financial literacy. We caught up with her to find out which areas of the financial services industry are ripe for reform and how fintech is redressing the balance.
Q: What are the biggest challenges facing women when it comes to wealth management today - and how is fintech addressing these things?
There are three main challenges that need to be overcome. In my opinion, they are;
- Women underestimate their ability and knowledge to make financial decisions.
- Products and services in the market fall short in catering to the unique needs of women.
- COVID and other variables/unknowns (like unemployment)
Fintech trends to make things simpler, easier to access, and provides a better customer experience, all with no to lower fees—especially for complex (or stereotypically complex) realms like wealth management. In the aforementioned ways and others, such as providing advice to meet a customer where they are in their usage journey and helping them build trust in their own literacy around building wealth, fintech is addressing these challenges and helping more consumers, like women, take advantage of products/services in the wealth management space.
Q: Why are there such huge discrepancies between the way men build their wealth, and the way women build theirs?
Women and men want money just the same. However, it’s no surprise that women’s priorities, needs, preferences, and behaviors related to building wealth, as well as their feelings towards money in general, differ in various ways from men. Women are more likely to seek professional advice and tend to underestimate their own knowledge of financial decision-making. They tend to be less risk tolerant and more focused on life goals, like retirement and health-related matters, which lends well to long-term wealth-building strategies.
They also care more about the details around how and where their money is being invested. Additionally, when women have money, more of it tends to go back to their families and communities, which in turn helps build generational wealth and enriches society. The way women feel about money is also different from the male perspective. In general, women tend to have more feelings in the stress and anxiety category related to money. Also, the way in which they feel good about wealth can be satisfied by their ability to align the way they build wealth with their values in life (think: ESG investing, other types of impact investing, and giving back to their communities through donating).
Q: Are these issues exacerbated by the fact that fintech is still a very male-dominated space?
Fintech has the power to help make a real impact in reinventing the way women take ownership of building their wealth, and there are players out there—doing just that as we speak—like Ellevest and BM Technologies (BMTX). Rather, these issues are deep-rooted and have long been a part of the history of the wealth management space, which has carried over to the more specific ‘fintech’ wealth management space. While it has taken some time to begin resolving those issues and creating a full-blown shift, strides have been made with fintech at the forefront of driving the launch of more women-centric offerings out there.
Q: What changes would you like to see happening as soon as possible, to redress the balance?
I'd like to see changes in three key areas. They are;
1) More women advisors and women-centric advice provided by companies to meet women’s distinct needs and more encouragement directed at women to take advantage of opportunities no matter where they are in their wealth-building journey.
2) More women-focused, wealth-building product and service offerings in the fintech space that prioritise ease of use (in the customer experience, for example), leading with personalized financial advice and decision empowerment, and understanding a woman’s financial life journey. Also, better tailoring of marketing messaging and value propositions around those products and services (without pushing them) to attract and empower women to take steps to build the wealth they deserve.
3) More women founders and members of the C-Suite at companies in the market that have a focus on helping people, especially women, build wealth.
Q: Women are the market spenders when it comes to household budgets - they have massive purchasing power. Will fintech companies suffer in the future if they don’t acknowledge this huge section of the marketplace?
Yes! Acknowledging women as a huge market opportunity and—this is key—building products and services specifically for women, and marketing them properly to women, based on their unique needs/wants, etc., will be a game-changer for fintechs. Those that don’t focus on this all-important segment will fall behind and miss out on capturing attention in this corner of the market as the rise of the SHEconomy continues. According to McKinsey & Company, “an unprecedented amount of assets will shift into the hands of US women over the next three to five years, representing a $30 trillion opportunity by the end of the decade.” At BMTX, women made up 50% of account holders in our student business vertical in 2021, compared to ~34% of men.
We understand how important it is to have a laser focus on this section of the market and strive to provide wealth-building digital banking through multiple product/service offerings and features, specifically keeping women in mind.