Three top fintechs driving equality in the industry
Diversification of workforce in the fintech industry is worryingly lacking, but there are companies driving to change this. Fintech Magazine looks at the three fintechs leading the way.
In the tech industry only 30% of women comprise major tech companies internationally, while across the finance sector, only 12.2% of women held CFO roles in 2018. The telling report that there are more men called John in a CEO or chairman position across the FTSE than there are women illustrates a big problem. And this isn’t just limited to gender inequality. A large number of people across different genders, ethnicities and abilities are absent from these C-suite roles and this is in turn affecting companies, who are missing out on vital insight on how to optimise products for these audiences.
FinTech Magazine takes a look at three fintechs that are leading the way in challenging this imbalance by driving diversity in the workplace.
[image: CEO of Starling, Anne Boden]
Starling Bank is the UK digital mobile-only bank that has taken the country by storm in the last few years. Founded by CEO Anne Boden in 2014, diversity has been built into the fabric of the company: "Our goal at Starling is for a more even gender balance, not only because it is the right - and fair - thing to do, but also because it is likely to make for a more successful company. And that, in turn, should mean a better service for our customers,” said Boden.
In 2017, Starling signed the Women in Finance Charter, sharing that 27% of its staff in senior positions were occupied by women and hopes to increase this to 30% by 2021, but having exceeded this target, has increased the goal to 40% by next year.
“There’s no shortage of evidence to support the view that diverse teams perform better in the workplace overall. In fact, the business case for diversity of all sorts is now widely accepted in management courses and boardrooms around the world, even if it is rarely rigorously applied in practice,” she said. Starling has increased its customer base by over 55% with over 100% growth in its deposit base. In addition to this, it has won a number of awards including Best British Bank, Best Current Account Provider in 2018 and 2019 and Best Business Bank at the Smart Money People Awards in 2019.
Nubank was founded in 2013 by David Velez, Edward Wible and Cristina Junqueira, the latter of whom was pregnant at the time. This was a particularly trying time for founder Junqueira, as she returned to work just a day after giving birth. From this experience she has ensured that NuBank’s policies are sensitive to women giving birth
“Many of the structural choices we’ve made in terms of gender equality and inclusion are reflective of the fact that I have been here from the beginning,” Junqueira told Quartz at Work.
Though Nubank is ahead of its peers in terms of equality, Junqueira says that this isn’t enough, and wants to grow the workforce to 50% women. “We are very close to achieving that goal. Given that we are at the intersection of technology and banking, both sectors that have a historic gender imbalance, we are way above industry average and very close to reaching the point of equilibrium,” Junqueira says.
Nubank is the third bank in Brazil to achieve unicorn status after achieving a valuation of US$1bn in 2018.The bank is headquartered in São Paulo, Brazil, and serves Brazil, Mexico and Argentina with digital accounts, credit cards and personal loans. Vélez revealed at the start of October 2019 that the bank now has over 15mn users. 25% up from August 2019. It has also won the award for Most Innovative Business of 2019 in Latin America.
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A branch of Deloittes many areas of expertise include a fintech advisory firm, which is committed to reducing gender inequality in the workplace. In an exclusive for FinTech Magazine, Louise Brett, Head of Fintech and Financial Services Innovation at Deloitte, acknowledged the scale of the gender imbalance. In the article she concludes: “We need to apply the same principles to solving this problem, as we do with our product: test and learn. The first step is to make a conscious effort to rebalance gender inequality in fintech. Then we can start to identify what’s working.”
Deloitte has responded to this need for change and it has been met with positive feedback: “Deloitte focuses on the whole person not just our work skills and contributions. There are a wide range of programs, policies, and benefits that help and support employees with different aspects of their life, inside and outside of work, so that we can come to work as ‘whole people,'” employees said. Its Global 2019 report backs up these efforts and as a result, it has been named as one of Fortune Magazine's top places for women to work.
[Images: Starling, NuBank, Getty]
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FIVE things fintechs must do to keep investors onboard
New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.
Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?
The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.
Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.
Equal access to financial wellness education
Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.
The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.
Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.
For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.
Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.
The rise of AI-Powered Advice
Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?
Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs.
Focus on financial mental health
New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.
It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.
Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.
Gamification for good
The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.
Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.
Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.
The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.