Opinions expressed by Entrepreneur contributors are their own.
The financial technology (fintech) industry has grown exponentially in recent years and is making major waves in finance. According to The Brainy Insights, the global fintech market is estimated to experience a compound annual growth rate (CAGR) of 26.2% between 2022 and 2030 — a clear testament to its impressive growth potential.
Though fintech is clearly thriving, there’s one area where it still lags: diversity. A recent study found that while 70% of male leaders believe the fintech sector to be inclusive, only 25% of female leaders do.
As a woman fintech founder with Asian heritage, I’ve seen firsthand the lack of diversity in our industry. Climbing up the ladder of an “old boys club” where gender and race were not considered was extremely challenging. I often felt like I’d have to fight much harder for a seat at the table.
So how can companies make an impact? I’ll be sharing my tips for doing just that and why diversity matters in fintech (as well as every industry).
Related: How Can Women in Fintech Break the Glass Ceiling?
A lack of representation in the fintech industry
In its simplest form, diversity encompasses age, gender, race, social class, sexual orientation and religion. Unfortunately for the fintech world, we’re still behind in terms of representation. Let’s take a look at some stats to better understand why this is an issue:
- TechNation found that ethnic diversity in fintech has increased from 12% in 2011 to 20% in 2021. While minority representation has improved, we’re still seeing a massive lag behind compared to other industries, particularly when looking at representation in senior and C-level positions, where minority representation fell to 8% for Black and Asian people and 11% for other ethnic minorities.
- Women currently make up 30% of the fintech workforce. However, the figure drops to 17% when looking at senior roles.
- Regarding sexual orientation, Glassdoor found that 53% of LGBTQ+ employees have experienced or witnessed anti-LGBTQ+ comments from coworkers and 47% feel being outed could hinder their career.
Personally, this experience resonates with me. I remember being one of the only females at more than one company. This made me feel isolated, undervalued and unappreciated — an experience that is all too common for many people of color, LGBTQ+ professionals and women in fintech.
Why diversity surpasses representation
The lack of representation in fintech is concerning. While it’s important to increase this representation, it’s also important to understand that diversity is about more than just representation.
Diversity goes beyond ethnicity, sexual orientation and gender, but rather encompasses individual differences such as backgrounds, experiences and perspectives. This means that, for a workforce to be truly diverse, they must foster an environment where the human experience as a whole is represented and respected.
Related: Don’t Just Sit At the Table, Flip It. A Reflection for Women Entrepreneurs.
Benefits of diversity in fintech
This is not just a moral argument, however. Studies have shown that diverse teams produce better results and lead to greater innovation. McKinsey & Company conducted research that found businesses in the top quartile for gender diversity are 15% more likely to outperform their peers, and businesses in the top quartile for ethnic diversity are 35% more likely to outperform their peers.
In addition, a diverse workforce allows for better access to top talent. By broadening the field of potential candidates, companies can draw from a larger pool of talent and find the best candidate for each role.
Finally, companies that value diversity and inclusion will experience a higher level of trust, respect and employee engagement among all employees. This leads to an improved overall company culture, which in turn can lead to increased productivity and performance.
Tips for increasing diversity in fintech
So what can companies do to increase diversity within their fintech organization? Here are some tips to get you started:
1. Engage leadership
Engaging your leadership is the best way to ensure that your company values diversity and inclusion from the top down. If your C-level execs aren’t on board with diversity initiatives, they won’t be successful. That’s because change needs to start at the top, which means ensuring that your leaders understand why diversity matters.
Collect data and evidence that highlights your company’s challenges and set targets. Your leadership team should clearly understand the current state of diversity in your organisation and be able to set measurable targets with timelines for improvement. Be sure that this can be tracked with data and reports.
2. Sponsor with diversity in mind
The best way to increase diversity in your organization is to sponsor with diversity in mind. This could mean providing internships or mentorship programs for people from diverse backgrounds and sponsoring events and conferences that focus on diversity and inclusion.
In her book, Sylvia Ann Hewlett found that men are 46% more likely to have sponsors than women, and Caucasians are 63% more likely to have sponsors than professionals of color. Managers and those in a position to sponsor others should cast their nets widely and deliberately seek out candidates from different backgrounds.
Related: It’s More Than a Seat at the Table: 4 Attributes of an Inclusive Workplace
3. Recruitment bias must be addressed
It’s important to have a recruitment process that doesn’t exclude potential job candidates based on gender, race or other protected characteristics. Many companies use blanket criteria and processes, which may not be effective in recognizing the best fit for the organization regardless of their background. Make sure you track your recruitment data closely so you can identify any biases that may exist in your organization.
At my company, we ensure our interviewing panel is diverse and unbiased in order to select the best candidate for the job. You could also utilize technology and AI-powered tools to ensure a fair and unbiased recruitment process.
The goal of any diversity and inclusion initiative should be to create a workplace where everyone feels respected, valued and included regardless of their background. By understanding why diversity matters and taking steps to increase it, companies can ensure that their organizations are best positioned for success. So start making some changes today and watch the benefits of a diverse and inclusive organization unfold!