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You don't have to be an economist to know that a drop of 34% in FinTech funding and investment in 2023 will have consequences for a sector that, in 2020, found renewed purpose during the pandemic, leading to a surge in recruitment, service innovation and global outreach. Amid an uncertain economic outlook, it’s time for FinTechs to confront some uncomfortable truths – and double down on their diversity efforts if they want to attract the talent to keep them innovating.
The funding wave that swept up the FinTech sector just a few years ago is dwindling to a few splashes here and there. FinTechs are being forced to tighten their belts, shed staff and retreat from markets that were touted as their next big growth hotspot. Disregarding 2020 as a once-in-a-lifetime anomaly, UK FinTech investment in 2023 was at its lowest levels since 2017, although the payments space still accounts for the largest slice of FinTech, despite a fall from $57.9 billion in 2022 to $20.7 billion in 2023. While there are still billions of pounds and dollars up for grabs, it’s clear that the venture capital and private equity firms are becoming much more selective about who they invest in.
Wary investors are ramping up scrutiny on potential deals, and deploying deeper due diligence than ever before – not just on company financials, and their products and services, but also on the people and the cultures within those companies, and for good reason; although the FinTech sector is rightly hailed as a beacon of innovation, it can be argued that hiring and employment practices at many are stuck firmly in the past.
Everywhere you look, the data shows that women, ethnic minorities, and those from deprived socio-economic backgrounds are still under-represented – particularly at senior and board-level positions. Even today, too many FinTechs are merely paying lip service to diversity and inclusion. And it’s something they ignore at their own peril.
The EY European Financial Services Boardroom Monitor shows that across UK financial services as a whole, the gender split among board directors is currently 39% female, 61% male. And this gender gap is now proving to be a stumbling block for FinTechs looking for the investment they need to grow. Around 45% of investors surveyed state that gender diversity in the boardroom significantly influences their decision to invest in a financial services company, compared to just 16% who say it does not influence their decision at all.
Diversity can drive profitability and positive team environments
The FinTech sector can no longer ignore the strategic imperative of reflecting the diverse customers and societies that they serve through the people they employ – and in who they select to lead those companies. It’s been proven time and time again that the more diverse an organisation is, the more innovative – and profitable – it becomes. Drawing upon different talent pools, insights and experiences will generate better-formed and fully rounded products and services. With those in place, those organisations will more successfully meet the needs of customers who come from a wide array of backgrounds too.
Changing entrenched company cultures can be hard, but it’s not impossible. My own experiences are living proof of how to foster diversity in the workplace. During my career, I’ve worked across Europe and the Middle East at some of the world’s leading payments firms. It was while working for Network International in Dubai that I saw that there was a need for female and ethnic minority support networking groups, to empower those under-represented in the workforce with success stories and practical skills, and support those dealing with discrimination or harassment.
Even though I am now back in Europe, it’s still common for me to be the only woman in the room or at the table when meeting other businesses. I continue to coach, mentor, and create development plans for others, alongside ensuring inclusive environments where everyone can feel supported. In fact, my promotion to the C-Suite at Tribe Payments happened while I was pregnant, and I instigated the push for revised HR policies to accommodate colleagues balancing work with newborns, such as allowing off-camera breastfeeding during internal calls.
I’m also proud of Tribe Payments’ ongoing work to champion women in STEM, and one of our exciting events planned for 2024 is an intimate event for women in FinTech, which will be a dual learning and networking experience.
I want to make sure that women at all stages of their careers – from those just starting out to those in the boardroom – have the confidence to speak up and speak out to build positive change. I want to ensure that every voice can be heard, regardless of level, gender or race.
At a broader level, while 2024 may bring a bit more stability in economic conditions, investors will be looking at businesses that can prove not just customers and revenue growth, but sustainable growth, and a productive, dedicated workforce. Diversity can be the cornerstone that fintechs use to build a strong, collaborative culture where people feel valued, can thrive, and contribute to long-term success.
Download your free copy of the latest Financial Technologist magazine here.
