One of the most interesting take-aways from our research on diversity and FinTech is that Millennials are demanding diversity in financial services and transparency, and they are prepared to shop around for banks that support diversity and give them corporate transparency. Another interesting change — Millennials want FinTech that supports social causes that are important to them, not those that are important to their grandmother.
Clearly, the most successful FinTechs and indeed banks, will be those that give Millennials fast, frictionless services online, that have visual diversity of women in key and cool positions of power and that support social causes that matter to Millennials, such as eradication of poverty, equality, environmental protection. This is hard for traditional banks to understand, and even some FinTechs but ask any Millennial and they will tell you that they want their bank to have leadership – to stand for something socially important that makes them want to bank there.
Huge investment in FinTech
The rapidly growing FinTech industry is attracting investment and talent globally. In March 2015, Accenture estimated that global investment in FinTech ventures tripled from US$4.05 billion in 2013 to US$12.2 billion in 2014. The US captured the greatest share of this investment, but Europe experienced the highest growth rate, with an increase of 215% to US$1.48 billion in 2014.
London, San Francisco and New York are established FinTech hubs, with government bodies and industry associations focused on attracting start-up companies to set up shop. Newer hubs such as Paris, Singapore, Nairobi and Sydney are also emerging.
Diversity brings Business Opportunities
But in this frenzy of investment, the industry may be missing out on opportunities because it lacks diversity; women and Millennials are under-represented in FinTech firms.
Unlocking innovation for Millennials
Anju Patwardhan, group chief innovation officer at the global bank, Standard Chartered, agrees. “Like any other industry, FinTech can benefit from a more diverse group of professionals. I have spent the majority of my working life in risk management in financial services and that area has a similar challenge.”
Unlocking an organisation’s true potential to innovate, she adds, requires diversity not only in gender, but also of thoughts, perspectives and knowledge which is influenced by many factors including industry experience, merit, ethnicity and cultural background. “For sustainable change to happen, we need to change the culture and the traditional mindset,” she says. “That requires a concerted effort by all stakeholders. It starts with changes in the selection process to cast a wider net at the entry level, building a leadership pipeline for senior women, and more development opportunities either through formal or on-the-job training.”
How far have we come already? The numbers speak for themselves: the global average for women on listed company boards – across industries – is only 11%. Patwardhan says there is, however, a more conscious effort by several multinational companies to appoint diverse boards including more people of Asian background and more women.
But as Patwardhan suggests, inclusion is about more than gender or ethnicity; another group that FinTech companies are in danger of overlooking are Millennials – typically defined of these critical functions are as those born between 1982 and 2004. Millennials trust technology and are less likely to seek face-to-face meetings with bankers at bricks and-mortar branches. This group of consumers want entirely new development and idea generation digital products that are relevant by connecting innovative, to their daily lives.