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How to improve fintech's gender problem
There are fewer female customers of fintech companies and addressing the issue is important, writes Selin Bucak.
Improving financial inclusion is one of the common aims of many financial technology companies, but the combination of two of the least diverse industries has led to many of these businesses being built by men, for men.
A paper by the Bank for International Settlements published in March found a large “fintech gender gap” across 28 countries, with 29 per cent of men using fintech product and services, compared with only 21 per cent of women.
“Female participation in financial products is very much linked to history. Historically women have been underrepresented in financial services products, whether it has to do with traditional family roles or it has to do with the structure of the workplace,” said Romi Savova, founder and CEO of PensionBee.
“For us in pensions, this is a big thing. Often you find women are over-represented in part-time roles and less represented in full-time roles and they are less likely to benefit from workplace driven financial products.”
In order to address this problem, there are several things fintech founders can do, in Savova’s view, starting with having a diverse team. The world of fintech is notoriously unbalanced when it comes to gender representation.
According to Deloitte, women make up only 7 per cent of the global founder pool in fintech companies. A more recent study by HR firm CandidateX identified only 2 female CEOs across 37 UK-based fintech and challenger banks.
The report also found that only 22.8 per cent of senior positions were held by women across the fintechs and six of the companies analysed had an all-male senior leadership team. The companies that were included in the study included Revolut,Monzo,Funding Circle,LendInvest, and Starling Bank—which led the pack with women holding 40 per cent of senior leadership roles.
If there are no women in senior positions at fintech companies, they might not take into account the various things that women might find appealing when building a product or launching a service.
“In financial services, a lot of what women have found to be unappealing has to do with the use of jargon and terminology that’s impenetrable. Every woman I know is multi-tasking…creating and sharing information in a way that doesn’t really fit into a modern woman’s life [doesn’t work],” Savova said.
In addition, a lot of the imagery used in communications, featuring mostly men, can be unappealing to women, who then feel like it’s not really a product for them.
“Targeting women where women are is important. Historically financial products and finance have not been a main feature of a lot of the reading literature that women have. When I was reading magazines it was pretty rare to have a strong finance section.”
“We’ve made an effort to try and talk to publications that are focused on women and reach women where they’re consuming content,” she said.
PensionBee has focused on ensuring that the company is representative – and has achieved a 4 per cent gender pay gap – and has spent time on making sure its communications are jargon-free. Its current split is 35 per cent women and 65 per cent men.
Over in Germany, N26, the neobank headquartered in Berlin, is determined to become a bank for everyone and not just for men, according to VP of marketing Patrick Stal. In the last two years the group has been actively working to balance out its customer base, Stal said, starting to better understand what female clients need.
“The imbalance from the gender side is something we’ve actively looked at correcting,” he said. “One of the first things you have to do is understand your customers, understand their decision-making processes, their needs and how they consider information.”
In addition to assessing the bank’s proposition, and how female audiences view them, N26 also examined the way it communicates, including its usage of specific words.
For the second year in a row, N26 attracted more female customers than men, with its female customer base growing by over 57 per cent in 2020 compared with 46.5 per cent for the male customer base.
Although the firm did not disclose the current gender split in its customer base, Stal expects N26 to continue attracting more female customers as they improve their understanding of women’s challenges with banking and their unique stresses.
The gender disparity in fintech is even worse when it comes to investing. Investment apps’ customer base is heavily skewed towards men. In 2019, for example, eToro reported that only 12 per cent of its customers were female. But UK region manager and head of business development Dan Moczulski told AltFi that while the group’s user base is still predominantly male, in 2020 they saw a small but hopefully significant increase in women coming to the platform.
Prior to 2020 just under 12 per cent of new accounts globally were opened by women, he said, but in 2020 this rose to 16 per cent.
In his view, the wealth gap clearly plays a role in why there are fewer women on investment platforms such as eToro. One study has shown that for every £1 invested by men, just 59p is invested by women.
“But how the industry communicates with women is also an area for improvement, as women have not traditionally been considered a target audience for the investment sector,” he said. “As an industry, we need to look at ways to engage with women. We know from our own research that attention to detail and a focus on long-term goals mean that women make great investors.”
Moczulski also pointed out that products have historically been made by men for men, and by ensuring more female representation fintechs can help break down barriers and create products that appeal to everyone.
He added: “Currently 41 per cent of eToro’s employees are female, and it’s growing. We’re encouraging this and want more women in senior positions to help us appeal to more women in the long-term, to increase the numbers investing and stop this gender divide.”
Elsewhere, robo adviser Nutmeg has also been working to improve the gender divide in its customer base. Previously around 35 per cent of the group’s customers were female, which increased to around 42 per cent last year as women accounted for 40 per cent of new investors in 2020.
According to savings and investment specialist Kat Mann, Nutmeg has reviewed the content it puts in front of its female investors through emails, in-app message and push notifications.
“We also have a really good referral program, that is really strong among female clients. By being able to advance that and make improvements to that process last year, we’ve also seen benefits,” she said.
Nutmeg’s research found that women are more likely to research, shop around and ask questions when it comes to selecting investment products. And according to Mann, offering access to a team of people alongside the digital process has also helped the firm attract more female clients.
But why should fintech companies care?
“There is the business opportunity and tapping into audiences that are less represented can be very beneficial from a business perspective,” Savova said.
“The other really important argument that motivates us is that we think it’s a good thing to do. A lot of fintech companies are built on - and build to deliver - the kind of world they want to live in rather than the kind of world they do live in. For us, we want to live in a world where everyone can look forward to a happy retirement.”