LONDON – A research consisting of some of the best funded private fintech firms from around the world shows that 1.5% of the companies have women as sole founders. It also reveals similar underrepresentation of women entrepreneurs when it comes to fundraising as well as the roles women occupy within the industry.
The research was undertaken by global fintech think tank Findexable as a part of its initiative Fintech Diversity Radar that aims to track the progress of diversity within the industry. FDR is a collaborative effort between findexable, fintech firms Chargebacks911 and Global Processing Services (GPS) and a global alliance of supporting organisations, women founders and fintech industry champions. The inaugural Diversity for Growth report released by the alliance paints a very bleak picture of fintech with regards to gender parity.
The research was conducted on data provided by 1032 fintech firms, from among which only 16 had a woman as their sole owner. These firms have received only 1% of the total venture funds raised globally. Overall, 5.6% women held the post of a CEO. When it comes to board members, only 11% of them were women while only 19% of executives were females. The most common role that women took over in the industry was HR leaders (26%), followed closely by marketing heads and chief financial officers. Less than 4% women were placed as chief technology officer or chief innovation officer.
“Global prosperity is more evenly distributed than at any point in history, yet our data shows the massive imbalance between men and women in innovative financial services firms,” said CEO and co-founder of Findexable, Simon Hardie. He believes that fintech is a key enabler in the digital economy and the sector plays an outsize role in reducing economic exclusion and powering digital transformation. He calls the findings the emergence of a new 1% club, a number that he says should be celebrated and commiserated in equal measure.
The research also factored in the geographical distribution of the fintech firms being surveyed. They found that Asia had the highest number of female founders at 7.7%, followed closely by Africa’s 7.4%, North America at 4.8% and Europe at 6.5%. Africa and the Middle East are the leading regions for the proportion of female CEOs. North America has the highest proportion of executive team members.
There was some silver lining to this dark cloud, in the form of positive progress noted by the researchers. Companies with at least one female founder increased from 6% in 2010 to 30% in 2020. In Latin America, APAC, and Africa, the companies that secured the highest median funding were those with only women founders. In North America, companies with one or more female founders got the highest median funding. The pattern changes slightly with average funding: in both Latin and North America, the biggest average goes to companies with at least one woman founder; in the Middle East and Africa, male only founders get the biggest average; and in Europe and APAC, women only founders get the biggest average.
Reacting to the findings, Findexable co-founder Denise Gee said, “While the research paints a disappointing picture of fintech’s performance at building an industry that reflects the real world, this research should be viewed as a line in the sand. From today all of us – from government to regulators, ecosystems and financial services firms of all sizes – need to ‘dig in’ to make the case and accelerate the progress of women and diverse teams.” She feels that these findings must guide the building of a future fit finance industry.
The report will be presented during the London Roundtable of global stakeholders in December. They will deliberate on ways to take the report’s recommendations forward and build a global index to track and accelerate progress.
According to Monica Eaton-Cardone, Founder and COO of Chargebacks 911, this report is a welcome addition to the growing body of evidence that things need to change in the technology industry. “Although progress is being made, statistics citing that only 1.5% of Fintech companies are founded solely by women highlights deep, systemic problems. However, there are signs of hope in the progress being made in the Middle East and Africa, where significantly more women are present in boardrooms. In this report, Findexable has given the industry another wake-up call, and now it’s down to all of us to listen,” she said.