On October 4, CGD convened a private roundtable on women and financial technology in development alongside Monica Brand Engel, co-founding partner of Quona Capital (which invests in financial technology solutions in the developing world), and Wendy Jagerson Teleki of the International Finance Corporation. An engaged set of participants from MDBs, government, civil society, and the private sector joined Engel and Teleki in exchanging ideas on how to increase women’s representation in financial technology (or “fintech” for short) leadership and improve access to financial services for women. Because the discussion was under Chatham House Rules, we won’t quote anyone, but a number of valuable points on and ideas for a better path forward emerged.
Globally, business remains depressingly gender-unbalanced. The World Bank’s enterprise surveys suggest that only about 20 percent of medium and large firm managers worldwide are women (and the figure isn’t much different in rich countries). Two particularly unequal sectors are finance and technology. The IMF suggests only 2 percent of bank CEOs are women, and a recent analysis of global patents suggests that only 15 percent of patents involve a woman inventor, with the share even lower in IT. So perhaps it is unsurprising that fintech companies are in a pretty grim place when it comes to employing women—especially in leadership. More than one discussant suggested that they frequently came across company boards in the sector without a single woman, and that they were the single woman on a number of boards. Why do so few women hold positions of power in fintech, and what can we do to change this bleak picture?
One participant suggested we know the macro case for greater women’s economic empowerment in terms of economic impact and development progress, and we know the micro case in terms of improved provision of services and outcomes for individual women and families in terms of earning, learning, and health outcomes; but company leaders need more, and more specifics, on the meso case—the business case for gender equity that includes better returns to shareholders, for example.
The discussion covered both better provision of financial services to women and better representation of women in firms that provide financial services—with the clear understanding that the topics are linked. Firms that recognized the benefits of a diverse client base were more likely to understand the value of having women in leadership—and vice-versa.
On the provision of financial services, a growing number of companies are recognizing the value of developing banking products with women customers in mind. And there were a lot of studies and examples to point to around the business case for those services. But it takes more than anecdotes, however convincing; banks frequently need engaged, long-term support to roll out new products for their markets (and there is a role for smart design of accompanying women’s empowerment projects including high quality business management and jobs skills training).
On greater women’s representation in fintech leadership, a recent Harvard Business Review survey based on US experience suggested limited or mixed impact of diversity training, hiring tests, and grievance systems, but better results from targeted recruitment. In the discussion, there was some skepticism towards enforcing board quotas, but on the other hand, there is evidence that the impact of quotas in discriminatory environments can often be to replace mediocre men with better women.
Mirroring the survey results, participants discussed the benefit of firms going the extra mile to find women for positions—leaving jobs open until a qualified woman applied, using ownership interest to place women on boards of directors, and targeted job searches using personal networks and contacts. And the discussion highlighted the importance of actively building pipelines—looking out for women to fill positions from intern on up. Again, while some participants felt mandating female board membership as a condition for investment was a step too far, positively judging companies with diverse boards as part of an investment decision could have both a financial and development impact.
And, especially given how few women there are in the sector today, men need to step up. Mentoring a pipeline of women employees shouldn’t be a burden that women in an organization carry alone. Men should be thinking about opportunities to better serve women clients. Men should be searching their networks for women candidates and recognizing and countering the role their own and others’ biases play in hiring and HR decisions.
On that note, it was a disappointment that there were so few men in the room for the discussion. At about 90 percent women, the roundtable saw even worse gender parity than at the average CGD event on gender. It was yet another indication of how far fintech—and the business community more generally—has to go towards equally involving and empowering women and men. And, in a sector known for its innovation and forward-thinking, a huge opportunity exists to transform the way we do business for profound social (and economic) impact.