Banking and Fintech Could Benefit from More Diversity
It’s possible that if we did nothing, the problem will eventually work itself out, but if you look around most conferences these days, there are very few people of color. Banks and fintech companies offer a robust, growing segment of the economy – what will it take to convince people it is an industry worth pursuing?
Fresh off from the fall banking conference season, which included Money 20/20, BAI Beacon, Finovate, MBA Annual and a host of technology user conferences, one thing is clear, the industry is not a poster child for diversity. We are including both banks and fintech companies in the same space as many technology executives work at banks and credit unions, and many former bankers work at fintech/software companies.
A recent study published in Business Insider on diversity within Wall Street banks (U.S. employees) illustrates the challenge.
Venture-backed startups in fintech may be more extreme in their lack of diversity. According to a recent blogpost on Center for Financial Services Innovation (CFSI), “Of CEOs at venture-backed tech startups, only 3% are female; fewer than 1% are Black; and fewer than 1% are Hispanic.”
While the business case for more diversity can include improving the bottom line or creating more innovative products and services, others are seeing the lack of diversity as possibly keeping access to capital down for minorities. In September, Rep. Gregory Meeks, D-N.Y., a member of the House Financial Services Committee, during a panel on fintech held during the Congressional Black Caucus Foundation’s annual legislative conference said, “We’ve still got work to do. You want to make sure that they’re (online lenders) hiring the people of color and lending to the people of color.” He went on to say that the Congressional Black Caucus aims to “make sure that we have people on these boards who make decisions on what the policies are.”
In October, Debbie Matz, who serves on the board of directors of Mutual of Omaha Bank, wrote in American Banker, “Building trust and new relationships, particularly among communities that have historically felt disconnected from the financial services industry, won’t come easily. The good news is that there is broad agreement that diversity serves a social good. The vast majority of technology executives (72%), for instance, see diversity as very important, according to a recent survey by Lawless Research.”
What do people think of our industry?
If you consider the Wells Fargo scandal involving employees opening unauthorized customer accounts and the industry’s already low reputational index score (67.1 out of 100), the industry could use some good PR. Stephen Hahn-Griffiths, a vice president at the Reputation Institute, said “We’ve seen some improvements broadly around financial services, but there’s still a hangover effect from the Great Recession.”
According to researcher and speaker, Jason Dorsey of The Center for Generational Kinetics, Millennials don’t notice diversity…unless it is absent. In other words, a room of middle-aged white guys looks suspiciously like a Kiwanis or Rotary International meeting (not what they see as typical).
Addressing Diversity and the Need for Employees in order to Grow
To improve diversity in the banking and fintech sectors, the companies that make up our industry need to 1) be more transparent with their goals and the programs they’ve deployed to promote diversity and 2) be more proactive with outreach and awareness about the attractiveness of the industry. As an example, in August of this year, federal banking regulators including the Board of Governors of the Federal Reserve System, the FDIC, and the OCC issued standards on how financial institutions can deliver transparency and awareness of diversity policies and practices within their institutions.
In the fintech sector, programs like FinLab (Financial Solutions Lab), a partnership between the Center for Financial Services Innovation (CFSI) and JPMorgan Chase, are proactively implementing programs that mitigate “unconscious biases” by hiring managers and publicly sharing data about the results their programs have achieved. To help companies diversify their recruitment and hiring strategies, they can look to and organizations like TUGG, Third Sector New England and Code to Work.
What Next?
If you look around your organization or department and most of what you see is pale and male, you’re likely not realizing the full potential of your business. Assess who your customers are (or who you want them to be) and make sure that you have a staff who can relate to those customers. If you don’t, take the right steps to get you there. Diversity in your business today will be critical to the success of your business tomorrow.
Sources:
Business Insider “These charts show just how white and male Wall Street really is”
By Portia Crowe and Andy Kiersz, Aug. 25, 2015
Center for Financial Services Innovation (CFSI) “Fintech’s Big Diversity Problem”
By Asad Ramzanali and Josh Sledge, Oct. 17, 2016
American Banker “Meeks: Fintech Companies Have ‘Work to Do’ on Diversity end others”
By Lalita Clozel, Sept. 16, 2016
“The Business Case for Diversity”
By Debbie Matz, Oct. 17, 2016
Bureau of Labor Statistics
Reputation Institute
FDIC
By Scott Mills, President at William Mills Agency and Marcell L. King, Chief Revenue Officer at Payveris
Scott Mills is president of William Mills Agency. He is responsible for guiding the account teams, monitoring tactical activities as they relate to the strategic plan, day-to-day management of the agency and customer service. Scott is also the editor of Bankers As Buyers, an annual guide to technologies and spending trends in the financial services industry. Scott also serves on the City Council of a very small town, Mountain Park, Georgia. He is also an officer for a non-profit advocacy group for the music industry, Georgia Music Partners.
https://www.linkedin.com/in/scottmills1
Marcell King is chief revenue officer of Payveris, a provider of an open API digital payment and money movement platform designed to help financial institutions transform their customers’ digital payment experience and stay relevant in a digital world. As chief revenue officer, King oversees all of Payveris’ sales, marketing, partnership and account management efforts. Before joining Payveris, he spent 20 years in sales, marketing, product management, client services and P&L management in the payments, transactions, and prepaid card industries. He has held senior leadership roles at InComm, Amazon.com (Global Gift Card Channel), Open Solutions, Timely Rewards and BankServ.
