Diverse recruitment doesn’t exist in fintech yet, says new report

Despite its reputation for innovation, the fintech sector is troubled by a culture of silence on diversity.

Despite fintech’s reputation for innovation, a new study reveals this label cannot be extended to the sector’s diversity and inclusion efforts.

The UK report by CandidateX, an HR firm that helps businesses champion inclusive recruitment practices, found that only 16% of the fintech and challenger bank (F&C) firms involved in the study had a BAME CEO, while there were no women of colour CEOs at all.

Statistics and sentiment

  • 37 F&C businesses included in the report
  • Only GoCardless responded to validate the statistics
  • Out of 328 senior leaders identified only 29 were BAME
  • Only 75 senior leaders (22.8%) were women
  • Only 8.1% of senior female leaders were BAME
  • Over half of all businesses included (51.4%) had no BAME leaders
  • Only 6 CEOs were BAME
  • There were no female BAME CEOs

Co-authored by the company’s founders Sunil Dial and Man Wong, the report entitled: “So how diverse is the UK Fintech & Challenger Bank sector?” is the first in a series of quarterly publications that will be published by the firm and will cover D&I statistics across other sectors in the UK economy that are deemed to be innovative.

Commenting on the purpose of the research, Wong said: “Reporting diversity numbers at senior levels has been crucial in our ability to monitor, track and measure progress made in engaging underrepresented groups for some time now. The FTSE has benefited from this insight through these efforts, and our report is the first of its kind for the F&C sector. CandidateX hopes to create a similar impact for awareness of diversity at senior decision-making levels and through data and aid organisations in establishing a basis of on-going improvements and measures for an inclusive culture.”

The results of the report show similar statistics to other areas of the business world in terms of low levels of diverse representation in leadership roles. In the F&C sector, as with other industries, white male executives dominate the rungs of leadership, which leaves women and BAME professionals out in the cold. The fact that only one out of 37 businesses included in the report wished to respond to the research also showcases the culture of “silence” around the diversity and inclusion problem in the sector.

The authors of the research went on to state that few D&I conversations they had with HR professionals and senior leaders in these organisations went beyond gender. It appeared that to be seen as a diverse recruiter, hiring more women was a better-understood variable than considering ethnicity or race. Despite the discussions of female inclusivity from these figures, the researchers also noted a gap between discussion and active implementation.

The report’s recommendations

The report’s recommendations for diversifying the F&C sector include establishing a higher accountability rate among senior leaders and HR personnel when making hiring decisions. Also noted is the need for greater transparency about the current state of D&I within organisations and stemming pressure from investors.

Overcoming pressure from investors

Pressure from investors is cited in the research as a key reason why F&C teams are not diverse enough. The desire for quick returns propagated by private equity and venture capital firms means the organisations they invest in are pressured to pursue a ‘risk-adverse’ recruitment strategy in order to “hit financial milestones.”

This approach leads to hiring candidates with the exact skill set and experience necessary to perform in these roles. While this is understandable, it also means that BAME and female candidates who may have transferable skills from other sectors and the talent to grow within a role are shut out. Instead, leadership teams, who are generally still overwhelmingly white and male (often unconsciously) recruit from a talent pool that feels familiar to them.

The report suggests that hiring teams in the F&C sector should pursue a more open strategy to recruitment, where candidates with potential are permitted to attain “growth experience” on the job to diversify the leadership pool and break the cycle of bias recruitment. While another idea outlined by the report suggests making more diverse hires at junior levels within firms with the hope they rise to senior positions in time, it is agreed by the co-authors that a more disruptive approach is needed by recruiting from a diverse talent pool at a senior level.

Investors should take the lead on D&I

The report also suggests the impetus for change should come from the investors themselves by placing their funds in diverse businesses, to begin with. Yet it also notes that within established investment firms recruitment can also be non-diverse, diminishing the likelihood of investment in diverse firms.

Being transparent to attract talent

While the report did come across a few F&C businesses that published their workforce demographics, they were in the minority. However, there is reason to believe that a more transparent approach towards D&I could help businesses attract the best talent. The fact that Gen Z candidates will soon account for the majority of the workforce and are statistically more likely to apply to roles at organisations with core D&I values is reason enough for F&C firms and those in other sectors to go beyond shallow diversity implementations.

Summarising the purpose of the report, Man Wong, co-founder of CandidateX, added: “Fintech promised to democratise access to financial services and instruments, particularly for underserved communities, but this can only be achieved through diversity of thought. The first step towards realising this promise and potential is by creating an inclusive industry at heart and engaging diversity through representation and empowerment. To do this, we need to understand the current landscape, to have visibility of the diversity within Fintech and Challenger Bank organisations.”

Commending the research, Bonhill Group’s editorial director and founder of the Women in Finance Awards, Lawrence Gosling, said: “CandidateX’s research provides a very healthy reminder that complacency is still a major issue with regards to female and BAME representation within key industry sectors such as fintech and the challenger banks. It’s very easy for the sectors to talk about how they want to disrupt and innovate to the benefit of customers and the population of the UK at large, but if their workforce isn’t representative of society then they have much to do.”

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