Global FinTech Companies Fall Behind in Race for Top Talent on the Board - Just 8% of Directors are Women

Dec 15, 2016

Fintech companies around the world are struggling to keep up with the trend for businesses to diversify their board of directors reveals research by DHR International, the global executive search firm.

Just 8% of the directors of Fintech companies are women as opposed to 22% of board directors of the Top 30 Global banks.

DHR says that Fintech companies may find their pursuit of growth and profitability hampered if they do not have the right mix of backgrounds and experience on their leadership teams.

DHR says that a growing number of financial services, tech and other major businesses are increasingly competing fiercely for the most highly qualified female executives to add to their boards. This drive for diversity is being propelled by formal and informal quota setting.

Those businesses that move slowly to add diversity to their boards may find that many of the best qualified senior female executives have already been hired.

Having a broader range of views among senior decision-makers is seen as vital in driving company performance and shareholder value because accepted conventions and consensus are more likely to be challenged, helping to identify risks and spot innovative new opportunities.

According to DHR’s research into diversity across 1240 directorships at almost 270 global Fintech companies in 19 countries, US and Nordic Fintech businesses have the highest proportion of women on boards. At Nordic Fintech businesses 11% of directors were female, and at the US, 9%.

Swedish Fintech companies also have one of the highest proportions of women at director level at 10%.

European countries are lagging behind, with an average of just 7%.  In the UK, 8% of Fintech directors are women, but by contrast Germany and France have just 4% each – among the lowest of any countries in the study.

This compares to an average of 25% women on boards of large companies in all sectors across Europe in 2015*.

DHR says that the Fintech sector can face challenges in boosting diversity because there are relatively few senior women in technology to draw from, compared to other sectors.

The relative youth and small size of Fintech companies can also act as a hurdle, as they may have less well-established HR capabilities to monitor and foster diversity – unlike many of the larger financial institutions such as banks with whom they may be competing for talent.

They may therefore be less likely to implement recruitment targets to help tackle the issue more effectively or have mentoring systems in place to boost retention.

Ramona Kühnel-Linnemann, Partner at DHR International comments: “As a leader in innovation, Fintech thrives on having the best people with the best skills, but the sector is lagging behind on a global scale when it comes to driving diversity at the highest level.”

“Uniformity of viewpoints on a board can create a risk. Having a diverse range of perspectives at the top is an essential safeguard against groupthink and stagnation. If companies are to maximise growth as the market develops this is something they need to address. They cannot afford to stand still.”

“Even the best performing countries like Sweden, the US and the UK still have much more to do to increase female representation to create a more balanced and broad-based leadership profile.”

“Encouraging more women into the industry in the first place is vital, and then they need to be incentivised to stay there and progress. Companies need to think creatively and pro-actively about ways to demonstrate that this is a field where they have the potential to go all the way to the top.”

Ramona Kühnel-Linnemann adds:  “There is a range of tools and techniques companies could consider using to help tackle this issue, from providing targets that shareholders can track to developing mentoring schemes and holding networking events.”

“While the effectiveness of targets and quotas has been the subject of fierce debate, there are signs that having something to aim for is yielding results in improving gender diversity at board level in larger companies across Europe.”

Some EU countries such as Germany, France**, Italy and Norway have introduced mandatory quotas of up to 40% for female representation on corporate boards.

Although neither Sweden nor the UK have compulsory quotas, both have recommended targets. Sweden has a voluntary goal of parity, and now has around a third female board representation at listed companies, while in the UK 26% of FTSE100 boards are now women***, with a non-statutory  target to increase this to 33% across the FTSE 350 by 2020.

DHR’s research covered 268 Fintech companies in: the UK, US, Germany, France, Sweden, Netherlands, Ireland, Israel, Switzerland, Canada, Poland, Luxembourg, Estonia, Singapore, Cyprus, Belgium, Spain, Finland, and Lithuania. The table below focusses on those where the sample size of companies was a minimum of 20.

global fintech diversity study.JPG

*European Women on Boards “Gender Diversity on European Boards”

**France’s 40% quota, introduced in 2011, comes into force next year

*** “The Female FTSE Board Report 2016” Cranfield School of Management, City University London, Queen Mary University of London