It is Women’s Equality Day today – and over two years since the publication of the UK government’s last mandatory gender pay gap report, due to coronavirus-induced cancellations for the 2019/20 reporting year.
With just over five weeks until the next gender pay gap report – for 2020/21 – is issued, it is time to take stock of the how the fintech and financial services sector fared last time, and evaluate what actions have been taken since to close the gap.
Across the fintech sector, the gender pay gap is well-recognised – with most agreeing that the ‘male-dominated’ financial services industry remains the root cause.
Calculated as the difference between average hourly earnings (excluding overtime) of men and women as a proportion of men’s average hourly earnings (excluding overtime), the gender pay gap is a measure across all jobs in the UK – not of the difference in
pay between men and women for doing the same job.
According to a
recent report based on Financial Conduct Authority (FCA) data, only 1,381 (14%) of 9,957 partners at UK private equity firms, hedge funds and other financial services companies are women.
Innovate Finance, meanwhile, points out that women account for just 30% of the fintech sector’s overall workforce.
This lack of diversity, not always limited to gender, serves to fuel the pay gap across financial services, where hiring and promotion decisions are often biased – even if unconsciously so.
Unfortunately, this pay gap does not seem to be going away in the short-term. The World Economic Forum’s 2020
Global Gender Gap Report, for example, predicted that – at the current trajectory – gender parity will not be attained for another 99.5 years.
While there have been positive strides toward gender parity across the fintech sector in recent years – such as female-founded fintechs receiving
11% more of the UK’s total fintech venture capitalist investment in 2020 than in 2019 – gender equity issues at the top evidently persist.
So, what proactive steps – if any – can organisations, or governmental bodies, take to redress the imbalance?
Finextra caught up with Starling Bank, Wise, and GoCardless, to gauge the sentiment of the financial community on these issues, for Women’s Equality Day 2021.
Reflecting on the latest reports
The most recent gender pay gap reports revealed that some of the UK’s favourite financial services start-ups, including Monzo, Wise, and GoCardless, fall below the national average of male to female median hourly pay. Starling Bank, on the other hand, sits
just above the national average; for every sterling pound a man earns, a woman earns 0.84 pounds, the bank told Finextra.
For every sterling pound a man earns at Monzo, however, their 2019/20 report reveals that a woman earns
0.8 pounds. International money transfer provider, Wise’s, latest 2020/21 report, meanwhile, shows it pays female staff
0.76 pounds for every pound earned by a man. GoCardless, for its part, paid women
0.58 for the 2019/20 reporting year.
The issue here is partly due to the fact too few women hold leadership roles across financial services. According to
Beauhurst data, there are currently only 3,831 companies in the UK that are led by a female entrepreneur.
If we focus the scope to high growth start-ups, the picture is not much brighter. Indeed, only one fifth of such organisations are run by women, points out the
Founder Institute – the world’s largest start-up accelerator.
Speaking to the GoCardless’ 2019/20 figures, Eva Ducruezet, the firm’s chief people officer, said: “Two years have passed since the publication of our last gender pay gap report and GoCardless has changed significantly – with headcount up around 60% and
growing, two new offices and more than 175 employees promoted.”
Ducruezet explained to Finextra that during this time, GoCardless has continued taking proactive steps to reduce their gender pay gap. These include completing an organisation-wide review of salaries, in order to address any internal discrepancies, and ensure
competitiveness against the external market, as well as hiring a Head of Rewards to create more structured governance around our compensation framework.
Wise has also been proactive since its latest 2020/21 figures – a snapshot of 5 April 2020 – were published. Hayley Bucur, senior people lead, and head of global payroll, reward and mobility, said: “While we’ve seen some improvements in our pay gap, it’s
clear we still have some work to do to achieve parity. Since we submitted our latest numbers, we’ve launched a range of initiatives to improve our pay gap. These include projects to bring more women into engineering, schemes to help progress women into more
senior roles, and publishing our career maps publicly for employees.”
Wise reports some promising results from these projects. “When we reviewed our pay gap data in March 2021,” said Bucur, “we had already reduced the mean hourly pay gap to 18.22% – a drop of 5.21 percentage points.”
While these actions alone won’t solve Wise’s pay gap, they do show positive steps on a journey toward becoming a more inclusive and diverse company: “We’ve still got plenty to do,” noted Bucur, “and we will keep working to make sure we leave no-one behind
on our journey to achieve money without borders, for everyone.”
On their 2019/20 figures, Monzo declined to comment.
Addressing the ‘shecession’
By all accounts, the coronavirus pandemic exacerbated these existing inequalities.
According to
S&P Global, women accounted for 54% of job losses as of May 2020 – despite representing 39% of the global workforce. Moreover, in the UK, the
women and equalities committee found that females were more likely to be furloughed during the pandemic.
Stymying efforts to track and close this gap was the UK government’s decision to suspend gender pay gap reporting in 2020 (and delay this year’s deadline to October). According to the
Financial Times, the number of employers reporting their gender diversity figures in the UK has slumped – from nearly 11,000 in 2019 to 6,200 in 2020.
Fortunately, there are some initiatives seeking to combat this data availability issue. These include the
Workforce Disclosure Initiative (WDI) – which aims to improve corporate transparency and accountability on workforce issues, like gender equality – and the
Women in Finance Charter.
Amber Ghaddar, founder of decentralised capital market provider, AllianceBlock, pointed out in an
interview with Finextra that “direct investment into female-led start-ups can empower women to garner the same footing in the industry. Numbers show that if women created businesses at the same rate as men, we would be adding £250 billion to the UK economy
and 1.1 million new businesses.” Clearly, supporting women is not just about gender equality anymore, it is about reviving the UK economy post-pandemic.
Flexible working and the skill gap
Although the full extent of coronavirus’ impact on gender equity is yet to be revealed, it is already clear it has disproportionately disadvantaged women. In turn, scrutiny around gender equity and the merits of flexible working, has sharpened.
“While nurseries were closed during the lockdown, and children were made to self-isolate at home, many working mothers balanced childcare with work – taking on more work and responsibility than most of their male colleagues,” noted Kira Makagon, chief innovation
officer and executive vice president at RingCentral, in an interview with Finextra.
If the fintech industry wants to increase gender diversity and level the gender pay gap, argued Makagon, the normalisation of flexible working – at all levels of seniority – will be key. This will “facilitate a better work-life balance and help to challenge
the stereotype of women as caregivers by redistributing caring responsibilities more equally, further supporting women’s progression.” Businesses, meanwhile, could help address this issue by moving to an
output-not-hours based performance system – where staff are measured on their productivity and quality of work, as opposed to the consecutive hours they put in.
Another factor firms should be recognising is the sizeable skills gap between digital and traditional teams, which has also been widened by the pandemic: “In order to reduce gender inequality in the fintech space, the skills gap of entrants – as well as
professionals already operating within it – needs to be addressed,” said Beth Porter, COO and co-founder of Esme Learning. “Professionals – often with decades’ experience – are being forced to consider what they need to do in order to rapidly upskill and reskill
to remain viable in increasingly digital workplaces.”
While this presents a real challenge, there is a considerable opportunity to be seized. A
study from AllBright recently found that two in three women are now planning to invest in upskilling themselves in a bid to better their career options. This may serve to provide more women with the tools to seize the senior positions they are entitled
to.
Although it’s important to attain hard skills in order to become proficient in new technologies, claimed Porter, it is equally important to learn how to discern disruptive secular trends that will significantly impact one’s career – and this is especially
true in the fintech space. “Women who are able to identify new types of jobs and opportunities in the fintech sector will be at advantage,” she noted.
Shrinking the 99.5-year timeframe
While progress to close the gender pay gap has been slow, organisations are putting initiatives in place to combat gender inequality. “I’ve seen first-hand, through my work with the Barclays and Techstars – which is designed to support women entrepreneurs
– that there are plenty of women extremely eager and dedicated to building their next venture in the finance space – and in so doing starting to redress that imbalance,” said Porter.
GoCardless
To improve its own pay gap figures, GoCardless is striving to reduce its gender pay gap across all levels and roles: “We have now achieved 50/50 ratios in our Finance, Marketing and Strategy teams, and continue working towards gender balance in our largest
team – Product & Technology,” Ducruezet told Finextra. “During the first quarter of 2021, 30% of our offers to external candidates for this team were to women. By comparison, today women only make up 28% of that department's total headcount.”
In addition to hiring a head of rewards, GoCardless is in the process of onboarding a head of diversity & inclusion, who will drive necessary changes across all business processes – including recruiting and compensation processes – to ensure all employees
are set up for success, and given equal opportunities to progress, regardless of their background or gender.
“We now systematically benchmark salaries before extending offers to external candidates, to ensure we bring new joiners in at a salary level that is aligned to their peers, and that is rooted in market data – rather than based on ability to negotiate or
on current earning levels,” added Ducruezet.
In September, GoCardless is due to release its next gender pay gap report, which will include updated figures, reflecting the actions taken by the firm over the past two years.
Wise
London-based fintech, Wise, has also been focusing on recruitment to improve its pay gap: “We’re building an inclusive recruitment process to help bring in, and support, more female applicants,” a company representative explained to Finextra. “That means
new inclusive job ad templates to help reduce bias language in our recruitment processes, and public career maps and salary bands for all teams in Wise.”
Furthermore, the marketing team has committed to sourcing at least 50% female and non-binary candidates for all roles, and has pledged a target of 50% women in senior leadership by the end of 2022, the company told Finextra.
To support gender-conscious recruitment processes – particularly when there is a large volume of data to sort through – some forward-thinking UK
firms are starting to deploy artificial technology (AI). Indeed, machine learning (ML) tools, like chatbots, can help to reduce the time it takes to sort through large volumes of applications, by asking candidates early-stage questions.
For Wise, widening the funnel to help diverse engineering candidates find the company has been foundational. “So far, we’ve already built a sourcing strategy for female engineers, using tactics like female engineering sourcing sessions, referral drives,
and working with our female engineers to help us reach out to candidates,” said the company representative.
By proactively headhunting female engineering candidates across all levels of experience, Wise’s overarching goal is to ensure that 25% of incoming applicants, and 20% of all engineering lead hires are female, by the end of 2021.
The business case for gender balance
Closing the gender pay gap, however, is more than just a compliance exercise.
In an interview with Finextra, Sahar Salama, CEO and founder of TPay Mobile, said: “We need to shout about the business case for gender balance. Fintech leaders need to understand the link between wage parity and attracting and – crucially – retaining more
women to senior positions. It is important for value creation within any business. Retainment can be achieved by promoting an inclusive work culture, ensuring there are equal promotion opportunities for both men and women, and offering mentoring and professional
development opportunities.”
Salama went on to argue that the conversation with business leaders must be one that highlights the need for an inclusive gender-balanced environment. Indeed, gender equality is not just a matter of the ‘right thing to do’ – but is shown to be commercially
sound.
“It’s been statistically proven that businesses with more diverse executive teams outperform their less diverse counterparts. Meaning, one of the biggest concerns for businesses right now is the long term impact the pandemic could have on women in the workforce,”
said Makagon.
Indeed, a recent
McKinsey report on inclusion and diversity, which surveyed over 1,000 companies, found that the top quartile of companies in terms of gender diversity was 21% more likely to have above-average profits compared to the bottom quartile companies – demonstrating
that more gender-diverse companies are more commercially successful.
With the business case for gender parity laid out, Salama affirmed: “There is still much progress to be made to solve the challenges of gender disparity in fintech, but as we mark Women’s Equality Day 2021, I am optimistic about an inclusive and equitable
future.”
Spotlighting the trailblazers
For some financial services organisations, the last gender pay gap report was a confirmation of the success of its existing policy – as well as a motivation to preserve, and improve on, its pay gap.
Starling Bank was just one of these firms – paying women 0.84 sterling pounds for every pound a man earns. While this is not yet equal, it does place the bank above the national average.
In an interview with Finextra, Anne Boden, CEO, Starling Bank, said: “Addressing the gender pay gap doesn’t have just one solution. Work on all fronts is needed. This includes paying women fairly and supporting women to flourish and thrive so they can access
leadership and technical jobs that are valued and highly paid.”
Another bank with a healthy
philosophy on diversity – which stresses the importance of equality of opportunity – is OakNorth: “We aim to attract people who possess the right competencies and talent, irrespective of individual differences,” reads the bank’s
policy. “We do not impose any cultural, geographical, or organisational barriers in setting or achieving our recruitment goals. While all job applicants and employees are provided equal consideration
and assess solely on merit, we create as broad a talent pool is possible through our recruitment efforts, focusing not on a small slice or subsection of the population, and on the wide applicant base cultivated by seeking talent and not type.”
This strategy is serving OakNorth well. The bank has already
hit the diversity requirements set out in the new
FCA handbook, and operates in line with the guidelines established by the
American Bar Association (ABA) on benchmarking diversity practices.
Other institutions which have, of late, received honourable mention in the field of gender parity, come from across the pond. In order to spotlight the companies most liked by female workers, Forbes recently surveyed 50,000 Americans – including 30,000 women,
working for businesses with at least 1,000 employees – and used the findings to generate its annual ranking of America’s ‘Best Employers for Women’.
To see who made it onto the list from the banking and financial services industry, read Finextra’s news article on the topic,
here. The sector’s top five firms on the list, however, were – in order of appearance – Fidelity Investments, Quicken Loans, Principal Financial Group, American Express, and Paypal.
Some practical steps
Gender diversity, and the associated pay gap, is a highly complex issue – with countless facets beyond those touched on in this article. For centuries, women have been fighting to prove their unquestionable capability to run teams, families, and businesses.
Unfortunately, it seems that when it comes to fairly representing – and paying – women, the professional sphere has some work to do.
Perhaps one of the largest, and most entrenched, hurdles for the financial services sector is overcoming the cultural perception of the industry as being ‘male-oriented'. Powerful female role models are critical to reducing structural gender inequality and
attracting juniors to the sphere.
But what does it take for women to get to these positions in the first place, and secure the recognition they deserve in an industry historically governed by men?
Fortunately, some promising steps are being taken to drive gender equality across financial services. The FCA’s recent launch of a
consultation on proposals, for example, may go some way to improving transparency for investors on the diversity of listed company boards, and their executive management teams.
What’s more, some sectors are beginning to link environmental, social and governance (ESG) measures to their salaries. A recent
report by PricewaterhouseCoopers (PwC) revealed that 45 percent of the UK’s 100 largest companies are now integrating ESG targets into decisions on executive bonuses.
Initiatives like this clearly have an impact. According to a
Hampton-Alexander review of female representation in business, women now hold over a third of roles in the boardrooms of Britain’s top 350 companies. This is, albeit slow, progress.
To get these figures up to the golden 50% mark – and ensure women are properly represented in the workplace – gender diversity must be addressed at every level, by both governments and organisations, as a continuous agenda. With further investment and education
in the area, pay parity in financial services may be attainable.
Just how soon this can be achieved will, in part, be answered by the UK government’s next gender pay gap report – due to be reported by 5 October 2021.