Diversity of talent is the key to the future of the Fintech Industry
Diversity of talent is the key to the future of the Fintech Industry – need to dispense with the myths
There are so many myths related to all aspects of diversity. Lets dispel some of them.
The typical successful fintech start-up founder is a 20 something, male. It must be because that is what people will invest in. “Young people are just smarter,” as Mark Zuckerberg, founder of Facebook, put it. “The cut off in investors’ heads is 32…after 32, they start to be a little sceptical.” according to Paul Graham, venture capitalist and founder of Y Combinator.
In fact a recent study has shown that the average age of the founder of the most successful tech start-ups is 47, that a 50-year-old founder is 1.8 times more likely to achieve upper-tail growth than a 30-year-old founder. Founders in their early 20s have the lowest likelihood of successful exit or creating a 1 in 1,000 top growth firm. Of course, there are many start-ups that are created by and for young people. The point is that there are many that are not. The future will be in the diversity of the individuals and teams who come together to shape the future of the fintech industry.
Equality, Diversity and Inclusion is not an issue of compliance, it is an imperative for any sustainable business. A confluence of evidence demonstrates the benefits of diversity and inclusion for fintech businesses. Some of those benefits include:
- Problem-Solving: diversity in workforce and team composition has been demonstrated to be a key lever to avoid group think and to produce new solutions quickly (Source: Dept. for Business Innovation & Skills, 2013)
- Sales: For every 1% increase in ethnic and gender diversity in a workforce, there is a rise of between 3 – 9% in sales revenue (Source: American Sociological Review)
- Customer Engagement: a diverse workforce that more accurately mirrors the diversity of its potential/actual customer base improves customer acquisition and retention (Source; University of Amsterdam)
- Equity Return: The return on equity of gender and ethnically diverse firms was calculated as 11.4 per cent compared to 10.3 per cent on average, whilst these firms also achieved stock price growth of 64 per cent relative to a sector average of 47 per cent (Source; McKinsey, 2007)
- Profitability: Scott (2011) identifies a variety of evidence from the US that finds positive correlations between board-level and workforce diversity and firm profitability, similar to the evidence on gender diversity from Virtcom. (Source: Westminster Research, 2013)
- Productivity: Richard (2000) identifies a positive correlation between workforce diversity and productivity in firms pursuing growth strategies. (Source; cited here)
- Buying Power: The diversity of the client base and their buying power should be a major incentive to bring diversity to your work force. Think about the buying power of the LGBT adult population in the USA. In 2017,it was US$917 billion
On the ethical investment side of the fintech business, consumers are also increasing demanding transparency, choice and making values driven decisions. As businesses move into a values-driven marketplace the role of diversity in brand identity is become more and more important. 50% of consumers saying they have bought or boycotted a brand based solely on a political or social position, and as many as 87% of US consumers stated they would purchase a product based on values – because the company advocated for an issue they cared about — and 76% would boycott a brand if it supported an issue contrary to their beliefs.
The bottom line is that Diversity is good for business and not any notion of political correctness.
It is very important to understand that diversity in the workplace is much more than gender or colour. It is a complex phenomenon and It is everything from how our brains work, to how we think, to our personality types, our cultural and organisational experiences and much more.
it is imperative that we dispel with the myths and start addressing the real issues.