Frequently, questions about diversity in fintech center on gender diversity, and that gender diversity means “white women.” When any organization is predominantly white, it tends to focus on attracting customers who look like its employees and leadership—white ones, though that’s often not deliberate.
This often leaves nonwhites, both employees and customers, feeling alienated and underserved. In financial services, where Blacks get excluded from access to products, services and fair lending practices, it also perpetuates systemic inequities. This problem is prevalent in fintechs, too, and gets driven by a lack of Black leadership in the firms.
In his Medium Post, “Fintech’s Race Problem,” Georgetown Law professor Chris Brummer cites a Harvard Business Review article that says fewer than 2% of tech executives and only 5.3% of tech professionals are Black.
He further asserts, “With fintech accounting for perhaps 10 to 15 percent of tech employment overall, the gross numbers of full time, African American fintech executives and professionals could be in the hundreds, not thousands.”
Betterment Steps Up
To address inequities across fintech, Betterment, a money management fintech led by founder and CEO Jon Stein, spearheaded the launch of the Fintech Equality Coalition in August 2020. Like many, Stein got motivated by the ongoing murders of Black men by police and vigilantes to make the move.
He recognizes people might question his timing and commitment, but Stein, who spoke candidly about why he felt compelled to take a stand in June, says, “It’s not that the problem wasn’t there before, but racism as a pervasive and systemic problem has been highlighted by the current political environment.”
“Sometimes movements are catalyzed by events,” Stein continues. “We thought it was time to take action as a company and a community, so we started talking internally about what we could do to influence our industry, financial services, our sector, technology and the nation at large.”
While Betterment is a small company within the financial services industry, it’s one of the largest in the fintech space. He and his team decided the fintech still could make a significant impact on the industry and society by “changing the way we think about equality in our industry and society,” he says.
Coalition members, Stein continues, are “committing to equality in the workplace, and to sharing data and annual reporting on hiring,” particularly equity data.
“This fintech coalition was one of several ideas borne out of our conversations,” he adds. “Over $100 billion dollars of value of companies have signed up, and more continue to join,” he adds. There currently are more than 50 companies in the Fintech Equality Coalition, and all are publishing their individual equity commitments to equity by year-end.
Starting Change From the Inside Out
Betterment is examining its equity practices internally and publishing data about its employee demographics, which show that 71% of its full-time employees and 80% of its leadership team are white.
Just 5% of its full-time employees, and 2% of its leadership team, are Black. But Stein has pledged to increase diversity in Betterment’s ranks. They’re also engaging in “all hands” antiracism training, some led by newly appointed Black advisory board member, Netta Jenkins.
Moreover, the fintech is opening up front doors for clients that reduce barriers to underserved banking populations. They make it easy for customers to open checking and investment accounts with no minimum balance and no minimum fees. They’re also considering the needs of customers who may have different priorities for opening investment accounts.
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