Why We Need Diversity In FinTech, by Chris Sier
Chris Sier, FinTech Envoy for the Northern Powerhouse recently spoke at our February Seminar: Women in FinTech (North). This is a transcript of Chris’ keynote speech.
When I was asked to speak at this event my first thought was “Who am I to stand in front of you and talk about diversity?” I mean, just look at me! At face value it’s hard to find a better, or perhaps worse, stereotype. I am, after all and by all accounts, part of a demographic that is both excessively privileged and mostly responsible for the issue on which this event is predicated…namely a shortfall in diversity within the financial services sector. And by ‘part of the demographic’ allow me to be specific: I am a middle-aged, middle-class, beer-drinking, public school educated, rugby-loving, somewhat overfed and overweight…man.
Furthermore, I can behave like an insensitive idiot and, unless I am constantly monitoring my behaviour, I usually do behave like an insensitive idiot. The good news is that I learn quite quickly and have had some sensitivity training along the way. This training has often come at the hands of my wife who, with one horror-filled look, can administer a beating of epic proportions. The training started early in our relationship. Like, for example, the time my son Oliver, who was eight months old and into crawling, tried to stand up for the first time under a table and banged his head. My response to his crying was “You won’t do that again in a hurry, will you?” This did not go down well with Katrin.
But anyway, I digress. I thought a bit more about why I might be useful here today and realised that my experiences could perhaps provide me with some relevant insights.
Eleven years ago, I was invited to set up and run a government-funded research and innovation organisation called the Financial Services Knowledge Transfer Network (FSKTN). The purpose of the FSKTN was to identify need and build collaborative programmes between the financial services industry, academia, entrepreneur and policy makers. When I first started the KTN I surveyed the Financial Services sector to ask what they felt the key issues were.
It turned out that every sector had its own particular unique set of troubles: the insurance industry was worried about model-dependency, banks were worried about risk management and Basel II, and so on. However, there was one ubiquitous topic across the whole sector that can be characterised as ‘How do we attract and retain top talent?’ When I dug deeper, I found that the crux of the problem in the eyes of the sector was ‘How do we make sure we have diversity levels at both board and executive level that are sufficient to satisfy the demands of Government?’ And so began three years of collaborative work designed to bring together the research base, with industry and policy makers looking at research and policy that might positively impact diversity, and, I’ll be blunt, the employment of women in the financial services sector.
In that time the KTN looked at issues that included: the ‘glass cliff,’ a theory proposed by Professor Michelle Ryan of Exeter University that posited that woman are often forced onto, or select, the most difficult projects and hence are set up to fail; the need for mentors and networks to replicate the incumbent networks that support men in the sector; the introduction of flexible working practices to support the alternative career paths that women must follow if they are to have a family; skills-based, as opposed to ‘time in role’-based, recruitment criteria so that women who have been out of employment to have families can re-enter at role-parity with male colleagues. Enablers of diversity, basically.
I am also extremely fortunate in that my wife, Katrin, leads diversity research at Egon Zehnder International. I therefore have continual access to leading research in the area of diversity, as well as a constant mentor and conscience to warn me when my unconscious biases become too pronounced.
Finally, I have had a portfolio career and recognise the benefits that working in diverse environments has offered me. As it happens I worked for seven years in what is generally considered the most institutionally racist and sexist corporate environment – the Police Service. However, having worked in both the Police and the City I can say without hesitation that I never saw anything in the Police that compares to the extremes of sexism exhibited in pockets of Financial Services. Just look to the President’s Club if you don’t believe me.
So even though I am a caricature of a man, a poster-boy for the problem demographic, I am also a potentially useful change agent. I am convinced of the need for diversity; perhaps my conviction may help to convince others like me.
One of the things I was criticised for on several occasions when I used to run well-attended events on the subject of gender diversity in financial services was “Why are there not more men at your events? Having events that are mostly attended by only women is preaching to the converted. You need to convert more men, so get more men please.”
Of course, I have been criticised in exactly the opposite way too, such as when I went out of my way to attend a women in asset management event last year in Berlin. When I entered the room, I was confronted by an attendee who told me it was a “women-only event” and I was not welcome. I was surprised but decided it just goes to prove that no matter how hard you try there’s always someone ready to take you down. Women will understand this point I am sure, and I empathise.
So, what am I trying to say? Well I guess one place to go would be into the business case for diversity. It turns out there is plenty of empirical evidence on the benefits of diversity. Diversity can bring corporate performance and profitability uplift, and can result in risk reduction. All the benefits that reduced group-think and an improved diversity of opinion can bring, basically. Crikey, I’ve even met a Venture Capital fund that only invested in SMEs that were provably diverse. When last I heard it was doing quite well.
I could expound about the sound statistical case for selecting from a diverse pool. Recruiting the best from a purely male set of candidates will yield a poorer quality of candidate on average than from a larger group of men and women. But this evidence-based approach to me is no more than value-add. It is supportive of the need for diversity and nothing more. Don’t get me wrong, it’s important as it lends weight in the eyes of some to the need for diversity. But to me it is noise. It is a distraction. The real reason we should support diversity is because it is the RIGHT THING TO DO. No other reason is needed.
Bigotry, sexism, racism…whatever flavour the bias comes in, it is just plain wrong. And anything we can do to fight such unconscious or conscious bias is absolutely the right thing to do. Like I said, talking about a business case is only, at best, a value-added part of the discussion. At worst, it is demeaning because it means that we are trying to prove that women are as good as men. That is not something that needs to be proven.
Anyway, all of this is known and has been known for a very long time. Concrete efforts to iterate the problem of gender imbalance and attempt to resolve it have really been in effect for 10, maybe 15, years.
So men, how are we doing? What mark do we get for effort and success? Is it a 3/10, which is the latest figure for the proportion of female representation on the boards of large companies in the UK (a figure calculated by Mrs Sier, btw J )? Or is it a 2/10, which is the proportion of women on the boards of Financial Services firms? Or, worse still, is it a 1/10, which is the score if you consider representation on executive committees of Financial Services firms in the UK? Sadly, I don’t think even a 1/10 really works as, once a woman has a job in financial services, she is going to be valued less and certainly paid less than her male colleagues. The headline in the Financial Times says it all: “Women in Barclays International Unit make half of what men earn.” So, let’s settle for somewhat less than 1/10 shall we?
In other words, men, we have barely even showed up to class, let alone sat or passed an exam upon which we can be marked. And in this world, there are no rewards for just showing up. It’s not a timeshare sales pitch, and we definitely aren’t going to get a boat or even the promise of a boat for showing up. So, I give us a resounding FAIL and offer three words: MUST DO BETTER.
But this is a depressing train of thought isn’t it? Fifteen years of effort and little noticeable improvement?
So, let’s change the tone and not put the onus of change only onto an establishment that by even the most illiberal person’s standards is backward and entrenched. To do so will only make this patriarchal establishment more entrenched and defensive and frankly nothing will get done quickly.
Let us instead look to the future and the wonderful world of innovation because this may hold some, if not most, of the answers. We have something of a clean slate, an open market, a brand-new world that is most definitely NOT occupied by the incumbent, entrenched patriarchy. At least not YET.
I would offer three points to consider though. Firstly, the incumbents will realise the threat and when they do they will respond and their reach is long and their pockets are deep. Secondly, some key skills are missing, and initiatives such as emphasising the need for STEM training at schools are important. And finally, the technology and innovation market may not be as open as one is led to believe. My good friend Karoli Hindriks, founder and owner of one of Estonia’s brightest and fastest-growing start-ups, occasionally talks about the male-dominated tech environment in Estonia. The good news is that despite this, three of the fastest-growing Estonian companies are owned and run by women.
The thing about diversity is that it really does bring rewards because it brings, amongst other things, creativity. It is exactly this kind of creativity and business management skillset that is needed to reform the Financial Services sector through the lens of FinTech.
There is a fertile ground in innovation and FinTech, ground that is ripe for disruption by diverse teams. And this ground can not only be farmed by diverse new entrants, it is also free of the weeds of incumbent large financial services firms. And this to me is the point. We can waste another 15 years trying to force an entrenched patriarchy to accept diversity on their terms and with their business models. Or we could point diversity at FinTech, which is where it will flourish, and in so doing change the machine of financial services from without rather than within. It turns out that diversity is actually our best hope for changing the financial services industry.
It really does make so much sense to me.