Catalyzing Diversity In FinTech

Written by: Anthony Franklin, EMBA

The dream of fintech is to democratize access to investment tools, but its lack of diversity is a huge problem. The first step towards achieving the field's full potential is sparking an industry-wide diversity and inclusion movement.

If you're anything like me, the last four months have made you think about how systems work both in society and in our workplaces. Although COVID-19 took most of us by surprise, the unsurprising truth is that minority communities have been most hurt by this pandemic. Then, like a one-two punch, the brutal killing of George Floyd sparked widespread outrage. In response, big brands rolled out empty acts of performative wokeness, seemingly looking to capitalize on these protests when truthfully many of their own houses weren't in order. For instance, while Adidas condemned racism in a social media post, the New York Times reported Black employees at the company often felt ostracized. Moreover, only three of the 340 vice presidents at Adidas are Black. Incidents like these have revealed a changing landscape: people are no longer interested in mere statements about the value of diversity. They want meaningful action.

But what happens when you want to help your own company or industry increase diversity and be more inclusive? How can you make a big change from inside an org? Since I recently went through this, I want to give you a four-step plan to help you start a diversity movement in your organization or perhaps even your whole industry.

MAP OUT THE CURRENT LANDSCAPE

Before you embark on this journey, it's important to understand the current state of diversity in your own company and, more broadly, industry. Sometimes that number is hard to pin down, but a quick Google search can at least help you get close. For instance, I work in financial technology. Finding specific numbers for how many people of color work in fintech is next to impossible. Many companies don't even give public reports on diversity. Despite the recent calls to action, many still do not publicly acknowledge the depth of their D&I problems. Fortunately, you can use proxies from the DOL, articles, or industry-specific academic research.

Once you find this information, tie it back to the purpose of your organization or the promises of your industry. For instance, financial services, and more specifically fintech, have always been about democratizing access to finance by helping underserved communities. From microloans to investment technology, the field’s animating idea has invariably been to use technology to bring new opportunities to low-income communities and people of color. But it's hypocritical to believe a company can actually help these communities, especially if their own organization cannot even recruit/source/promote a diverse group of employees. You'll want to tie the data you find on diversity to the actual purpose of the organization and any current diversity initiatives already in place. This data, along with specific industry promises or a company mission statement, will help you build a persuasive argument on why your organization needs to be part of the diversity solution. You’ll use this information later as you communicate to others the “why us” part of the problem.

FIND ALLIES AND UNDERSTAND THE PROBLEM

The most difficult part about starting a movement towards meaningful diversity is overcoming the fear of how you will be perceived afterwards. To get over that fear, you must find allies that can support you. Moreover, they can help you understand the problem on a deeper level.

Internal Allies. My company has a Slack channel where we share interesting articles and industry-related news. From time to time, I share articles about the lack of diversity in financial services. Once, after I asked the team for their thoughts, our Head of Strategy reached out and we had a really good conversation about the abysmal amount of Black financial professionals. Finding important internal allies starts first with putting your thoughts out into the world (in moderation). The best content marketers understand how winning the hearts and minds of customers means actually having a stance and then communicating that particular worldview. For those looking to spark change, the same communication should happen in social posts, Slack channels, and everyday conversations. Done regularly, you will attract the kind of like-minded people who can support, implement, and improve D&I ideas. Of course, those responsible for D&I initiatives are natural internal allies, but try to brainstorm other executives who may also benefit.

External allies. If you're looking to spark industry-wide change, you'll also need more external allies. One of the most interesting aspects of 2020 has been the visible effect of social pressure on organizations. For example, the #PullUpOrShutUp challenge has pushed more than 200 companies to disclose diversity numbers and how they plan to improve those numbers. Notably, many of the brands listed there are competitors. When you can find other allies, especially across competitive businesses, and band together, you can exert powerful pressure on the industry.

Your allies are great for not only for establishing credibility but also helping you to understand different aspects of the same problem. Are the problems in sourcing people of color? Are they represented in leadership positions? Do they feel included in our organizations? Speaking with others can help you understand the problem from multiple points of view.

DEVELOP A STRATEGY TO MOVE THE NEEDLE

Next, you want to work with your allies to build a business case explaining the reasoning for allocating resources to a plan of action. Remember that not everyone understands the importance of diversity. Also, organizational structures may mean it’s unclear who in your company is responsible for ensuring diversity. Often, D&I initiatives are delegated to an HR leader without the authority to make truly sweeping, cross-departmental changes. The point here is your efforts to build a case can provide a framework for everyone to work together, even if others have tried and failed. Having a solid business case increases the likelihood that your plan will win support from all your allies. When you have made a case for increased employee retentionimproved ability to solve problems, or better company publicity, you are able to make a compelling pitch more likely to receive broad consensus.

For context, my company Portformer builds a robust portfolio management platform to equip financial planners/advisors with curated investment insights they can share with clients. We recognized early on that asset management, like fintech in general, has a huge diversity problem. 

We understood from the beginning that we couldn’t fix all of these problems, although we wish we could. While considering our resources, we began brainstorming with our team about where we could have an impact. After narrowing our options, we felt the best way to contribute would be to offer our resources (portfolio management software and mentoring) to financial planners/advisors. The thinking here is to empower the independent advisory firms successfully hiring Black CFPs so they (1) can hire diverse candidates at a faster rate due to their success and (2) set the example for the rest of the industry. After jotting down some partners we thought would be great to join this initiative, we started to reach out to open up the opportunity for other fintechs to contribute their resources to the Black investment community. The result of all of this was #FintechforBlackFinance, an initiative we hope will speak to the very reason financial technology exists: to democratize access to financial services to all people.

EXECUTE AND SHARE THE RESULTS

After promoting this initiative to our internal newsletter readers, reaching out to potential vendors, and working with CFPs, early response has been positive. We are excited about the real support we can provide Black CFPs, many of whom have already created their own successful practices. We liken our efforts to an aerial refueling of an F-16; they were already moving fast, and now they can go even farther. 

On my LinkedIn page, I’ll be sharing more about the results as this initiative hopefully gains steam. As a startup, one of the most powerful processes is: Ideate, Build, Iterate, Repeat. Following these steps allows you to build something amazing. For D&I initiatives, the iterate element is vital. We need more organizations to share their diversity ideas and the real-world processes they’ve built. When you share, you open the process to feedback. Then we can go at the diversity problem again, hopefully with new eyes, fresh ideas, and new solutions.

CONCLUSION

Although initial results to our campaign are promising, we still have much work to do. Where we have fallen short in my eyes is in winning other fintech vendors who are ready to help. We have a few vendors on board, already creating landing pages. Unfortunately, some of the initial companies we thought would immediately support this initiative have stayed on the sideline. Although we disagree with their response, we understand the potential conflicts between promoting the greatest social good and increasing profits. 

When you see a lack of equity and diversity, be resolved to take action. But at the same time remember that systemic racism is a multilevel problem which requires a coalition of allies to develop solutions. To be honest, there is a risk in implementing the four-step plan outlined. In the best case scenarios, you find allies where you thought there were none and inspire change where it is sorely needed. But sometimes when you bring up the diversity problem you seek to solve, you will meet resistance. Man executives still find it tough taking on the struggle that people of color have in the workforce. Others will point to previous efforts concluding they have done enough. But don’t let any of this prevent you from starting something today. Outrage won’t change the status quo, nor will empty promises. Let's change the world with our actions.

If you are interested in joining our initiative as a vendor or are a financial planner in need of investment tools reach out to us at [email protected]https://www.fintechforblackfinance.com/

Related: Want to Achieve Greater Diversity? Start With Women