Weekly Wrap Up

October 29, 2020

Five years ago I was invited by a venture firm to address the fintech founders and CEOs in its
portfolio. At the time, I was leading the Office of the Comptroller of the Currency’s innovation
initiative as Chief Counsel. What I encountered surprised me – of the dozens of assembled
fintech leaders, I recall only three were women. As I had gained more stature in the
government, I had become accustomed to being the only woman in meetings among senior
level bankers, whether at the OCC or while working for the Senate Banking Committee. But I
expected that an industry on the cutting edge of innovation, with the promise of providing
better and more inclusive products and services, would be different. The convergence of “fin”
and tech, however, had seemingly produced even fewer opportunities for women and
minorities in its service.
Not enough has changed in the last 5 years to address this problem.1 And it is a problem.
Studies show that companies with a diverse workforce and leadership are more creative, can
better understand the needs of their customers, are more profitable, and operate with a
healthier environment.2 Perhaps more diverse teams designing AI voice recognition would
have corrected for bias favoring white men’s voices over those of women and minorities.3 A
G30 study concluded that industries suffering from significant and systemic cultural failures had
certain common characteristics, including a lack of diversity.4 Homogeneity can result in group
think and the lack of alternative opinions to challenge poor business decisions.
5 And as I
learned recently, a company was spared embarrassment when a Black employee flagged a
planned message that would have unwittingly offended certain customers for cultural reasons.
For the fintech industry, where innovation and creativity are foundational, a lack of diversity is
surely an impediment to meeting market and mission opportunities. “Mission”
1 See, e.g., Achieving Gender Equity in the Fintech Community, Deloitte, October 21 2020,
Fintech’s Race Problem, June 9, 2020 https://chrisbrummer.medium.com/fintechs-race-problem-856df6351695.
2 See, e.g., How Diversity Can Drive Innovation, Harvard Business Review, December 2013,
https://hbr.org/2013/12/how-diversity-can-drive-innovation. See, also, Banking Conduct and Culture, Group of 30,
November 2018, https://www.oliverwyman.com/our-expertise/insights/2018/dec/banking-conduct-and-culturethe-g30-report.html, p. 32 (lessons learned from the financial crisis), and Delivering Through Diversity, McKinsey
and Company, January 2018,
https://www.mckinsey.com/~/media/mckinsey/business functions/organization/our insights/delivering through
3 See, e.g.,Voice Recognition Still has Significant Race and Gender Bias, Harvard Business Review, May 10, 2019,
4 Banking Conduct and Culture, Group of 30, November 2018, https://www.oliverwyman.com/content/dam/oliverwyman/v2/publications/2018/december/Oliver_Wyman_G30_Report_on_Banking_Conduct_and_Culture.pdf, pp.
because fintech’s promise has been to democratize financial services and meet needs unmet by
incumbent financial institutions.6
In an article about the lack of Black people in fintech, and
noting fintech’s special responsibility to increase diversity in its ranks, Professor Chris Brummer,
said, “If fintech fails to innovate where it counts the most, it will be doomed to repeat the
failures of the very system it seeks to replace.”7 And fintech founder Natasha Bansgopaul says
that if companies are redesigning the same way over and over, only with tech as the
differentiator, they’re missing the point.
Recently, Chris Brummer of Georgetown University Law Center and Natasha Bansgopaul
founder of VegaX, Konstellation and Darc Matter joined me and two other fintech founders —
Judith Erwin of Grasshopper Bank and Jenny Xia Spradling of FreeWill — for a panel discussion
about diversity and fintech at an FS Vector conference.8
In addition to highlighting the
importance of diversity for fintechs, the panelists suggested ways to foster it. The following is
based on the panel discussion.
One way to start to address the problem is through funding. Access to funding has proved
extremely challenging for women and minority founders. While venture investments account
for a minority of funding for fintechs, venture firms often lack diversity themselves.9
If funding
tends to go to founders who are familiar because they are in the investors’ networks or they
look more like the investors, then it’s difficult to achieve change. When you don’t have the
right tools, inputs and outputs aren’t surprising according to Brummer. How does a venture
firm price risk when it doesn’t understand the backdrop? How do women obtain funding on
equal footing when the funders are predominantly male?10
Fortunately LPs in venture firms are
beginning to demand the firms change the makeup of their portfolios to include companies
with diverse leadership.11

The panel discussed the importance of “intentionality” in seeking to diversify a firm’s
workforce. Finding diverse candidates can take more time and firms may need to be more
resourceful in their searches. For instance, LinkedIn can be a valuable source beyond sole
reliance on a recruitment firm. Expanding one’s own networks was another suggestion for firm
leaders – if your own network is not diverse, it may be time to take personal responsibility to
reconsider it says Erwin. It’s the same for boards. Board hires often reflect the networks of
6 See, e.g., Time to Talk (Again) About Fintech’s White Privilege, Forbes, June 17, 2020,
7 Fintech’s Race Problem, June 9, 2020, https://chrisbrummer.medium.com/fintechs-race-problem-856df6351695
8 https://www.fsvector.com/raft
9 See, e.g., https://chrisbrummer.medium.com/fintechs-race-problem-856df6351695
10 https://www.allrisedc.org/speakerseries/fintech-roundtable-with-women-founders-and-venture-investors.
Women founders have spoken about degrading incidents in seeking funding, such as investors who assumed their
male co-founders would do the speaking, or that they were an assistant accompanying the male co-founder. See
also How the VC Pitch Process is Failing Female Entrepreneurs, Harvard Business Review, January 13, 2020,
https://hbr.org/2020/01/how-the-vc-pitch-process-is-failing-female-entrepreneurs for a discussion about gender
bias by VCs during pitches by women founders.
11 https://www.allrisedc.org/speakerseries/fintech-roundtable-with-women-founders-and-venture-investors.
their members. Minority CEOs may be a valuable resource, worth seeking out and asking for
referrals, according to Bansgopaul. Erwin suggests diversity can also extend beyond race,
ethnicity and gender – bring in people who know things the leadership team doesn’t.
Otherwise you never learn. Fresh perspectives can lead to new solutions.
Spradling noted that the death of George Floyd and the ensuing racial strife were catalyzing for
her firm and resulted in a new plan to increase diversity, including targets for interviewing
underrepresented minorities for management positions, recruiting from a broader geographic
area, and creating safe spaces for diversity, equity and inclusion discussions. It takes time and
training to change the pipeline for leadership positions. But, the result is a team of people who
look different from one another and are well-suited to solving the complex problems fintechs
must inevitably confront.
Setting goals (not quotas) can help achieve diversity. Bansgopaul has set a personal goal of
achieving women representation of about a third of her employees. But she notes, a firm can’t
just pivot to suddenly being committed to diversity in its workforce where there was no such
previous commitment. It must build into the business a receptive culture, consistency around
personnel practices, and a commitment to longevity.
Corporate culture that allows diversity to flourish is key to maintaining a diverse workforce.
Hiring diverse candidates is just the beginning. Brummer stresses that a firm needs to create an
environment where diverse people feel free enough to contribute in order to create the value
the firm expended time and resources on in the first place. People need room and opportunity
to disagree, as well as the tools and training to help them voice contrary opinions according to
Bansgopaul. A commitment to your own people is critical. Spradling notes once you have
people on board, it is economical to keep them. But people need to feel they belong in an
organization or they will leave.
Building and maintaining a diverse workforce requires intentionality from a firm’s leadership in
recruitment and hiring and a commitment to creating a culture that welcomes and celebrates
diverse voices. According to the studies and those on the journey, it’s well worth it. Here are
the key take-aways:
• In recruiting and hiring diverse candidates:
o be intentional about the search for women and minority candidates
o consider sources beyond recruitment firms, such as LinkedIn
▪ How diverse is your own personal network? Is it time to expand it?
o reach out to minority CEOs and ask for referrals
o extend geographic bounds of the search
o consider setting interview and hiring goals
o hire people who bring different skills and knowledge and fresh perspective
• To maintain a diverse workforce, create an open, healthy culture
o a firm will only realize the value of a diverse workforce if employees feel free to
o employees need room and opportunity to voice contrary opinions and disagree
and training to support them in doing so
o create a safe space for discussions of diversity, equity and inclusion
o establish consistent and fair personnel practices
o develop a leadership pipeline that includes diverse employees
o make and demonstrate a genuine commitment to employees
▪ it is economical to retain employees, but they will not stay if they do not
feel they belong.