FinTech not diverse enough? So says Australian venture capitalist

Australian VC bizarrely says women under-represented in FinTech, despite the senior authors of 2020 Census Report being leading ladies for major consultancies. Here is the viewpoint, and more importantly, the full report on Australia’s latest tech developments

Dirk Steller, founder of Australian VC firm Seed Space, believes Australia’s fintech industry needs to turn up the dial to help promote the successes of its most brilliant female entrepreneurs, which is rather an interesting perspective given the considerable egalitarianism within the financial technology sector.

Indeed, even the Assistant Minister for Superannuation, Financial Services and Financial Technology is a lady, Jane Hume.

Seed Space this morning approached FinanceFeeds considering itself a champion of diversity, and that it is actively promoting female leadership in FinTech and financial services in Australia, recognising there is much for improvement.

For a comparison, Seed Space asserts that in the UK, blockchain, along with finance and cyber-security, is notorious as being one of the world’s worst industries for female representation – with only around 5% of people working in blockchain are women and 8.5% of start-ups having a female founder or co-founder. That is a very strange comparison. It is more likely that the astute female leaders in FinTech see blockchain for what it is, a folly, and it is quite simply not true that the cyber security business in the UK is under-represented by female leaders. I have personally worked in institutional systems engineering in the electronic trading sector since 1991 and there are many very senior ladies in cyber security, working for Fijitsu-Siemens, Accenture, PA Consulting, Capita and Steria, all deployed at Tier 1 institutions in Canary Wharf.

“The issue becomes clear when taken in context of gender representation levels among Australia’s current board and directors on the ASX200. Worrying findings from The Chief Executive Women (CEW) ASX200 census in September found there were only 10 female CEOs of ASX 200 companies – the lowest since the census began four years ago. These low levels of representation are a concern to Australia’s present cohort of fintech start-ups, some of which may one day look to list” asserts Mr Steller.

Advisor to Seed Space, Katrina Donaghy, was just named as one of the global leaders in the September edition of the 101 Women in Blockchain Report. With start-ups like Brighte, Airwallex and AgriDigital also counting female founders in the driving seat, Dirk believes the successes of Australia’s emerging fintech female leaders present an excellent opportunity for change, and highlight strong role models both for the current crop of fintechs in Australia and for the generations to come as the industry continues to grow.

Contrary to this assertion, in Australia, leading ladies are certainly very much part of the development of financial technology. Rebecca Schot-Guppy,
CEO of FinTech Australia was a major contributor to the Ernst & Young 2020 FinTech Census Report, stating “The Census gives us hard data and credible insights to back our advocacy work to drive the industry’s ongoing expansion.”

“This report is also, arguably, the best source document to define the overall shape of Australia’s fintech industry and how we differ from overseas markets. It gives us fine-grain detail about the established and emerging sub-sectors within fintech and helps track the industry’s increasing maturity in terms of company size and revenue.”

Another leading lady, Meredith Angwin, Partner, Financial Services at Ernst & Young said “The fintech sector continues to grow rapidly in Australia
and around the world. EY is committed to working with fintechs, investors, regulators, governments, education institutions and accelerators/hubs to help the industry realise its potential.”

“An important part of our commitment has been to deliver comprehensive, focussed and prescient thought leadership to help define the industry, identify the challenges and cast light on the best way forward” she said.

“For the fifth year, the EY FinTech Australia Census provides an exciting contribution to this commitment and recognises the strong global connection within EY supporting the fintech industry. The Census is essential research conducted with the Australian fintech community
by EY Financial Services supported by EY Sweeney, our market research practice. It delivers a powerful fact base, combined with broader insight to inform and inspire those involved with the sector. We are proud to be collaborating with FinTech Australia on this significant initiative and pleased to be able to share the Census’ findings” concluded Ms Angwin.

Some of the important areas of the report highlight the following:

  • Open Banking goes live… on 1 July, the long anticipated change to allow consumers greater access to their own data went live with little fanfare – after significant implementation effort from incumbents and a couple of fintechs who made it through the trial. Initial consumer uptake is predicted to be slow as there is still significant work to be done, particularly to allow access via intermediaries to support access by small and medium fintechs.
  • Government moves to take the industry forward. In July 2019, Senator Jane Hume was appointed as Fintech’s first federal minister. Her office began work on a fintech roadmap to chart a course through the next few years. In parallel, the Senate Committee into Financial Technology and Regulatory Technology received submissions from more than 170 industry participants and service providers, academics and industry watchers on the “how” and what is needed to support fintech and regtech innovation. The bipartisan Committee released its interim recommendations in September 2020. The fintech industry welcomes most of these and is keen to see these move into action over the coming months.
  • Buy Now Pay Later. On the back of the success of home grown fintechs, this is now one of the higher performing ASX categories, with players focussed on global expansion in the major markets of US, UK and Europe.
  • Consumer Lenders continue to grow. Positive signs are emerging, with new consumer-oriented offerings that have reduced fees, are easier to use and put financial wellness at the centre of the user experience.
  • B2B fintechs dominate. With 80% of respondents identifying as “B2B” and “B2B-2C”, we continue to see growth in innovative solutions or platforms to fill “gaps” in financial services and also adjacent areas – think small business productivity or retail.
  • More diversity reflects growing maturity. Female participation remained at 29% in line with last year. However, we continue to see prominent female founders be successful, including Lucy Liu from Airwallex, Catherine McConnell from Brighte, Emma Weston from AgriDigital and Debra Taylor from OpenSparkz. They and many emerging fintech female leaders are the strong role models needed to support improved gender diversity as the industry continues to grow. The CALD proportion of workforce was also marginally higher this year at 22%, compared with 18% in 2019.
  • Neo-banks striving to build their customer profile. The last 12 months saw growth in the neobank sector with offering of loans and new services. While there is early enthusiasm for the sector4, wider consumer knowledge of the benefits of engaging with their offerings will take some time.
  • Collaboration vs. Competition. The positive sentiment of 2019 on improved collaboration between incumbents and fintechs has shifted as bank and other institutions have moved their focus to their core business during the pandemic. Fintechs accept why this is needed for the short term however will be concerned if this extends too far into 2021.
  • Capital funding has been hit hard. The tightening of capital for startups reported in the 2019 Census, continued over the past 12 months with 39% of post revenue/profit respondents not meeting expectations. However, they fared better than the early stage (pre-revenue/launch) respondents with 54% reporting their expectations were not met. Nearly three quarters of respondents report that COVID-19 has worsened their capital raising situation.
  • Royal Commission recommendations delay.  There is growing concern that a number of key recommendations will not be implemented as quickly as originally envisaged and will not achieve as much as was initially proposed. However, in the long term, 84% of respondents expect a positive outcome.

An interesting area for thought. For those more interested in the actual findings of the census than a whimsical attempt at diversity-orientated self-promotion, here it is!

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