WORKWEEK

There is a surge of female leadership in the fintech industry, a sign that companies are finally beginning to recognize the importance of diversity in terms of leadership and staff. 

The industry is now concentrating on closing the gender gap, with many companies taking steps such as diversifying their hiring practices and increasing board representation. 

This will increase the chances for collaboration and innovation, ultimately benefitting both consumers and businesses. 

Through this focus on female leadership, we have seen the emergence of 3 important stories in fintech over the past week. 

These stories demonstrate the impact of women in the industry and remind us that diversity is the key to success in the fintech sector.

#1 Stash names Liza Landsman CEO

Liza Landsman stepped into her new role as CEO of the banking and investing platform Stash last Monday. 

Liza recently served as a general partner at venture capital firm New Enterprise Associates and has held leadership positions at Jet.com, E*Trade, BlackRock, and Citi. She replaces co-founder Brandon Krieg.

But Krieg is sticking around – his focus is on developing a new B2B offering that Stash plans to provide through employers.

Founded in 2015, Stash, valued at $1.4 billion during its Series G fund raise, recently crossed $100 million in revenue. The company says its platform has over 2 million active subscribers and roughly $3 billion in assets under management.

Why It Matters

The appointment of Liza as CEO is interesting for 2 reasons. 

First, less than 6% of fintech CEOs globally are women. So when we’re working with single digits, every She-E-O appointment matters. 

“There is a real shortfall in terms of the representation of women and people of color in leadership across every sector, but in fintech as well as financial services more generally, this phenomenon is more acute because these industries have tended to be even more homogenous, white, and male,” Landsman said. 

Ultimately, we’ll only know how big fintech as an industry can be if 50% of the population is adequately represented. Today, women comprise 30% of the workforce. 

“When a woman or a person of color steps into a leadership role, it begins the turn of the flywheel,” she added. “I wish it would move faster, but every little bit helps.” 

Second, we’re seeing Stash step into the diversity of product offerings with a B2B focus. 

This makes perfect sense, given diversifying your product line can help reduce the impact of a downturn in any market. Plus, during economic uncertainty, employees look to their employers to provide some relief. 

84% of employers now say that offering financial wellness tools can help reduce employee attrition, and 81% say wellness tools help attract higher-quality employees, according to a survey by Bank of America. 

At Betterment, which offers its employee wellness products, the platform found that 54% of employees are more stressed about their finances than before the pandemic, while 68% would prioritize financial wellness over an extra week of vacation. 

Older banking and investing platforms like SoFi, which serves 5.2 million members, have offered an employee benefit program to reduce student debt and build financial wellness since September 2016, already working with more than 600 corporate partners.

#2 Suma Wealth Acquires Reel, Beefs Up C-Suite 

Latina-led fintech company Suma Wealth announced its acquisition of the savings and personal finance platform Reel. 

The companies merged to help close the wealth gap for young U.S. Latinos by providing the community with financial management tools in personalized and culturally relevant ways. 

As part of the merger, Reel Co-Founder and CEO Daniela Corrente become a part of Suma Wealth’s executive suite as Chief Strategy and Business Officer. 

Why It Matters

Corrente joins the Co-Founders CEO Beatriz Acevedo and COO Mary Hernandez, making this trio one of the first solely Latina executive teams to lead a fintech company.

Latinos represent almost 20% of the U.S. but only hold 2% of all available technology jobs. With the merger, Suma Wealth plans to tackle the unrealized $182 billion opportunity that U.S. Latinos represent in fintech and edtech. 

Though the Latino community is underrepresented in financial services, that doesn’t mean they don’t hold power. The total economic output of U.S. Latinos was $2.7 trillion in 2019, making U.S. Latinos the equivalent of the seventh-largest economy in the world.

The Suma Wealth team, led by second-generation immigrants who have faced the same obstacles as their target audience, has community as a significant competitive advantage. 

Today, many historically marginalized groups are leading the cultural zeitgeist. They’re showing the trends and how culture and industries move forward. 

Today, fintech companies are seeing the benefits of social capital in building communities. 

Fintech is more than a consumer tool to build wealth or software that enables enterprises to offer financial services. 

Fintech entices a sense of belonging with like-minded users willing to pay or partner to feel part of your company’s community. 

#3 Phenomenal Ventures Debuts 

Phenomenal Ventures closed a debut early-stage-focused fund totaling $6 million, led by Meena Harris and Helen Min. 

Around 38% of LPs are founders or former founders. According to TechCrunch, nearly half of the fund’s investors self-identify as women, and 12% as Black. Partner Zabreen Khan also joins the firm. 

The new fund allows Phenomenal Ventures to participate in pre-seed to Series A rounds, averaging check sizes around $100,00 to $500,000. The firm has invested in 13 companies, nine of which are built by underrepresented founders.

Fun fact: Meena Harris is the niece of U.S. Vice President Kamala Harris. 

Why It Matters

Female founders are facing a double bind. Not only is funding for female-led firms dropping, but they are also facing more significant challenges in raising a second round of funding if they can even acquire the first.  

The best way to combat this is to have greater gender parity among venture capitalists. A 50/50 split – at the least. However, it’s rare to see funds led by women, let alone women of color who aren’t career venture capitalists. 

The venture capital space still looks something like this: 

A lack of female representation in the industry directly influences the quality and diversity of the industry products and whether they are good or harmful to users. 

In addition to elevating more female-led VCs, our industry should promote inclusive investing, where male and female investors are encouraged to join forces to support promising female entrepreneurs.

We should also look to the expansion of embedded finance as an avenue to unlock funding for more female founders. Embedded finance opens up fintech to make adjacent traditional or outdated systems, like healthcare or media, work better for everyone, unlocking a pathway for more women to see working, investing, and building in fintech as an opportunity to succeed. 
Here are 3 steps VCs can do today to make their investment portfolio more diverse and inherently innovative.