Still in pursuit of #BalanceforBetter – the theme for this year’s International Women’s Day – The Industry Spread has decided to review a 2018 report by US-based financial data and software company FactSet on gender diversity in leadership positions. We spoke to two female leaders in the fintech world: Nichola Hunter, Chief Executive Officer at trading venue LiquidityEdge, and Alisa DiCaprio, Head of Trade and Supply Chain at blockchain company R3 – both firms founded by former ICAP chief executive David E. Rutter.
A 2017 FactSet report found that 23% of companies within the Russell 3000 had zero female board members and 58% had boards composed of less than 15% female members. Interestingly, publicly traded companies with gender diverse boards show a higher return on invested capital and lower price volatility than their counterparts.
The 2018 paper found a strong correlation between having a female CEO and having high female representation on the board of directors. In regard to sectors, technology and financial services did very poorly. Technology ranks at the bottom in terms of female CEOs, with 2.4% of the companies having female leadership, and financial services was the third worst sector with just 3.3% of companies having women at the helm.
Nichola Hunter and Alisa DiCaprio, because of their executive roles, have a responsibility to champion diversity from within company structures and create real long-term change. Based on the evidence that demonstrates firms with strong diversity and inclusion agendas outperform firms without, both Hunter and DiCaprio expect to see greater appointment of women to leading roles in tech start-ups this year.
“For a sector that prides itself in being forward thinking and at the cutting edge of innovation, it’s counterintuitive that the tech sector would rank dead last on gender equality in leadership”, said Hunter. “Diversity at all levels of an organization brings in new types of thinking and approaches to problem-solving. Until these numbers begin to even out, it should be viewed as a priority to have women in leadership roles and represented on boards, making sure all ideas are heard for the benefit of the company.”
“These figures only make me and the entire team here at LiquidityEdge that much more motivated to show how well things can work with a woman in charge and encourage other firms to do the same”, she added.
Alisa DiCaprio, Head of Trade and Supply Chain at R3, believes the emerging role of women in STEM (Science, Technology, Engineering, Math) will be a key driver of gender diversity in the corporate world.
“As the blockchain industry has grown, so have we. The community at R3 has adopted a culture of inclusion from the start with gender, ethnic and cultural diversity at every level of the organization, including the leadership team. Having leadership of highly conscientious women is a key priority for us”, Di Caprio said. “With new opportunities emerging in this space, we still have work to do to attract more female involvement. I think over the next five years, the power of blockchain, combined with a rapid growth rate of women entering STEM and technology-related fields, will play an important role in expanding female representation on boards and in the executive teams for tech firms that wish to stay relevant and empowered.”
How to Lead FinTech Firms In The Face of The Rise of BigTech
The Financial Stability Board (FSB) published a report earlier this year as part of the FSB’s ongoing work to monitor FinTech market developments and their potential implications for financial stability as new technologies give birth to new business models, applications, processes or products.
The publication found that established technology companies (‘BigTech’) could materially alter the universe of financial services providers in areas such as lending, payments, insurance, and trading, with the potential side-effect of putting pressure on financial institutions’ profitability which then could lead to additional risk taking among incumbents in order to maintain margins.
We turned to LiquidityEdge’s Nichola Hunter and R3’s Alisa DiCaprio for comments on how to navigate the BigTech challenge.
“As mentioned in the FSB report, BigTech firms have the luxury of established customer networks and name recognition. However, this can work against them as they can become complacent and concerned with defending their position through maintaining the status quo. This leaves the door open for innovators and disrupters”, said Hunter. “In order to be successful, lesser-known tech firms have to bring something different to the table and actively disrupt the status quo to make a name for themselves. Building a reputation and staying top of mind amongst customers is difficult. However, if you’re addressing the pain points that have been neglected by the bigger firms, or introducing a new idea that creates efficiencies, saves costs and benefits clients, the process becomes easier.”
Using LiquidityEdge as an example, Hunter argued the firm is at the forefront of change in the US Treasuries market and are actively challenging the traditional two-tier legacy structure, having become the first alternative model for US Treasuries to break into the market in over a decade. Innovation is the name of the game, such as the introduction of its fully electronic aggregated streaming service for off-the-run US Treasuries in 2017. The firm plans to launch new innovations over the next year and leverage from its rapid growth: 250% volume growth YoY in January 2019.
R3’s DiCaprio recognized the importance of BigTech as partners and potential partners for creating and deploying Corda-based applications and infrastructure. “This is why we’ve made sure Corda is built to integrate with the established cloud computing providers services. At R3, we recognized early on that technology alone isn’t enough to achieve our aim of re-engineering the infrastructure for global business. Its more efficient to work together with established players to adapt existing systems rather than rebuilding it all.
“There’s a second element to adapting existing infrastructure. Start-ups in fintech play a critical role by introducing new ideas and disrupting existing practices. However, even during innovation and disruption, the financial services industry requires operational stability. Go fast and break things isn’t going to go down well if trillions of dollars of people’s pensions are put on the line. This is why it’s imperative to combine forces to introduce fresh ideas in a way that recognizes the security and stability requirements of the institutions that adopt them. There will always be a place for firms which have built their technology with the unique requirements of finance in mind from the start”, Di Caprio added.
Alisa DiCaprio sees the emergence of BigTech within the financial services as an opportunity as the R3 technology, which meets the needs of the most regulated sector in the world, is equally applicable for other sectors that require confidentiality, visibility, and security. “As big established firms move into the fintech space, I think there are opportunities to share expertise and create new applications for end users.”
“To help nurture that ecosystem, R3 actively engages with developers, inviting them to participate in developing elements of the blockchain technology that has formed the basis for Corda, our enterprise-grade blockchain platform. We have also developed an ecosystem that creates multiple interactions between partners and developers. This gives both groups a stronger stake in building both the most resilient and secure blockchain platform available”, she concluded.
