Tulip Siddiq MP
MP for Hampstead and Kilburn, Shadow Economic Secretary to the TreasuryTulip Siddiq MP discusses why we need to unlock the neglected talent of half of the workforce
I regularly attend meetings with the financial services sector, and it’s noticeable that whether you look at founders of new companies or C-suite level at major firms, there is still a considerable lack of women around the table.
At leadership levels, only 6 per cent of CEOs are women and at the entrepreneurial level, it is estimated that £133 billion of pounds worth of value creation is not realised each year as a result of female-owned businesses not being able to access the capital they need.
The fact is, it is not possible to unleash the full potential of the City to drive investment in the British economy while neglecting the talents of half of the workforce and failing to recognise the contributions and needs of half of those who are potential consumers, investors, and entrepreneurs.
It should be recognised that impressive progress has been made in recent years, and I know from my conversations with businesses and investors in the sector that there is a real drive to ensure that this momentum continues.
Gender Imbalance
Globally, around two-thirds of women manage their household’s finances. As consumers, however, just 30 per cent of women say that they are satisfied with the gender diversity of the organisations that provide their financial services, and 77 per cent believe that being served by a gender-diverse team is important.
There is a real opportunity for businesses in the UK to set themselves apart by recognising the concerns of female consumers. Analysis in 2020 suggested that financial services firms across the world are missing a $700 billion revenue opportunity each year by not meeting the needs of women.
One of the clearest examples of this is the need for a shift in the way that financial planning is carried out. As things stand, women tend to retire earlier, live longer and take more time away from work to raise children. Standard wealth planning generally assumes that income increases year on year – however, this is often not true for many women, in particular for mothers, who still face many barriers in the workplace. If financial services firms are not showing sensitivity to these factors, then it is not surprising that women do not feel that their needs are being met.
Female Entrepreneurs
The Alison Rose Review of Female Entrepreneurship reported that over 1,100 businesses are set up in Britain each day. In fact, between 2013 and 2017, the UK had the highest rate of start-up growth in Europe. Disappointingly, however, there is a stark gender gap in this field – too often, women can’t get the investment they need. This is despite evidence that on average, female founders of companies generate higher returns on investment than men. If women had the opportunity to set up businesses at the same rate as men, we would have around 1.1 million more start-ups in the UK.
There is clearly a significant opportunity here. Female entrepreneurs say that one of the biggest barriers preventing them from getting started or scaling up is securing the capital to make progress. Taking steps to prevent this obstacle from affecting women disproportionately is an important part of closing the entrepreneurial gender gap. Only then will we start to see a fundamental shift in our ability to unlock the potential value creation that the sector is currently missing out on.
Promoting and Maintaining Progress
There are important external factors that must be considered when talking about women in the financial sector. The first of these is that our ability to focus on making progress is greatly aided by a stable and growing economy. Pavlos Mylonas, the CEO of the National Bank of Greece, noted that “during the crisis in Greece, banks focused on the big existential issues, and gender diversity didn’t receive the attention that it should have”. The lessons here are twofold. Firstly, we must make sure that maintaining a secure economy is a priority to ensure that enough energy can be given to enhancing the role of women in the financial services sector. Secondly, continuing the progress that has already been made on the issue should be prioritised sufficiently, such that when there is a downturn in the economy, the momentum towards progress continues.
It is important not to view the treatment and inclusion of women in financial services as an isolated issue. For example, ensuring that women are represented in the world of technology is very closely linked to financial services, which is something that the Anthemis Female Innovators Lab fund – supported by Barclays and Aviva – has been doing to support women entrepreneurs in FinTech. It is direct and deliberate steps like this that have the power to transform the way that an organisation functions in terms of its relationship with women.
From female consumers to founders, progress is being made in financial services to break down the barriers facing women and unlock the enormous potential that is currently being missed. I am optimistic that if we can do more to support women in the City, this could be a real breakthrough in the UK’s ability to stand out on the world stage in this important sector.