Diversity in fintech
While startups in leading Canadian tech hubs like Toronto and Waterloo have long recruited mostly from these regions’ highly diverse labour forces, the increasingly insular mood in the U.S. could become a source of competitive advantage for domestic firms in fast-growing verticals like fintech, according to Salim Teja, MaRS’ executive vicepresident, ventures.
Cluster advocates in the Toronto-Waterloo corridor are already calling on universities, established technology firms and entrepreneurs to take advantage of the Trump administration’s immigration bans to recruit highly skilled software engineers from the overseas regions they target.
These shifting dynamics, according to some players in the fintech and venture-capital space, are serving to accelerate and amplify the industry’s attempt to broaden both its ethnic and gender diversity.
In recent years, the global tech industry has drawn criticism for tolerating workforces and management structures that are overwhelmingly white and male. As a 2015 Fortune survey found, some of the largest players — companies like Microsoft, Apple and Intel — remain largely male with little diversity.
Yet that picture has begun to change rapidly in many Canadian firms. At MaRS, one of the world’s largest urban innovation hubs, the power of diversity is evident among the startup teams we are advising. Of the roughly 1,000 startups within our ecosystem, 54 per cent have at least one founder who is foreign born — an average that is slightly higher than Silicon Valley’s.
“In Toronto, there’s a lot of talk about diversity,” says Neha Khera, a partner at 500 Startups Canada. “The community has rallied together — both men and women — to take a bold stance, saying ‘we care about diverse workforces.’ ” (Khera, an electrical engineer with an MBA, will be a panelist at an upcoming MaRS event titled Faces of Finance & Commerce, which will examine diversity in the fintech sector.)
For a growing number of entrepreneurs in the fintech space, ethnic and gender diversity are deeply embedded in the business proposition.
“Wherever you see a large immigrant population, you see the tech hub energizing as well,” says Kanchan Kumar, co-founder and chief executive officer of Remitr, an international payments firm with offices in Toronto, Palo Alto and India. His firm is geared at two markets: immigrants sending money to relatives overseas and businesses looking for easy international payments systems; both of which are global and require employees with a facility in many languages.
Remitr’s customer-facing activities, Kumar says, need to be conducted by people with an understanding of the cultures as well as the regulatory systems of countries where the payments are being processed. Given its orientation, the location of the company’s global head office — Toronto — is a strategic advantage. “Hiring is extremely easy. You have people from various backgrounds and they speak those languages. This is one place that is truly a melting pot.”
Paycase is another secure payment platform that serves overseas workers who remit money home. “It scaled quickly in Canada because the company could target early-adopter, ethno-cultural communities whose members were able to give customer feedback quickly, allowing Paycase to rapidly iterate its product,” says Teja.
There’s growing evidence that a similar dynamic is driving gender diversity in the sector. “Females are on the rise,” says Mogo’s marketing director Stephanie Leakey. She joined the Vancouver fintech company as one of its first female directors two years ago. Today, there are more than four women on Mogo’s senior leadership team and the office has a growing contingent of young women writing code.
Leakey points out that Mogo, like other startups that actively recruit from diverse communities, doesn’t use hiring targets that might lead to biased results. The strategy, as she points out, makes sense from a business perspective.
Teja points to research showing that companies with a strong commitment to diversity also tend to perform better financially. A recent study by McKinsey found that diversity within work teams lead to greater innovation and new ideas.
“The reason?” he says. “More diverse teams are inherently more likely to understand the varying needs of a global population. It’s little surprise that entrepreneurs who are comfortable with diversity inside their firms have greater confidence when selling their products outside their region.”
Yet, as Kumar and Khera both point out, one of the long-standing challenges
facing Canadian tech firms is accessing capital north of the border. Increasingly, firms like Remitr or venture capital firms like 500 Startups will fundraise in Silicon Valley but build a base of operations in the Toronto-Waterloo corridor to take advantage of both the diversity in the talent pool and the greater openness toward hiring and promoting women into senior operational and leadership roles.
Khera says Canadian tech firms are increasingly open to embracing these changes and following the leads set out by globally oriented fintech companies like Remitr and Paycase.
But, she adds, “There’s a lot of work to be done.”