Can FinTech Support a Women-Led Economy?

What if financial technology was built with women in mind? What if the greatest tools to financial success were carefully crafted to take into account our career trajectory, education, life goals, life expectancy, and our immense potential? Would we see such a remarkable pay gap or investment gap or even gender inequity at all?

Women may comprise 51 percent of the population, but when it comes to wealth, we’re still significantly lagging behind, particularly when it comes to getting businesses funded. As DAME recently reported, the pay gap between men and women is still cavernous, and women still only receive a measly 2 percent of venture capital funds, despite starting and running businesses in droves. While there are a growing number of apps and websites that aim to connect women to women-led businesses and encourage women to support each other, experts suggest that the kind of tech with the potential to make the greatest impact on a woman-led economy is financial tech (or FinTech), the sector of technology that helps consumers and businesses access and manage financial services, including their own finances.

FinTech can help women understand how and where to invest, teach money management, and potentially make wealth more accessible to women across different socioeconomic strata by putting more money into women’s hands.

“A lot of old white guys have money and they’re the ones doing the funding,” says Tara Ceranic Salinas, Ph.D., professor of business and ethics at the University of San Diego School of Business. “The only reason they’re the ones doing the funding is because women haven’t been in the pipeline long enough to be at that stage.”

Indeed, women have only been able to apply for their own credit cards without a man’s help since 1974.

Since women control less money than men, female founders are often forced to bootstrap their own businesses, drawing on savings, crowdfunding, and tapping their friends for startup funds.

Lauren Hasson, The Texas-based founder of Develop[Her], an online career development platform, was tired of watching men succeed in tech while women struggled. Her defining moment came when a male colleague that she was training complained about his salary being too low—when it was the exact same amount as hers. She decided she wasn’t asking for enough money and invested her own savings in studying with female negotiation coaches.

“In less than three years I tripled my salary,” she says.

She wanted to bring this same skill to other women in tech, so she built DevelopHer’s platform with “off the shelf” components, spending as little money as possible, with the goal being to scale it fast. Not all big ideas have to come with big investments, she says. But she does believe women have to make the initiative.

“You have to say, ‘What about me has to change? If I don’t change, how will the system change?’”

And tech that changes women’s lives doesn’t have to start on a large scale, says Salinas. She envisions a tech version of microloans, similar to something like Kiva, which funds people (often women) in countries where they are typically excluded from such resources. “Investing doesn’t have to be in this massive [venture capital] kind of way—I don’t have two million dollars to give to anybody—but I can give somebody fifty dollars, or one hundred. That’s way more manageable.”

Erin Papworth, the Seattle-based CEO and founder of Nav.it, a money-management tool designed by women to help women grow a future of wealth, was also frustrated by the male-dominated nature of the tech industry. She points to early failures of devices like Fitbits and Apple Watches that had no period trackers, failing to take into account that half of their audience would not be served by their product. It was women who had to push for these necessary tweaks. “Technology has not been designed by women for women, and I think that is really the next step,” Papworth says.

She says that since women haven’t had as much time being able to access and grow wealth on their own as men, they have a less intuitive relationship to growing it. “It’s really only one generation that’s grown up with this kind of access to labor, to their own capital, the ability to start businesses and become enough of a critical mass in the labor market to start saying, “Hey, this isn’t built for me.”

That impetus inspired her to start Nav.it. The money-management tool aims to address “the specific and nuanced experience women have with money.” She adds,  “We’re helping women manage their money. They can aggregate all their accounts, see their overall budget and income. Then we marry that to basic financial goals.”

For example, the app will ask a woman if they have an emergency fund, or high interest debt. “Not only does our AI help you see if you’re on track to achieve your savings goals, we overlay that all with education,” Papworth explains.

Financial education is crucial to helping women thrive economically, she says. “The world only changes when women have control of their money, so we just need to get more women doing that.”

She points out that 40 percent of heads of household are women, however, “The financial industry hasn’t been built with our narrative in mind.” She explains that women tend to rate at lower average credit scores than their male counterparts, but not because they’re bad borrowers. “We have lower default rates. We pay back the loan more often, but we don’t have access to the same amount of credit, so your credit ratio is less. That directly affects how much money costs us.”

She says women also get smaller business loans. “That affects the APR on your credit score, your mortgage, etc. It makes functioning as a businesswoman more expensive.”

While the credit industry does not admit to offering women lower credit rates as a rule,  she says, women have noticed the difference between their credit limits with friends and spouses. Recently a consumer  called out Apple Card when a husband received a higher limit than his wife. Even Apple’s co-founder Steve Wozniak said it also happened with him and his wife. His limit was 10 times that of his wife’s.

Moreover, Papworth says, because 42 percent of women will take a career pause at some time in their life, they lose as much as a million dollars over time in wealth they won’t earn while they are raising children.

Terri Hanson Mead, an angel investor, business consultant and author of Piloting Your Life: Take the Controls and be the Pilot in Your Own Life, is committed to “Helping women individually and collectively claim our power in the world so that we can shift it economically, politically, ecologically.”

Mead, who says she is frustrated with the arrogance of male-dominated tech, envisions tech that would enable multiple people, and not only women, to invest in women’s businesses through gathering information on investors. “What if we created something that allowed us to centralize and make it easier to see what investors tend to invest in women or tend to invest in startups with products and services that align with what women founders tend to found?

Bringing more women to the table, so to speak, she says “can balance out this far too masculine analytical in-the-head world.”

Additionally, like Papworth and Hasson, she sees a need for tech that allows women to invest with greater ease and take more educated risks, as men are more likely to do. She mentions the investing website, Ellevest, as one example. “I think we have a huge opportunity within technology to better educate women on investing, taking risks and investing in companies that align with their values and have potentially for really good returns.”

Women, after all, live longer and typically have to take care of more people in their lifetimes, she says. “We start with less and are not introduced to investment options like men are.”

“The more women come into their own and have meaningful wealth that can be reinvested, the better, Papworth says. “Female founders are creating really amazing companies that are thoughtful and social-impact driven.”

Earning that wealth has a long way to go, still, but these women are hopeful that FinTech may finally help women get an economic advantage that has long been denied them.