FinTech and the Remaking of Financial Institutions - Chapter 16: Social Issues: Diversity and Inclusion, Unemployment, and Income Distribution

Elsevier, FinTech and the Remaking of Financial Institutions, 2018, Pages 315-330
John Hill

There are concerns about the negative impact of Fintech on diversity and inclusion, income distribution, and unemployment. US High Tech companies have lower proportions of women, black, Hispanic, American Indian, Hawaiian (NHOP), and multiracial workers than the average for all US private industries. CEOs at tech start-ups backed by VCs are estimated to be less than 3% female and less than 1% black. VC’s fund few start-ups founded by women, just 7%, and those start-ups received smaller funding amounts. VCs themselves have few women and minority employees. Tech advances are also likely to displace more than 1.8 million US and European bank workers within 10 years. Start-up “winner take all” payoff structure leads to an outsized share of revenue and income increasingly going to profits of “Superstar” firms and founders, worsening income inequality. How to balance a need for strong incentives for start-up innovation with the resulting increased inequality of incomes? The educational need is for both STEM degrees and for training for skilled jobs that do not require college degrees.