We sat down with Stephanie Balint, Head of U.S. Strategy & Operations with N26 Inc. in New York, to talk about her experience in the fintech industry, and the continued evolution of technology to solve old and new problems for consumers, and create new opportunities we have yet to think of.

How you get involved in fintech?

Stephanie Balint: I got involved with fintech very early on in my career. Right out of college, I started working in investment banking, and one of my first areas of coverage was fintech, which included players within market structure, exchanges, trading, and technology platforms. By covering that space, I learned a lot about the industry, and eventually moved on to work for a fintech company because I wanted an opportunity to have direct impact in day-to-day operations and scaling fintech businesses. One of the reasons this industry stood out to me is because of the unique aspects of the business models; unlike consumer retail businesses, fintechs are less subject to short-term trends and the whims of consumer demand, and have higher margins and therefore more scalable and profitable economics.

How have you seen the industry change across your career?

Balint: I have seen the industry change immensely over the past 10+ years. When I was first getting started in 2009, there was much more of a focus on established and mature companies who were utilizing older, legacy tech stacks and serving traditional financial institutions, but starting to do so in more tech-forward ways. Over time, I saw an evolution begin to take place with lots of new entrants in the space trying to better serve retail and commercial customer needs by replacing legacy tech. It was incredible to see so many talented people, who had previously worked at older financial institutions, come back to identify a problem in the space and propose new solutions that would eventually improve financial services as a whole and bring it into the modern age.

There have been so many interesting companies founded over the past 10+ years. Many of the small fintech concepts I was watching during my banking career have grown significantly, including neobanking. This was a category that was barely considered or on the radar, and now is its own massive category within fintech – with no signs of slowing down. Q2 2021 was the largest quarter on record for fintech with nearly $31B invested worldwide across 657 deals.

Some of the innovations I’m most excited about are around what I call the “plumbing” of financial services. Things like enabling faster payments, like ACH payments, foreign money transfer, and trade settlements. A lot of companies – like Plaid, Orum, or Wise – have already brought forth incredible solutions. Behind the scenes, as a consumer, you would never know what is driving your ability to get money faster or facilitate complex transactions.

Can you tell us a bit about your current role?  How is your company impacting the future of fintech?

Balint: In my current role, I am the interim GM of N26 US. With that, I oversee our operations in the U.S. market, focusing primarily on the strategic and operational side of things. This includes working closely with our legal and compliance team to manage critical business partners, selecting new partners, and overseeing customer service and banking operations. A large part of my role is creating a shared strategic vision for the entity to work towards, as well as developing roadmaps and long, medium, and short term goals to achieve our vision in the U.S. 

Where do you see fintech heading in the next 12 months?

Balint: There is a very strong appetite from investors who are trying to find the interesting companies that will rise to the top. I believe there is still a huge opportunity in the “plumbing” side of financial services, particularly with B2B businesses who are working to do things like speed up payments, improve infrastructure, and provide solutions to help globalize money movement. Generally, these businesses are working to bring financial services into the 21st century and it’s fascinating to be a part of this evolution.

What more do you think can be done to support women in fintech?

Balint: At an entrepreneurial level, I think foundational change needs to occur. Encouraging female founders by providing access to capital is essential to helping generate a more diverse fintech startup economy. The issue is that historically women have been underrepresented within VC investing. There are generally not many women in VC investing, compounded by not enough representation and funding of women at a founding level, which in turn leads to underrepresentation of women in fintech across all levels over time. 

Within startups, I think it’s important that leaders take steps early on to build out a team that ensures diversity across all facets of the business. Seeking individuals with various social and economic backgrounds will ultimately contribute to a stronger and more inclusive product and diversity of thought within and across teams.

For individuals, I think having strong mentorship from other influential leaders is key to building a strong supportive network that will pay dividends throughout your career.

Where did you find support in the fintech world?

Balint: I had a lot of support early on in banking. As the only revenue-generating female senior managing director, and the only one in an advisory role leading fintech as a practice, my mentor in investment banking took a keen interest in me and helped me to build my network and coverage area to do things earlier in my career than I would have been able to on my own.

Once I moved directly into fintech, I found most of my support from other peers, not necessarily women. Especially at N26, many of the early employees at the company were like-minded and we found similar comradery in terms of drive, motivation, intellect, and general interest in how to navigate a small and growing organization, think critically about things, handle tough negotiations, optimize contracts for best possible terms, and build the team. I found that support from early employees who had gone through it together with me incredibly valuable as I grew in my own career.

What advice would you give to women starting their careers in the industry now?

Balint: First, know your worth. Figure it out early and don’t be afraid to ask other people you know in the industry for comparisons/benchmarks. Demand the pay you deserve and don’t be afraid to negotiate.

Second, invest your money early and often. You may make the same salary as your peers, but if you don’t put your money to work, you’ll be left behind in the long term in terms of wealth creation.

Last, don’t be afraid to ask for things you want. I feel strongly about the “don’t ask don’t get” approach. Ask for a seat at the table, to be included in meetings, for someone to mentor you … what’s the worst that can happen? You can always move on from a rejection but you can never get back a missed opportunity.

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As part of our #womeninfintech series, we spoke with Karen Gordon Mills, a Senior Fellow at the Harvard Business School and a leading authority on U.S. competitiveness, entrepreneurship, and innovation. She details her perspective and experience with small businesses and lending, and highlights several other women leading the charge to create a better future with fintech.

How did you become interested in fintech?

Karen Mills: My interest in fintech grew out of my work with small businesses.

As Administrator of the U.S. Small Business Administration (SBA) from 2009 to 2013, I had a front-row seat to the challenges that small businesses face when accessing bank capital. Getting a loan is an onerous process even for the most creditworthy small business owners. It often involves carrying stacks of paperwork to a local bank and waiting months for a decision. That’s because for banks, lending to small businesses is actually pretty hard. They tend to lack complete information about the business that would allow them to determine profitability or cash flow, and since small businesses are such a heterogenous group, it’s difficult for loan officers to develop expertise in a specific sector. These frictions have led to a credit gap, especially among the smallest and most vulnerable businesses.  

The traditional lending process wasn’t working for this critical part of our economy. Yet it had been this way for decades and only started to change in the late 2000s, around the time I was at the SBA. That’s when a wave of new fintechs entered the market. The fintechs gathered nontraditional data streams from their small business customers (like daily transactions) to get around the lack of information, integrated them using application programming interfaces (APIs), and deployed machine learning tools to quickly generate insights about the business and automate loan decisioning. All of a sudden, small businesses could submit applications, receive decisions, and find new funds in their accounts in a matter of days.

I thought fintech’s potential to transform small business lending was so transformational that I wrote a book describing its evolution and possible outcomes: Fintech, Small Business & the American Dream. I’ve continued to speak about and research fintech developments in my current role as a Senior Fellow at Harvard Business School.

How have you seen the industry change across your career?

Mills: Lots of people initially thought the fintechs would knock traditional banks off the map. But that hasn’t happened. Although banks might be less nimble or tech-savvy, they have established customer bases and low-cost capital—which most fintechs don’t. One big change we have seen in recent years is a rise in bank-fintech partnerships, with each seeking to benefit from the other’s strengths. Another important development is the presence of Big Tech companies, like Apple and Amazon, whose wide reach and ability to create seamless user experiences allow them to make rapid and large-scale inroads with small businesses.

The pandemic has obviously brought massive change over the last year, and accelerated the uptake of digital technologies for both lenders and borrowers. The Paycheck Protection Program (PPP) played a key role, pushing banks to overhaul their systems and get money out the door at an unprecedented pace. Fintechs were especially important in distributing aid dollars to the smallest businesses, and they may be able to leverage that success into new customer relationships. Meanwhile, with more and more activity occurring online, small businesses will likely adopt new digital tools to serve their various needs—in everything from lending to advertising.

How have you seen female leadership influence the fintech space, particularly around small businesses?

Mills: Women have developed some of the most transformative and innovative fintech solutions that I’ve seen for small businesses. For example, Kathryn Petralia co-founded Kabbage, a company that pioneered the use of alternative data and machine learning to automate small business lending. As the head of Square Capital, Jackie Reses built out Square’s similarly data- and technology-driven strategy for providing small business loans. Both of these women, and many others like them, have created crucial new opportunities for small businesses to grow and thrive.  

Women’s leadership has also been influential in other, related spaces. In traditional banking, women like Jill Castilla, the CEO of Citizens Bank of Edmond, a community bank in Oklahoma, are spearheading digital transformations intended to provide better service for small businesses. In academia, female economists like Professor Sabrina Howell of NYU are doing crucial research around fintech’s impact on small businesses—including demonstrating how fintechs like Kabbage and Square played an outsize role in delivering PPP funds to minority-owned businesses during the pandemic. 

What more do you think can be done to support women in fintech?

Mills: First and foremost, we need more women in fintechs, in banks, and in the research and policy areas too. There are talented women coming up in banking and in other areas of finance who will push the industry to adopt more innovative solutions.

And, yes, there are things we can do to help. Investors need to funnel more money to female founders in fintech, and established companies and organizations need to implement better recruitment and selection strategies. There are brilliant, highly-qualified women out there who may well have the next big idea or innovation for small business customers. We just need to be more deliberate about bringing them on board and promoting them to the highest leadership levels – in ways that account for the biases and obstacles that women often face.   

We also need to be aware that simply recruiting more women isn’t good enough. It’s crucial to actively foster cultures of diversity, equity, and inclusion that provide women—and all underrepresented groups—with the resources and opportunities they need, and with an environment in which their contributions are valued. Organizations that do this well will be more successful in innovating and winning in a rapidly changing environment like the worlds of banking and fintech.

What advice would you give to women starting their careers in the industry now?

Mills: Fintech is a great industry to be in. Traditional banking is being challenged and organizations are more open to innovative thinking – because they have to be. Female leaders are most often excellent problem solvers. The solutions that fintechs put forward are game changing. Better access to capital can have a significant impact on the success and wellbeing of small business customers, and on the American economy.

My advice to women is that this is a critical time to get involved. Work to build a new environment that closes gaps in the market and improves access and opportunity for a more diverse set of small business owners. Get engaged, build relationships (and help each other out), pursue your ideas, and stay committed to your goals.

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