Building an Equitable Financial Ecosystem: Why It Matters and How We Get There

Did you know that hundreds of startups make their public debut every year, but historically, only 20 startups in total have the distinction of being founded and led by women?

Creating a fair financial landscape is more than just a dream of mine—it’s a necessity. By breaking down barriers and promoting equal opportunities for all businesses, we tackle the glaring disparities in access to financial tools and resources. It’s my mission to nurture a system where everyone—especially minority-owned and women-led businesses—has a chance to thrive.

As the daughter of Pakistani immigrants and the first in my family to attend college, I experienced the hurdles of limited financial access and economic inequality firsthand. Witnessing these challenges ignited my dedication to fostering equitable opportunities within the financial sector, particularly for those who are often marginalized.

I’ve dedicated myself to using my experiences and platform to advocate for equal opportunities for all entrepreneurs. By founding Stax Payments and scaling it to billion-dollar success, and building Worth with the same vision of financial inclusion, I’ve aimed to dismantle barriers and open doors for businesses that have historically been left out of mainstream financial systems. My commitment extends through CEO School, where I’m passionate about empowering women entrepreneurs to break the glass ceiling and surpass the 2% statistic of women founders who achieve over $1M in revenue.

Why an Equitable Financial Ecosystem is Crucial

Right now, countless businesses are missing out on financial tools that could fuel their growth. This lack of access, not only hampers these businesses, but also hinders innovation, diversity, and community development.

Closing Opportunity Gaps

Financial institutions hold significant influence, with the potential to either elevate or disadvantage entire communities. By providing equitable tools and services to underserved groups they can break cycles of inequality and foster true equity.

In fact, 39.1 percent of employer businesses are owned by women, but only 2 percent of venture capital funding goes to women-led businesses. By addressing disparities like these, financial institutions can play a crucial role in closing opportunity gaps and driving meaningful change.

Empowering Economic Growth

Diverse businesses drive innovation. By creating a financial landscape where minority-owned and women-led businesses can access capital and financial services, we unlock tremendous potential. Minority-owned and women-owned businesses contribute nearly $3 trillion to the U.S. economy each year. Yet, they still face significant challenges in accessing capital, with as little as 1.5 percent of total US venture capital going to black and latino entrepreneurs. Finding ways to tap into this potential can significantly boost innovation and overall economic performance.

It’s not just about diversity for diversity’s sake—these businesses bring fresh ideas, new perspectives, and innovation that fuel growth.

A More Inclusive Economy

An equitable financial system benefits everyone. When businesses, especially SMBs (small and medium-sized businesses), have the resources they need to thrive, the entire economy grows. SMBs account for 44 percent of U.S. economic activity and create two-thirds of new jobs. However, 82 percent of small businesses fail due to cash flow problems, and only 48 percent of minority-owned small businesses receive the full amount of financing they seek, compared to 79 percent of white-owned businesses.

Building an inclusive financial ecosystem ensures all SMBs have equal access to capital, driving growth and innovation across all sectors.

How Financial Institutions Can Foster an Equitable Landscape

If we want to build an equitable financial ecosystem, financial institutions must take intentional steps toward change.

Address Bias in Lending

Bias in lending—whether based on race, gender, or the size of a business—holds back progress. Financial institutions need to leverage AI-driven tools to ensure fair and unbiased decision-making. By taking human bias out of the equation, we can create a system that evaluates businesses on merit not misconceptions.

Promote Financial Access for Underserved Communities

Financial institutions shouldn’t stop at fair lending. They need to actively promote access for underserved communities by providing capital, mentorship, and resources for growth.

Commit to Transparency and Accountability

Lending practices should be clear, data-driven, and transparent. According to a 2022 survey by PwC 87 percent of executives think consumers have a high level of trust in their businesses, but only 30 percent of consumers say they do. When financial institutions commit to accountability, they create an environment where business owners feel empowered and supported, knowing they’re treated fairly.

How Small Businesses Can Hold Financial Institutions Accountable

Small businesses can play a role in driving change, too.

Seek Out Transparency

Business owners should get into the habit of asking for clarity on lending criteria and decisions. Understanding how decisions are made allows for more transparency and accountability.

Tap Into Your Network

By connecting with other small businesses and joining forces with advocacy groups, owners can work together to encourage financial institutions to embrace fairer, more equitable practices. There’s strength in numbers, and by supporting each other, businesses can help drive positive change.

Use Data to Drive Change

Data is a powerful tool in the fight for equity. Small businesses can advocate for data-driven accountability by highlighting patterns of bias in lending practices and demanding fairer outcomes. A 2022 survey from the Federal Reserve Bank found that 50 percent of Black business owners applying for a loan, line of credit or merchant cash advance were denied, compared to 18 percent of white business owners. By bringing attention to these sorts of numbers, we can push for transparency and encourage financial institutions to adopt unbiased, AI-driven decision-making tools. Small business owners can help create a more equitable system where data can help determine access to capital. Data doesn’t lie, so let’s use it to level the playing field.

–

Financial institutions have the power to shape a fairer and more inclusive economy. By fostering transparency, leveraging tech like AI, and championing financial inclusion, they can create a more equitable landscape for businesses of all sizes. Every business, regardless of its size or background, deserves access to the financial tools necessary to succeed. Together, we can create a more equitable financial ecosystem—one that empowers entrepreneurs and fosters innovation.

See more of Suneera’s YEC blog here.