FleetBoston Financial has joined three other banks to form an alliance designed to assist the growing number of women-owned businesses. From left are Teri Cavanagh, Fleet senior vice president and director of the bank’s Women Entrepreneurs’ Connection; and Betty Wood, managing director of the Women Entrepreneurs’ Market at the Royal Bank of Canada. The other banks in the alliance are the Bank of Ireland and Westpac Banking Corp. of Australia.
FleetBoston Financial is hungry. Over the last decade, it has grown at a phenomenal rate.
Part of its success obviously has been recognizing profitable ventures. In that vein, Fleet last week announced a new Global Alliance among four banks aimed at providing fuel to the skyrocketing number of women-owned businesses.
Projections indicate that women-owned businesses soon will become the most important growth area in the economy. Start-up companies are the most important source of job creation in every economy, said Henrique de Campos Meirelles, Fleet’s global and corporate president, during a press briefing at Fleet’s headquarters at 100 Federal St. in Boston, where the alliance was announced.
“In the U.S. … the number of start-ups which are women-owned business are being created at twice the rate of male-owned business, which means that the potential for growth is much more important for women-owned businesses. If the level of start-ups that are owned by women reach the level of the male-owned businesses, the number of start-ups in the U.S. would grow annually by about 20 percent,” he said.
The alliance is made up of FleetBoston Financial, the Royal Bank of Canada, the Bank of Ireland and Westpac Banking Corp. of Australia. Its mission is to identify and share best practices among banks to accelerate the growth of women in business. The four met last November, when each was invited to participate in Paris convention aimed at women entrepreneurs. The four women in charge of fostering women-owned business growth in their own countries shared their experiences.
“Not only did we discover there were common themes and experiences that women were having across the globe in these access points, but there were some meaningful points of differentiation for women-owned businesses from all other small businesses,” said Teri Cavanagh, senior vice president and director of the Women Entrepreneurs’ Connection at Fleet.
Cavanagh highlighted five points realized by all the banks during the course of their research.
Women want to be taken seriously by banks and the business community in general. Whether it’s true in some cases, women feel as though they are easily dismissed. They want a relationship with their bank beyond just performance of transactions, she said.
“Thirdly, women use their personal credit. They bootstrap their companies a lot longer than men do. So they use their personal credit, rather than their business growth, to finance their business,” said Cavanagh.
Women also seek much more information than men do before making financial decisions. “In part, that’s because they often don’t have the role models that men often cite that they do,” she said. Lastly, women don’t have access to venture capital to the same degree that men do. “Last year, women received less than 4 percent of the $48 billion of venture capital money in the United States. But what’s discouraging is not only are women not receiving it, they aren’t even thinking it. Only 10 percent of the business plans reviewed by venture capitalists were firms owned by women,” said Cavanagh.
However, as more women enter the market, they will effect great change.
“We found in each of our markets that women are changing the business paradigm. They’re changing it in how they’re structuring their companies, how they lead and manage them and, particularly, in how they place a greater importance in community involvement and values,” said Cavanagh.
‘Really Frightening’
In response, Fleet began a five-year, $2 billion financing and efficacy system in October. Three years ago it launched the Women Entrepreneurs Connection, which not only helps women with business planning at the initial stages but also follows through and helps women connect for mentoring at the end stage of the career lifecycle. It helps women plan exit strategies and plan for retirement. Although women are a fast-growing segment of the business world, they still do not have many mentors in the field to show them the way.
“Even women at the leading edge of growing companies are far less likely than their male counterparts to leverage their companies in growing their businesses … and are far less likely to have a commercial loan. Thirty-nine percent of women, compared to 52 percent of men, have a commercial loan,” said Cavanagh.
Even after growing their businesses in their own countries, women may face hurdles when it comes to participating in international trade. According to Betty Wood, managing director of the Women Entrepreneurs’ Market of the Royal Bank of Canada, women, when interacting with countries where women do not traditionally participate in business, have to be resourceful to succeed. Some have gone so far as to have a man represent them so that the country will do business with them, she said.
Generally, the experiences that women have had in the United States are similar to those shared by others in the alliance. In recent years, many banks have focused on developing the women’s business market. According to Angela Leigh-Doyle, sector manager for small business at the Bank of Ireland, 28 percent of its customers are women. Part of their focus is on internal training and creating networking opportunities for women in business, she said.
In addition to focusing on the present, Westpac is trying to educate women about their futures, said Amanda Ellis, the bank’s national manager for women in business. In Australia, women only have one-third of the retirement savings that men do. “What’s really frightening is the attitude of young women,” she said, citing a recent survey. Over 70 percent of young women still believe a “knight” will come riding in, marry them and take care of them. The reality is only 8 percent of women will be “taken care of,” she said. As a result of the study, Westpac has started a financial literacy program for teens and adult women.
The alliance plans to reconvene in October but has not yet set the agenda for that meeting.
While the alliance combines some of the powerhouses in world banking, Cavanagh acknowledges that for a woman with a small business plan, approaching a FleetBoston Financial may be intimidating. But taking that initial step will instantly benefit the woman through the connections Fleet can provide.
“That’s why the program is so powerful. It’s like taking a drink from a fire hydrant,” she said.
