Women in Finance: How to Improve Gender Diversity in Banking

According to a 2018 McKinsey report, less than one-fifth of all C-suite executives working in finance were women, highlighting a painful discrepancy in gender equality and diversity. Do we know why? 

Historically, banking has been a very male-dominated sector, especially within the market risk, technology and investment banking verticals. Statistics from crowdsourced pay data provider Emolument reveal that in front office roles for the lower-level bankers, the ratio between men and women is 5:1. The higher you go up the seniority chain (for managing director-level bankers), the ratio jumped all the way up to 17:1. 

So why is it that women don’t want to stay and work in the financial sciences & services industry? What are some of the barriers that prevent women from continuing to work in finance throughout their careers, and what can employers do to further ensure gender inclusion at the highest levels of seniority?  

Barriers to women working in finance 

When we look around the financial sciences & services market, the majority of senior positions are held by men. According to Catalyst, while 54.3% of people at Fortune 500 finance firms are women, just 2.1% of banks have female CEOs—indicating that there is still plenty of work to be done in the arena of gender equality and inclusion. 

The Federal Reserve Board is working to raise awareness of this imbalance, however, having wrote in 2019 that women were “underrepresented in leadership positions in financial services, where they generally remain in lower-paying first- or mid-level positions.” 

One of the biggest reasons why women do not choose to continue on a career path within financial sciences & services is because they want to instead focus on having children and raising a family, which can be difficult to do with a demanding job in banking.  

To combat this, we advise that employers be as agile and flexible as possible to accommodate working mothers. As technology advances, so does the ability to be productive at home and to work outside traditional “work hours.” Banks can also look to tweak and tailor their benefits, allowances and perks to suit women and their lifestyles, instead of having the same one-size-fits-all packages and coverage across all employees. 

"Anyone who leaves a post for a substantial period of time loses contact with clients, loses their ability to feel the pulse of the market and loses knowledge of the ever-changing regulatory environment,” said Abimanu Jeyakumar, Head of Selby Jennings, North Asia, during an interview with EuroMoney. “This makes everyone, including female professionals, less valuable when they return.” 

Banks have been working hard to combat as well as adapt to this harsh reality by taking steps to ensure the female talent in their organization doesn’t have to make a decision between building a career and nurturing a family. Some examples of how they are promoting a more equal gender nation can be found below. 

Offer a flexible working schedule 

“Covid has shed light on some new options for working women as it has shown that working from home is possible,” says Natasha Madhavan, Head of Selby Jennings, South East Asia. “It shows that mothers can be more flexible and can work well from home. Because of that, we anticipate that the retention of female banking talent will only improve in the future.” 

These flexible working arrangements will make it easier for new or young mothers to do some work and stay connected throughout their maternity leave if they choose, which can curb the concerns around losing touch with their jobs and the market.  

Establish gender inclusion and equality throughout the recruiting process 

Developing a pipeline of strong female banking talent ensures inclusion at the very onset. Some recruitment-related initiatives that can help promote gender equality throughout an organization include carefully wording job descriptions to ensure they are relevant to the skills and experiences of all genders, removing the requirement to disclose current pay in order to prevent perpetuating past pay disparities, launching return-to-work programs after careers breaks and much more. 

Many banks and other financial institutions have begun to set more stringent diversity requirements within their business lines. Many will demand that recruiters show diverse talent across not just gender but nationality, as well. “A lot of banks will now tell you they won’t accept a short-list that isn’t gender-diverse,” says Jeyakumar. "Major banking clients will also incentivize their recruiters with a higher fee if we can find them diverse talent, local talent, or returning mothers,” Madhavan adds. 

Promote opportunities to network with one another 

Women keen to foster a long-term career look for positive role models who have already done so. It's important that women are made aware of and actively engage in market associations for women to come together, share their experiences and offer support. Associations such as Women in Finance Asia and 100 Women in Finance are regularly organizing conferences and networking events, allowing individuals to expand their network and potentially meet a mentor. 

Benefits of women working in finance 

There is so much work being done to keep women in the financial services workforce because there are a lot of benefits to be gained. It’s not important not just for the sake of equality, but for the overall health and progress of the industry. 

A 2018 study from the International Monetary Fund found that women often make better investors, generating higher returns compared to their male counterparts. This is partly because women are more likely to incorporate Environmental, Social, and Governance (ESG) factors into their investment decisions. They are also more likely to invest back into their communities through philanthropic activities, according to this same study. As their income rises, their charitable contributions increase, which can have a positive social impact. 

A balanced representation of women, especially in senior positions, boosts innovation and resilience within financial institutions, according to a recent study by Boston Consulting Group. This gender diversity can lead to better financial performance and more robust decision-making where it matters most. 

Today, women will still have to compete with men to climb the corporate ladder and get the salary and career they covet. In Asia’s competitive banking sector, nothing will be handed to them on a plate. It’s still a fight, but for the first time in history, it is becoming a fairer one.