According to McKinsey 2018 report, less than a fifth of all C-suite executives working in finance were women. Most banks are painfully aware of this discrepancy in diversity. Do we know why?
Historically, banking has been a very male-dominated sector, particularly across certain verticals such as Market Risk, Technology and Investment Banking. Data from crowdsourced pay data provider Emolument shows that in front office roles for the lower levels bankers, the ratio between men and women is 5:1. You might find this surprising, but as we go up the seniority chain (for managing director level bankers), the ration jumped up to 17:1.
In 2019, 42% of the students attending Harvard Business School were female – why don’t they want to work and stay in the finance industry? What are the struggles and why is it hard to keep a senior, diverse workforce in Financial Services?
Women in Senior Roles - Hard to Retain
When we look around the financial services market, the majority of senior positions are held by men. According to Catalyst, while 54.3% of people at Fortune 500 finance firms were women, just 2.1% of banks had female CEOs.
Is there a reason why? The Federal Reserve Board 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”.
On the other hand, women - because of the gift of giving life - one day decide to leave the workforce to have kids. Because of how demanding a Banking job is, it’s not easy to manage the amount of work that comes with being a Banker, and also juggling a career alongside with it. Retaining female bankers become a challenge for banks.
Our advice to Banks is to be agile and flexible. As technology advances, so does the ability to be productive at home, and to work outside the usual work hours. Banks can also look to tweak their benefits and tailor their benefits, allowances and perks to suit women and their lifestyles, instead of having the same benefits and coverage across all employees.
The New Normal for Banks
"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, loses knowledge of the ever-changing regulatory environment,” says Abimanu Jeyakumar, Head of Selby Jennings, North Asia, at interview with EuroMoney. “This makes everyone, including female professionals, less valuable when they return.”
With such concern, banks have been working hard to adapt to this fact. They are working to ensure women don't need to have a decision between fostering a career or nurturing a family.
“Covid has helped as it shows that working from home is possible,” says Natasha Madhavan, Head of Selby Jennings, South East Asia. “It shows that young mothers can be more flexible and can work well from home. Because of that, the retention of young female bankers will be better in the future.”
While companies can apply flexible work arrangements, it will make it easier for new or young mothers to do some work and stay connected through their maternity leave, which can balance up the concern about losing touch with their jobs and the market.
Encourage on Diverse Workforce
Going into 2021, we see Banks and Financial Institutions start to set more stringent diversity requirements within their business lines. Banks are no longer okay just to interview male candidates, and they demand recruiters to 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 gendered diverse,” says Jeyakumar. "Major banking clients will also incentivise their recruiters with a higher fee if we can find them diverse talent, local talent, or returning mothers,” said Natasha Madhavan.
Diversity in Banking
Diversity has been a topic for a long period. It has changed so much for women in recent years in banking as well. There are more associations set up in the market for women to come together and share experiences. Associations such as Women in Finance Asia and 100 Women in Finance are regularly organising conferences and networking events, allowing individuals to expand their network and potentially meet up with a mentor.
Women keen to foster a long-term career, hence they look around for positive role models. While the majority of seniors in banks are male, female financial services professional can look from the outside.
Today, women will still have to compete with men to rise 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.
Visit our Diversity & Inclusion hub for more diversity hiring strategies and tips.
If you are looking to speak to a professional recruiter for a diverse workforce, contact us.