The banking industry routinely faces unique challenges that require a measured and precise approach to avoid catastrophe. The responsibility is monumental and yet despite repeated mistakes lessons don’t seem to be learned. When thinking of the solutions to this issue, we can think of internal decisions and a different approach to the hiring process, and this should include in my view appointing more senior female leaders. In this article I will explain why more women are needed in banking to provide stability and bring one of the oldest financial institutions into the 21st century.
Banking in the last few years has faced a huge number of challenges and has felt the disruptions to a higher degree than ever before. The Covid-19 pandemic, the war in Ukraine, and Brexit in the UK, has spurred financial institutions into disarray and left many customers uncertain and in despair. There are no quick remedies to solving economic woes, but changing the course of leadership could perhaps aid its recovery and make seismic change in society, notably increasing diversity in senior roles. The number of women in finance roles has fallen despite efforts that have been made in the last decade to attract diverse talent.
According to Statista “in 2021, the share of women in the most senior roles in the financial services industry varied across role categories. On the board, women held 21 percent of the seats, and 19 percent of the C-suite roles were filled by women. The share of women CEOs within Fortune’s 2021 Global 500 list of financial services institutions was five percent”. No matter the reasons why, it is important more is done to address gender inequality, not just at senior level, but all stages of women’s careers in finance.
There are of course fundamental differences between men and women in terms of their attitudes and decision-making process. For example, women are more likely to be risk-averse and less optimistic than men, and the same applies in the context of investing and banking. Such traits aren’t necessarily bad, but being over cautious can be costly in business. Differences are normal and it shouldn’t mean women are less likely to reach senior level. However, despite the unpromising outlook, banking still needs women in these top positions. Not only to promote diversity and inclusion, but to give a greater chance of success. It is not guaranteed – nothing is, but how do we get the answers if we don’t give women the opportunity to showcase their skills?
Finding diverse talent in a sphere which is dominated by men, wealth, and close connections is a marathon not a sprint. Education and experience are vital, but personality and personal qualities are often left out of the equation. When appointing a CEO for a bank, characteristics like empathy, emotional maturity and selflessness aren’t high on the agenda, but if we want banks to persevere and customers to trust again, perhaps they can be reconsidered.
In addition, companies where a least a third of their senior team is made up of women, outperform those with no women at that level according to a report on women in banking by The Institute of Leadership. Women continue to prove they are capable, resilient, and intuitive and yet aren’t being rewarded with same opportunities as their male counterparts to exceed. Financial institutions must do better to root out bias and level the playing field so opportunity to progress is available to everyone. This can be done through training workshops, women-only mentorship programmes, appropriately sanctioning those who break the rules and coaching men on gender bias and how to challenge it.
Accountability is central to the role of a CEO and studies have found female CEOs are more competent in this area. Banks with more female executives are less likely to commit misconduct and take excessive risk and are more transparent in their financial reporting according to an investigation by F. Arnaboldi et al. Fairness and diplomacy in leadership is also noted in female CEOs’ attributes and less so in their male counterparts. Distinguishing what sets men and women apart in their field can be helpful to fill the gaps, but if change isn’t adopted then male leaders will continue to evade responsibility.
Male leaders’ tendency to take bigger risks can often come at a price as overconfidence can result in unnecessary risk which doesn’t benefit customers or the institution. Furthermore, according to Pew Research 61% of women are more likely to value DEI than men at work. If DEI is not being promoted in influential institutions how can customers and society as a whole trust banks have their best interests at heart?
The power of community can also be harnessed more by female leaders. A study by A. Kara et al showed banks with higher board representation of women directors offered more support to customers and their communities. Community-building is integral for a functioning business and it’s no different for banks who want to earn customers’ trust and keep people’s pockets balanced during political upheaval. Having more women as CEOs can help empower communities and make sure people from all backgrounds are being listened to. In addition, for local businesses as well community banking can be hugely beneficial in lending support and keeping them afloat.
Networking is now seen as a necessity to uproot our careers, and I share this view. It can be hugely beneficial to someone’s career, especially women. Building a supportive and inquisitive network that values your contribution, experience and outlook gives you the confidence to share your ideas and branch out to people and sectors you may have not previously considered. Historically, networking was limited to men from wealthy circles, but now there are initiatives in place to close the gap and allow female leaders to prosper without fear of bias or backlash. Lack of access to networks has been documented as a key barrier to female entrepreneurs by a 2019 Alison Rose Review of Female Entrepreneurship, but thanks to women taking action creating women-only network events, these spaces are becoming more common and not limited to entrepreneurs. Women-only networks empower like-minded women to achieve gender equality. The more opportunities there are for women to excel in their role and climb up the corporate ladder the better financial services will be.
In conclusion, to enhance the reputation of banks and financial services and increase representation at C-Suite level, we must take into account the biases that have created this issue and understand the role sexism and exclusion plays in our most prominent institutions. Making networking more accessible, supporting women in their career progression, providing mentorship and holding men accountable in their roles will help drive much needed change in a very traditional sector and give women the confidence to progress in their field in 2024 and beyond.