Article co-authored by Invigorate and Invigorate Advisor, Lana Tahirly Abdullayeva.
The banking sector has never been traditionally known for its diverse and inclusive culture, but thankfully that is changing.
A study of 71 banks in 20 countries conducted last year by SKEMA Business School’s Observatory on the Feminisation of Companies found that women comprise, on average, 52% of the banking industry’s workforce. Sweden (45%), France (35%) and Canada (34.5%) even boast impressive rates of female representation on the boards of directors of banks.
However, beneath the surface of these results are some fundamental issues that still lie in this sector regarding overall inclusivity and diversity.
In the UK, for example, women make up only 28% of boards of directors.
According to McKinsey, only one in five companies have ethnic diversity of more than 10% at senior management.
So how do we go about fixing this problem in the banking sector?
And what systemic changes do banks and other financial institutions need to implement to improve overall inclusivity and diversity?
Change in the banking sector needs to be driven from the top and from senior leaders setting clear and ambitious goals, as well as setting an example.
Take the CEO of Lloyds Banking Group, António Horta-Osório, who, as part of a wider organisational drive, wrote to all the senior leaders in the banking group emphasising how important the diversity agenda was and how it was expected that they participate and take action on it. He also committed to increase the proportion of senior management roles held by women to 40% by 2020. We shall all be watching Lloyds closely in 2021 to see if that target was indeed achieved!
It’s an initiative echoed by Eileen Taylor, CEO of DB UK Bank, Deutsche Bank’s UK banking subsidiary. Whenever she presents on the governance of the company, she always includes the diversity statistics, which inevitably leads to a discussion on the wider topic.
As the Chair of Deutsche Bank’s UK Diversity Council, Ms Taylor also strives to identify best practices across the divisions, highlighting role models and even taking advantage of a ‘headcount modelling tool’ that allows senior managers to assess the impact of hiring more diverse teams.
Invigorate Advisor, Lana Tahirly Abdullayeva underlines why inclusive leadership is so important:
“Inclusive leadership is definitely a critical ingredient for healthy corporate cultures where new ideas can flourish and be executed effectively.
I would start with some basic ground rules – listening and respecting each other regardless of relationship, hierarchy, technical competency, age, gender or race:
These qualities lead to fostering diversity of thought and delivering richer outcomes, as well as opening access to the best talent globally and maximising your market reach anywhere in the world.
Inclusive leadership creates a winning, thriving culture. Elevating others through leadership and growing diverse capital talent are fundamental to supporting the next generation. And it’s this next generation who will drive profound change in the sector and also create a more sustainable future.”
A founding member of Open51, an association of senior professionals who are transforming the financial services sector through innovative, open data technologies, Lana Tahirly Abdullayeva is an advocate for diversity of thought and inclusive leadership, especially in the Financial Services and Tech sectors. Her experience in these sectors across the past three decades has shown her just how far inclusivity and diversity have come, but also how far they still need to go.
For Lana, this isn’t just about ticking the diversity box on the annual report though, it’s also fundamental to how customers now behave in the wider economic marketplace. For example, female ownership and influence over household buying power has significantly increased in recent decades and therefore any organisation that doesn’t reflect that in their DNA is seriously missing out.
Inclusivity needs to be fully built into any customer-facing design, be that products, services or the marketing that companies do.
In fact, although recent drives in the financial services sector have been towards more digital ways of operating, combining the digital and the human is extremely important when it comes to designing for inclusivity and diversity.
As Lana explains:
“Digital evolution and more democratised access to the financial system continue to influence the transition to a more open ecosystem and Open Finance.
These trends galvanise the emergence of new business models with opportunities for customer-centric solutions, joining the dots to serve customer needs holistically with Embedded Finance and introducing a better reach and alternative (more inclusive and more holistic) design considerations. All of which benefit households and businesses, in the UK and globally.”
2019 global research by Bloomberg and Forbes showed:
As consumers continue to embrace digital services, this introduces a new set of challenges and opportunities to provide a diverse range of payment options and wider finance capabilities.
At the same time, we are seeing an increase in customer cohort diversity and their preferences. Consumers are becoming more informed and demanding, and are more aware of the ‘value exchange’.
“I do believe that building diverse teams provides better reach to the wider market and customer base; this is becoming even more important in the growing digital world of virtual assets and global distribution, as well as in the world of open banking and open finance!
While building diverse teams, I also think it is crucial to avoid any positive discrimination. To me, diverse teams are not about just gender, race, cultures, etc., they are about creating team cultures where everyone is welcome, everyone’s opinion is respected, and diversity of thought is fully embraced. It is not about giving a seat at the table, it’s about the voice being heard.
Forward-looking businesses are pushing towards a model that combines the digital and the customer-centric, with data and analytics shaping the vision and strategy. This means that data and technology are put at the core design of enabling organisational strategy and governance, with strategy, operations and risk management designed and executed in tandem, all focused on positive customer experience and avoiding customer friction.
The customer-centric organisations who have mastered customer segmentation, understand customer behaviours, and target diverse cohorts – they tend to proactively bring solutions to their customers’ doors, and succeed in the process.
As we are transforming financial services and developing open finance products (enabled by innovative, open data technologies), it is critical that new products benefit all consumers and are based on data that is not limited by any bias.
That’s why we founded Open51 and why we are so passionate about influencing the development of open finance products and services.
I’m proud to say that all our members are fully committed to this cause. My Open51 SteerCo colleagues are leading this at their own businesses as well as through the industry.”
These are values shared by a number of other forward-thinking businesses, including three that Lana points to in the emerging Financial Services space:
The third key pillar for fixing inclusivity issues in the financial services sector is, of course, continued education and awareness training. Whilst the sector has been slow to implement training initiatives, the results are starting to cascade down.
A 2019 study showed that diversity training successfully produced attitudinal change in the workplace.
This same study, however, showed little to no change in behaviours, demonstrating that more work and repeated training is needed to embed new behaviours and turn attitudes into actions.
As Lana underlines in relation to the banking sector in particular, “Change doesn’t happen overnight, and more awareness training is needed for those in the banking sector.
Coupled with workplace education and training is the pipeline of more diverse individuals that is needed to take on future roles. There are still not enough females taking STEM subjects in earlier education and if this is not corrected, it will continue to lead to an imbalance in the workforce.
Indeed, Lana strongly believes that gender inequality – particularly in the UK – can be traced back beyond the boardroom and into the classroom. Her own career journey began by graduating from Baku State University with a tech degree, having received an education where there was “an equal celebration” of females and males.
“By comparison, some schools in the UK today do not sufficiently focus on maths and science”, she says, “Computer science is not qualified as science at all and a combined science approach does not help to attract interest and build strong foundations. This means there are still fewer women in the tech talent pool to recruit from, despite initiatives to address the imbalance.”
Then there’s the talent pipeline as individuals progress through their professional careers.
It’s a journey that’s reflected well in Morgan Stanley’s ‘Step In, Step Up’ programme. Targeted at Year 12 and 13 females, this programme gives students an insight into the investment banking industry. Morgan Stanley then complement this programme with proactive university outreach, which looks to widen the pool of female applications to increase female analyst intake. Overall, it’s an approach that demonstrates why focusing on talent pipeline is so important.
It comes as no surprise that a sector as traditional as the banking one still has a long way to go when attempting to fix its deep-rooted issues around inclusivity and diversity. As a highly competitive sector, it’s also difficult to not hire for the best candidate as opposed to hiring for a more diverse and inclusive talent pool. Nevertheless, with further training, education and a focus on pipeline, small changes can and will continue to be seen. And with leadership driving this change from the top and mandating that it be part of all business operations, internal and external, the results will no doubt speak for themselves in years to come.
To find out more about Lana Tahirly Abdullayeva, our co-author on this article and Strategic Advisor on Digital Financial Services and Innovation, read our interview with her here.
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