Over the summer, Deloitte published a global report, Advancing more women leaders in financial services[i] on the theme of women’s representation in senior leadership within financial services institutions (FSIs). Building on an extensive body of research on the theme of gender equity, this latest study drew on data from more than 23,000 FSIs, almost 1,000 of which[ii] were classified as UK banking, capital markets or payments providers. This blog focuses on the representation of women at the top of these institutions. By comparing the UK experience with our global results, and in the context of recent work by UK Government around gender equality in financial services, we ask what more needs to be done to achieve gender parity in the upper echelons of British banks.
As Figure 1 below shows, our study found that women held 19% of C-suite[iii] positions, 21% of Senior Leadership[iv] roles and 29% of Next Generation[v] roles within global FSIs in 2021. Gender parity still seems some way off, with significant variations in representation between geographies. The UK, for example, lags average levels of representation in both the C-Suite and Next Generation cohorts, trailing other markets including the US, France, and Singapore.
Figure 1: Proportion of Women at different levels of leadership in FSIs, selected geographies, 2021
Digging deeper, as Figure 2 below illustrates, this somewhat anaemic result is an industry-wide issue, with no FS sector yet approaching equal representation. Banking is slightly above average in both the C-Suite and Next Generation cohorts, at 19% and 28% respectively, but when it comes to Senior Leadership, only 20% of roles are occupied by women. This is meaningful, since the Senior Leadership cohort is the visible leadership rank within a firm and, theoretically, the pipeline for C-suite succession planning.
Figure 2: Proportion of Women at different levels of leadership in FSIs, selected FS sectors, 2021
Importantly, while there is clearly still much to do, progress need not be linear. For example, as reported in Deloitte’s Leadership, representation, and gender equity in financial services: Within Reach report[vi], academic research published in 2011[vii] found that achieving just 30% representation within a group can be a ‘tipping point’, allowing the minority to enact real change inside a larger crowd. In the Next Generation cohort, for example, UK banks are already within touching distance of this important milestone.
In addition, the same study found compelling evidence of a ‘multiplier effect’, revealing an average 3x increase in the number of women in senior leadership roles for each woman added to the C-suite. Deloitte’s ‘Women in the Boardroom’ study[viii] also showed that firms with women in the C-suite had almost 2x the number of women board members than those that did not.
Yet, while there is cause for optimism, UK FSIs cannot afford to be complacent.
In 2016, HM Treasury launched its Women in Finance Charter[ix] to support the progress of women into senior UK industry roles. By 2021, the Charter counted more than 400 UK institutions covering more than 950,000 financial services employees as signatories. As Figure 3 below shows, across three key banking sector sub-categories[x] – UK Banking, Building Societies/Credit Unions, and Global/Investment Banking – the average proportion of women in senior management roles grew by almost one-third, from 26% in 2016 to 34% in 2021. Again though, we see significant variation and evidence that more work is needed for banks to hit their aggregate average target of 37% of women in senior management positions.
Figure 3: Progress towards senior management equality targets of UK banking service providers, 2016 vs. 2021
Source: Deloitte analysis of data from New Financial in their review of submissions by signatories to the Women in Finance Charter[xi]
Indeed, it was estimated that UK banking institutions would need to add more than 2,500 women to their senior management ranks to achieve their individual gender equality goals[xii]. With almost half of those additional appointments needing to be made by the largest firms, much of the risk in hitting these important targets is concentrated with only a few top-tier institutions.
Elsewhere, for the first time since the launch of the Treasury’s Charter, growth in women’s representation across all areas of UK financial services stalled. While 60% of signatories increased the proportion of women in senior leadership roles, 6% maintained their 2020 levels, and 34% regressed. Taking the different proportions of employees in each sub-category into account, the average level of female representation remained flat overall at 33% in 2021. While above the crucial ‘tipping point’ this is still some way short of gender parity, with two key drag factors working together to slow the pace of progress.
Firstly, furlough schemes related to the COVID-19 pandemic, which had a chilling effect on the global economy, protected jobs but also limited the career mobility of women[xiii]. In 2021, as punishing lockdowns lifted, workers re-evaluated their career objectives. The resulting increase in employee mobility triggered by the so-called ‘great resignation’, together with the normalisation of home working and stabilisation of the wider UK economy will, it is hoped, reinvigorate progress towards gender equity.
Secondly, 40% of Charter signatories published female representation targets of 33% or less. This matters since firms are effectively targeting the ‘tipping point’ rather than true gender parity in senior leadership. In addition, with many firms preoccupied with achieving rather than exceeding their targets, the additional effort needed to get from 30% to 50% will be harder to muster.
Figure 4: Women in Financial Services Leadership, UK Banks forecast, 2021 vs. 2030f
As Figure 4 above illustrates, Deloitte is forecasting that banks will not achieve the 30% ‘tipping point’ by 2030, let alone anywhere near true gender equity in leadership. The sector faces a significant challenge then, one shared in other areas of financial services too. Indeed, as Heather Stockton, Deloitte Canada vice chair and Banking partner noted in our global report:
"Succession planning and retention issues may be the area to focus on for women in senior leadership roles. Opportunities to ascend to line of business leadership can be critical for retention and to avoid a reverse multiplier, meaning, for each woman that leaves a senior leadership role, is there a proportional percentage of women leaving from the next generation segment?”[i]
Hence, rather than creeping towards the 30% tipping point, banks need to dig deeper to achieve their desired outcomes.
Workforce strategies, including diversity goals and recruitment and retention practices, should be measured, reported, and communicated across organisations. As our global report notes, leaders who support and drive transformational opportunities, even creating non-traditional paths to leadership, can help their organisations to become highly sought-after employers. And, by transparently communicating with colleagues and the market on the importance of diversity, the actions they are taking to drive gender equity, and the progress they have made, banks will also better position themselves to drive higher rates of retention.
A key finding from our global report, one which transcends geography and sector, was that when women experience a truly respectful and inclusive workplace culture, they are more engaged, productive, and loyal to their organisations. By doubling down on their efforts in crucial areas like recruitment, retention, promotion, culture change and investment in the women leaders of tomorrow, British banks can vault the symbolic 30% hurdle and forge ahead with renewed vigour towards the real finish line.
[i] Alison Rogish et al., Advancing more women leaders in financial services: A global report, Deloitte Insights, June 2022
[vi] Alison Rogish et al., Leadership, representation, and gender equity in financial services, Deloitte Insights, November 2022
[vii] Lissa Lamkin Broome, John M. Conley, and Kimberly D. Krawiec, Does Critical Mass Matter? Views from the Boardroom, Seattle University Law Review, 2011
[xi] 2016 data sourced from Women in Finance Annual Review 2017 (New Financial, March 2018); 2021 data and five-year targets sourced from Women in Finance Annual Review 2021 (New Financial, June 2022)
[xii] Women in Finance Annual Review 2021 (New Financial, June 2022) - in their report, the authors estimated that UK Financial Services signatories would need to add 4,473 women leaders in order to meet their targets. Of this total, 58% (n=2,594) were employed in UK Banking (29%), Global/Investment Banking (25%) or Building Societies/Credit Unions (4%).