It’s often said that we need more diversity and inclusion in financial services. But with the economic impact of Covid-19 pandemic, has that need become more urgent?
Since 2015, there’ve been some high-profile initiatives – like the Women in Finance Charter – and some significant moves by big banks to increase diversity and inclusion in the financial services sector.
Lloyds Banking Group was the first FTSE 100 firm to set a target to increase representation of Black Asian and Minority Ethnic in management – aiming for 8% of its top 7,000 staff.
The Financial Conduct Authority (FCA) has set similar targets and carried out regular research to monitor the progress of under-represented groups to senior management roles.
But despite a lot of hard work, the rate of change is still painfully slow.
Last year, the FCA estimated that the banking and finance sector won’t achieve gender equality for another 88 years.
Women make up 45% – nearly half – of the financial services workforce. This however, does not translate into representation of women on executive committees at major financial services firms across the world.
Representation of Black, Asian and Minority Ethnic (BAME) workers in financial sector management is growing even more slowly. In their 2018 report, Paying attention, the research firm Randstad revealed that members of the BAME community currently hold fewer than one in ten management jobs in UK financial services.
The economic need to accelerate change
Banking and finance has always been a fast-evolving sector but now, more than ever, needs workforce diversity to generate fresh ideas and perspectives.
We’re living through a period of accelerated change, not least brought about by the Covid-19 pandemic.
The Organisation for Economic Cooperation and Development (OECD) reported this week that the UK economy could suffer a 14% contraction if there’s a second Coronavirus spike. This would be the worst economic damage suffered by any country in the developed world.
Yet it was only two years ago that the Randstad report found that the UK economy would be £24bn bigger if those from BAME backgrounds progressed in their careers as the same rate as their white colleagues.
Around the same time, McKinsey and Company revealed that:
- companies in the top 25% for ethnic diversity were 33% more likely to achieve above average profit
- more ethnically diverse boards were 43% more likely to outperform on profits
- companies in the top 25% for gender diversity were 21% more likely to achieve profit above the industry average.
So how can we encourage those from under-represented groups into the industry?
Promoting diversity and inclusion in banking and finance
We set up our REACH programme to help bring more people from under-represented groups into the industry.
Usually we invite young people to come to our office in the City and learn more about banking and finance.
They hear from speakers from under-represented groups about their experience working in the sector and get a chance to ask questions. We talk to them about the skills they’ll need to help them succeed as well as our specialised degree programmes.
Feedback has been very positive. Ayesha, who came to one of our events for BAME students, said she found the panel of speakers “inspiring”.
“Hearing from them made me feel confident about my choice to study banking because we actually found out what it's like to work and grow in the sector.”
Women in finance
Of course, we’ve not been able to run our REACH events over the last few months. But we’re pleased to announce a Women in Finance event for 1 July focusing on women in investment management.
According to research from Oliver Wyman:
- 40% of global wealth is held by women
- 40% of entrepreneurs around the world are women
- female entrepreneurs are 30% less likely to have access to sufficient funding for their businesses compared to men.
To explore this issue, we’ve invited a panel of experts – all leaders in their respective roles in investment management – to discuss:
- what the sector is doing to encourage more female talent
- the impact of gender lens investing as a specific strategy
- the growth in wealth among women
- the different routes into the profession and how to manage your career
- how LIBF is supporting widening participation.
Before she came to a REACH event, Katie told us, she'd always thought of bankers, "especially senior ones", as older men.
“But, seeing so many women that are enjoying successful careers in the industry makes me more determined to study towards my own future in financial services.”
Related content
Find out about and register for our Women in Finance event
Find out more about our REACH programmes and events