Gender diversity in financial services

2024 was a significant year for the UK with its first female Chancellor. Last year also marked 10 years since Dame Inga Beale became CEO of Lloyds of London, the first female in its 326 year history. It also saw the appointment of Pam Kaur as HSBC Group's first female chief financial officer, marking a significant milestone in an industry long criticised for its gender disparities, particularly in senior leadership and pay equity.

With nearly four decades of experience in auditing, risk management, and compliance, Kaur's ascent to the C-suite highlights a growing – if still gradual – shift toward gender diversity in financial services. Despite these encouraging steps, the industry continues to lag behind in closing the gender pay gap and promoting women to top executive roles.

Financial services lagging behind

The finance and insurance industry in the United Kingdom has long been one of the poorest-performing sectors regarding the gender pay gap. The gender pay gap represents the difference between the median hourly pay of men and women, expressed as a percentage of men's pay, and in 2024, it continued to be highest in financial services.

According to Bloomberg Intelligence only 6% of CEOs are women globally, with the level ranging from 3% in emerging markets to 8% in the US and Europe. Across the FTSE 100, according to a , women make up 23% of chief financial officers, chief operating officers, divisional bosses or are already chief executives. Bloomberg earnings calls trends data from UK listed financial services firms shows that executives are not mentioning diversity efforts as much as they used to.

Despite DEI falling down the agenda this past year, we can expect to see focus on this area in the future. Last year, the Treasury Committee released a raising concerns around how well the sector works for women. The and also released a consultation outlining proposals to increase diversity and inclusion, which looks to place accountability for diversity and inclusion on senior management. Two years on from their DEI blueprint, the latest data from Association of British Insurers illustrates the proportion of women on executive teams increased by 3% to 32% in 2023, senior manager and director level representation also rose to 32%, while manager level representation fell slightly to 46%.

In the financial services sector, as career levels rise, female representation is said to fall. According to the , average levels of senior representation have increased from 34% to 35%. The report also analysed the top and bottom quartiles and, despite efforts to increase female representation, the gap between top and bottom quartile firms has widened from 15% to 19% since 2018. UK banks and insurers lead with higher female representation, whereas global/investment banks and investment managers lag behind, largely due to societal factors, including headquarters in London.

Combatting gender diversity through recruitment and retention

Having data and dashboards to understand gender disparity within business areas is key to carving out appropriate policies and strategies focusing on encouraging diverse recruits as well as retaining diverse talent.

Recruitment

To ensure that female talent is identified and utilised as a business resource, the recruitment strategy must be right from the outset, with policies encouraging diverse recruits, with managers on board, for example, HSBC have stated that they train managers on countering potential biases when recruiting. Aviva have stated that gender neutral language is used in job advertisements, mandated diverse shortlists for senior positions with 50% female representation and diverse interview panels. Widening the pool of candidates by using initiatives such as returning to work programmes following career breaks and focusing on markets to identify and source talent, from grassroots to senior hires, are also being ever more utilised in the sector, particularly considering the tight labour market. Additionally, another tool is not requiring applicants to note their current pay so as not to compound previous pay inequalities.

Retention and promotion

A strategy harnessed by firms striving for a diverse senior team, is generating internal talent by having a pipeline of people, including women, who will be able to take on more senior roles in future. This involves the early identification of female talent, supporting growth, with initiatives such as female leadership programmes, coaching and mentoring opportunities, and being transparent with regard to promotions and progression. For example, HSBC has established accelerator programmes for women and minorities to increase representation across the business and Santander supported 400 high potential female leaders as part of 9 month Accelerating You programme. Some firms are eliminating self-assessments in performance reviews given the research has show this can increase gender disparity. Firms are also turning to data to understand why women may be dropping out of the pipeline, where the glass ceiling actually is and why it exists, to enable a more proactive, rather than reactive approach. 

Harnessing network groups and staff surveys can also shape the benefits offered to staff, which go beyond the traditional basic benefits with a focus on breaking down inequalities, for example, inadequately paid parental leave policies can disproportionally impact women. Positively, Abrdn was found to be a leader in a with the most generous parental leave policy.

Culture

Embedding a diverse culture with a tone from the top and transparency is key to breaking down barriers. Increasingly, financial services businesses are enhancing focus on policy development, covering areas such as pregnancy loss, premature birth, menopause, family related policies and fertility treatment. These are often kickstarted by networking groups leading on change and encouraging allyships. Teamed with this is training for all staff on diversity and bias, publicising and celebrating efforts and embedding the culture.

Hybrid working models

The financial services sector, in the main, has seen a shift back to the office, and this could be damaging for women in the workforce given care responsibilities that hybrid working allow greater flexibility for. For example, JP Morgan is preparing all staff to return to the office five days a week, replacing the previous three-day mandate. However, many firms still see the benefits of offering more flexible working, such as Investec Bank, which actively encourages discussions around flexible working and has created a more ‘agile environment’. The FCA accept that hybrid working remains a desired model for some and . Having different models of hybrid work, allowing greater autonomy within teams to operate how works best for them, their productivity and their team takes a step toward removing barriers for women. In gathering an understanding of employee preferences, many are taking to staff surveys and seeking feedback from established network groups.

Unfortunately, there is a heightened fraud and cyber risk which comes with agile working, so businesses should ensure their cyber strategies and staff training is robust. Additionally, the accessibility of generative artificial intelligence can make roles easier to perform, which not only mean a heightened data security risk, but could enable remote workers to juggle more than one job at the same time, so managers must be astute to the activities undertaken by those under their supervision and not just what is being produced. 

Keeping gender diversity a priority in the financial services sector 

Whilst the outcome of the FCA and PRA’s survey and subsequent guidance is still awaited, firms are wise to ensure that policies and processes are robust in this area ahead of the introduction of requirements from the regulators.

Meeting the goal of increasing gender diversity will require a focus on recruitment, retention and promotion, behaviour and culture and weaving the agenda throughout the business. The monitoring, as well as sharing of data illustrating improvements and targets, and even external accreditations, can build a profile to attract talent as well as retain it. This data is not restricted to internal monitoring data, but external publications on diversity data to drive change.

As economic conditions get tougher, it is important that diversity and inclusion remains on the agenda in the battle to secure and retain talent as well as hit their gender diversity targets.