The gender gap in financial services is narrowing, but it’s far from closed

The news: US banks are making progress on closing the gender gap in the financial industry, but there’s still work to be done, especially at the leadership level.

This is according to a recent study by DBRS Morningstar, which looked at women in leadership roles at 28 banks in the US.

Key stat: In 2021, women made up 26% of executive management teams at banks, and 32% of their board of directors. But even though these percentages are low, they’re an improvement from 2014, when women represented 18% of executive management teams and 22% of boards of directors.

Source: DBRS Morningstar, Company Documents

A trend on roles: The study also examined the types of roles women held at banks and found that they were generally less financially focused roles within the executive team.

• The Chief Human Resource role was held by a woman 70% of the time out of the 28 banks studied. This position was the only woman-dominated executive role.
• The Chief Legal Officer position was split evenly between men and women.
• But roles like Chief Financial Officer had only 13% female representation, Chief Risk Officer had 20% female representation, and only one bank surveyed had a female CEO.

The report argues that the presence of women in less-financially-focused roles suggests the gender gap at banks is even larger than reported.

Around the world: The US isn’t the only country struggling with gender gaps in the financial industry. Europe and the UK are also dealing with a disparity.

• In Europe, women hold 41% of bank director positions, according to the Morningstar study. Additionally, only five out of 43 European banks had a female CEO.
• Bloomberg also reported that 30 of Europe’s biggest banks haven’t appointed a female CEO in the past two years, despite almost half of those lenders replacing CEOs during that period.
• The UK fintech sector also struggles with gender diversity. A report from EY and Innovate Finance put the male-to-female ratio at 2:1.

Why does it matter? Gender diversity leads to more than just diversity of thought. Banks and financial institutions stand to gain much more.

• The prevalence and importance of environmental, social, and governance (ESG) values is rapidly increasing. Shareholders and consumers now expect most brands and companies they support, even their banks, to practice diversity and inclusion. Additionally, these values are strongest among younger cohorts, such as millennials and Gen Z, which are the most targeted generations in the financial industry.
• Additionally, some studies show that banks with increased gender diversity tend to perform better. Morningstar’s report found a positive correlation between female executive team composition and banks’ credit ratings.

This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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