Why do talented women and minorities leave financial services?

As banks large and small aim to create a more diverse pool of employees, the fact that many of the most talented female and minority employees leave retail banks is still an issue. The financial industry must come to grips with how their conventional hiring, training and employee development practices must change to meet a broader market.

Randy Rivera, executive director of Fintex, points out that change cannot simply be a passing engagement, but needs to be more holistic and future-focused. He says that “diversity exercises and spurts of focus will not make a change in the industry’s statistics, and this has a lot to do with senior leadership walking the walk. This becomes particularly complicated because the longer the problem persists, the more difficult it is to recruit this talent.”

After a quarter-century in banking, Philippa Girling, chief risk officer for Varo Bank, has seen the best and the worst of retail banking. Moving from Britain to the U.S. in the mid-1990s for a promotion, Girling knew she was in the minority. For the most part, she realized “a middle-aged, straight white man is going to hire a middle-aged or younger straight white man.” Hence, she embraced the strategy of moving jobs every few years to get ahead in her career.

But Girling acknowledges that, unlike even a few years ago, “people talk about their unconscious bias now.”

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Similarly, Rohit Arora, CEO and co-founder of Biz2Credit, believes there’s a dearth of a support system for women and people of color.

“There’s a lack of empathetic mentorship from leaders at many banks—they haven’t been in the same positions and so they don’t provide the same level of attentiveness,” Arora says. “In many P&L roles, bankers are expected to bring in a lot of business regardless of the amount of support they have, and very often it is the ‘old boys network’ that still gets this job done.”

And, Arora adds, it is even tougher for immigrants to get into the right roles in banking. If they don’t have an advanced degree, they will end up in information technology, or pushed to the margins.

Engaging underrepresented employees

According to the Federal Reserve, the banking industry is eager to promote a new sense of racial and gender diversity.

“In the last two years, regulated entities slightly increased their submissions of assessments of their diversity policies and practices,” Sheila Clark, program director of the Fed’s Office of Diversity and Inclusion, said in congressional testimony published in September 2020. “However, we are not satisfied with the level of responsiveness.”

Rivera argues that the first thing to do is to get C-suite, other top executives and the board of directors actively involved. Hosting quarterly lunches, one-on-one meetings and long-term career planning discussions can help support executives who need to support diversity, equity and inclusion initiatives. “When executives get to know strong diverse talent, they allow themselves to become invested in their success,” he says.

Girling says so much of the acceptance of bank diversity rests on the upper management, their “openness and acceptance.”

However, a more varied employee base brings a more diverse response base. “Diverse customers want diverse choices,” Rivera says. “The business case is well-documented, which directly ties the benefits of diversity in management to a company’s success. More importantly, in the United States market consumption is being dictated more and more by the purchasing power of women and people of color.”

Arora points out that engaging with people of color requires banks to understand different cultures. For example, paid leave needs to be flexible. “Women in the industry are in better shape in India compared to the United States,” he says. “There’s more of a glass ceiling in the U.S. for women, even with all the apparent advances that women have been making. The reason for this is perhaps counterintuitive, and it shows the massive role that cultural pressure plays in this area.”

Having moved jobs every two to three years, Girling admits that earlier in her career she acted “more like a man,” pitching her voice lower, coming into a room with false confidence. “It was very inauthentic for me,” she says. “I have completely changed my mind about that.”

Karen Epper Hoffman is a financial writer based in Olympia, Washington.

Does your organization have the right structure in place to support diversity, equity and inclusion initiatives that will truly make a difference? Recent BAI Banking Outlook research evaluates the state of the industry to find out what’s working and where the opportunities lie.