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EY teams can help solve the most complex workforce challenges in banks of all sizes and operating models. Find out how.
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As the most racially and ethnically diverse generation yet,³ it is perhaps little surprise that diversity, equity and inclusion (DE&I) is a critical consideration for Gen Z, who want their working environment to reflect their own identities.
It’s an old issue for financial services and, although significant strides have been made to remove stereotypes from the banking sector, there is still much to do. Underrepresentation of women is particularly acute in banking leadership roles, capital markets and private banking, where earning potential can be the greatest. For example, women occupy only 30% of top management seats at major US banks, and this figure is even lower at top European banks (25%),⁴ versus 42% in Asia.⁵
The inequality feeds into the sector’s gender pay gap, which has already been exacerbated by a range of possible factors.
These include tougher negotiations on compensation by men at hiring stages, and unconscious bias in the performance management system, which has the potential to impact women’s ratings, bonuses and promotions.
Racial representation and ethnic diversity in global banking are even more problematic. For example, in the US only 16% of management, business and financial operations roles were held by people of color in 2021, according to the US Bureau of Labor Statistics.⁶
A damning 2021 review⁷ from the Bank of England Court, which governs the UK’s central bank, echoes this finding. Despite concerted efforts to recruit and nurture talent from more diverse backgrounds, it noted “material disparities between the collective lived experiences, career opportunities and outcomes of minority ethnic and white colleagues.”
For roles requiring more experience, the share of new hires with a minority background in 2019-20 was much lower than its share of applications, the review showed. These staff were also more likely to believe that opportunities to progress were not allocated fairly.
It is well documented that a lack of diversity in senior leadership and front-office functions leads to “group think,” hampers innovation and has significant implications for profitability. A report by Bank of America Global Research⁸ lends credence to this idea and suggests a lack of diversity within US companies is costing them trillions.