The importance of greater diversity in the financial sector

Tiba Raja is Executive Director at Market Financial Solutions

The debate surrounding diversity within the financial services industry, or lack thereof, has been raging for some time.

It raised its head again this month when the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) and the Bank of England jointly announced that they would publish a discussion paper to explore how to foster “a resilient financial services sector that brings together and responds to different viewpoints and perspectives, so that concerns can be raised and decisions effectively challenged.

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Reports like this tend to elicit mixed reactions – certainly in me, at least. While it is positive that steps are being taken to address the problem of diversity in the world of finance, it is also questionable to what extent progress can or will be made thanks to the production of a new report. Is this just a public relations exercise? Or will this action trigger a significant change?

I consider the data concerning the Women in Finance charter as an example of my concerns. Hundreds of companies – including well-known banks and lenders – have pledged to abide by the voluntary charter, which aims to set targets for gender representation and compensation.

However, the latest annual review of this year’s charter tells us that the representation of women in leadership positions in participating companies is only 32%, which represents a year-on-year increase of less than 1% since 2017.

Measures must be taken

These figures partly illustrate the measures to be taken. Women, on the one hand, are not represented in the upper echelons of financial companies, and their compensation does not match that of their male counterparts.

The problem becomes even more pronounced when we look at ethnic minorities.

A major 2018 study called Paying Attention found that members of the BAME community (this is the term used in the Randstad report, although admittedly it is a matter of debate) currently occupy fewer one in 10 management positions in UK financial services. .

It is simply not enough and more needs to be done.

There are various reasons for this. Most importantly, we need to create industries – as well as individual workplaces – where employees feel comfortable, supported and able to grow, regardless of culture, gender, ethnicity or background. . It is a fundamental right that must be defended.

The benefits will follow. For example, the aforementioned Randstad report suggested that the UK economy would benefit to the tune of £24 billion if ethnic minorities progressed in their careers at the same rate as their white colleagues.

Meanwhile, consultancy McKinsey produced data showing that companies that rank highly for ethnic diversity were 33% more likely to earn above-average profits.

These percentages and monetary figures may seem both crude and reductive in the larger debate surrounding diversity in the financial sector. I believe it is best to look at the issue from the point of view of individuals and teams.

Creating Inclusive and Supportive Cultures

As stated above, my position is that companies should strive to create inclusive and supportive environments for people to work. Not with a view to increasing productivity or profit (although studies show that will come), but simply because that is what staff deserve.

Indeed, it goes without saying that employee retention and productivity will be higher if they work within a team that encourages them to express themselves and celebrate their origins.

This has certainly been our experience at Market Financial Solutions, where we are extremely proud of our diversity.

Our team of over 50 employees is almost evenly split between men and women, with women making up 62% of the management team. Additionally, 42% of our workforce is from ethnic minorities — they are represented among our founders, directors and senior executives.

Throughout the pandemic, the diversity of our team has been a real strength. For example, it has allowed us to take more creative or innovative approaches to the multitude of challenges that COVID-19 has presented – this would have been less likely if our team, and in particular the leadership group, came from a limited range of backgrounds.

Embracing diversity in finance

How to create diverse teams? that is the question.

Practical measures can be taken. Anonymizing CVs during recruitment is one of them. Setting goals to ensure more diverse representation in the workforce is another.

Perhaps more important, however, is establishing the right culture. For example, this may mean allowing flexible hours for parents who need to drop off or pick up their children from school, or allowing a wider range of religious holidays to be celebrated as a team – such as Ramadan and Diwali, not just Christmas. .

This will involve challenging the language used in the workplace, and perhaps undertaking education (formal or in a social setting) to improve knowledge of different cultures, ethnicities or the challenges some people face in a professional setting.

Ultimately, it is up to every business to strive to do better. MFS knows it can’t be complacent – ​​there’s still a lot to do.

Reports and charters can be useful both in raising awareness of issues related to the lack of diversity in the financial sector and in providing guidance on how to address the issue. But employers can’t and shouldn’t wait for others to lead the way – I think all business leaders need to have honest and candid internal conversations about what more can be done to improve diversity and foster cultures that genuinely promote inclusiveness and equality.

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