Women are making strides toward gender parity in finance, yet to reach gender parity will require all industry players taking an integrated approach.
Companies should begin by creating and monitoring formal sponsorship programs to provide entry-level women with mentors. Furthermore, senior leaders must make it their top priority to expose young women to influential role models so that these will serve as positive role models for future employees.
1. Gender bias
Reaching gender equity in finance means confronting all forms of bias at every level. While women in finance have made great strides over time, male-dominated senior roles continue to present a formidable obstacle.
Gender bias in finance can prevent women from progressing, even when they possess all of the qualifications and experience for promotion. Women may be less likely to take risky investments due to family sharing norms and gender-biased credit scoring practices that could restrict them from promotion.
GABV member banks often experience what’s known as “leaky pipeline syndrome,” where women drop rapidly from graduate level through entry-level and executive ranks, potentially hindering women’s career progression when it becomes challenging to balance both work and family obligations simultaneously. Organizations should ideally encourage flexible working arrangements as a solution and showcase examples of senior leaders who embrace such initiatives.
2. Work-life balance
Women working in finance face an unique challenge: striking a balance between work and family responsibilities. This can cause them to doubt themselves and restrict taking career risks or taking on leadership positions.
To address this, companies should establish formal mentoring, sponsorship and buddy programs between female finance professionals of varying experience. Such programs can offer invaluable career support while alleviating feelings of isolation among female professionals in finance.
Firms must create an equitable environment that supports women reaching senior leadership roles. Firms should create a diverse team to make promotion and hiring decisions to reduce biases while increasing female representation in leadership positions.
3. Lack of role models
Many women in finance feel powerless without role models they can look up to, which can be particularly dispiriting when few female executives exist at their firms. It also leads them to doubt their own ability to progress in this industry.
Women working in financial services must adapt to an environment dominated by masculine traits such as being transactional, aggressive and dominating – which may be difficult if they have children and other familial responsibilities.
Though it’s encouraging that more women are becoming leaders at large financial institutions, this shouldn’t be seen as evidence that change will occur in banking’s traditionally male-dominated environment. More must be done to promote women at all seniority levels of industry.
Women tend to choose less competitive environments than men, which translates into lower promotion rates and earnings nine years post graduation. According to one recent study of MBA graduates, this difference accounted for 10 percent of earnings inequality between genders.
Research suggests that policy interventions such as quotas may have unintended side effects, but increasing attention to the work environment could close this gender gap. Experiments have demonstrated how priming subjects with an awareness of power can significantly narrow it in competitions between women.
Thus, it’s critical that workplaces create a supportive environment that is free of bias and encourages women to pursue ambitious goals without bias or harassment. This can be accomplished with programs offering flexible work schedules, childcare support or mentorship for junior and senior women alike.
5. Lack of confidence
Women working in finance often face difficulties building confidence, especially when working in environments dominated by men. This can have a profound impact on their career progression and reaching their full potential in finance.
Bucher-Koenen and her colleagues discovered that lack of financial literacy is one of the biggest hurdles women face today, leading them to investigate whether knowledge or confidence was the culprit behind women opting for answers such as “Don’t know.” This led them to question if lack of financial knowledge attributed to more evasive responses than expected from women when responding to multiple choice questions about finances.
Women in finance may feel intimidated from speaking up, fearing they will be seen as threats or their ideas ignored by senior leaders. Building self-assurance through their ideas will help overcome such hurdles and contribute to furthering women in finance.