In recent years there has been renewed scrutiny of gender equality within the financial services industry.
More often than not, this has focused on the lack of women in both senior management roles and boardrooms — and the fact that this has contributed to the widest gender pay gap of any UK industry, when calculating by mean average, and second-highest by median.
According to government figures, the average man working in financial services earns 26.8 per cent pay more than the average women — a bigger difference even than is seen in male-dominated industries such as the construction industry, the tech sector, and agriculture.
These headline figures have been well discussed, and there are a number of initiatives underway, at both a company and sector-wide level to try to redress this balance. But this isn’t just an issue for women working in the financial services sector, says Anjalika Bardalai, chief economist and head of research at TheCityUK.
This trade body — which represent the insurance, banking, investment management, and accountancy professions — says the sector has the potential to be more effective and inclusive, and do a better job of service society if its workforce more accurately reflects society as a whole.
Given her role, it is perhaps not surprising that Bardalai chooses to look at this pressing socio-economic issue through a macro-economic lens, by taking a deep dive into the data currently available on this subject.
She says: “Figuratively speaking, I have been looking at the issue of women in the financial services sector through the lens of supply and demand.
“On the one hand a lot of data is more encouraging than you might think. But if you look at some of the longer term trends the picture is not quite so rosy, with the situation potentially getting worse for women in future, rather than better.”
This may seem counter-intuitive, given the work that is being done by regulators, boards and individual companies to improve recruitment and promotions policies, address issues of corporate culture and improve flexible working options and a host of associated benefits.
Bardalai says: “Most companies are taking steps to try to address the issue of getting more women into senior roles. There is no one silver bullet, but improvements can be made by taking a range of different approaches.
“For example, encouraging men, as well as women, to take up benefits like flexible working can make a significant difference to the position of women in the workforce. And this is a change that doesn’t just benefit women.”
Currently around a third of senior managers in the financial services industry are female. Bardalai says this gap can be shrunk further by companies adopting policies that reframe how they recruit and promote candidates for more senior positions.
“There is less likely to be so much of a gap between the number of men and women in senior roles if job performance can be assessed using more objective quantitative measures.”
As she points out, this may be more straightforward in certain roles, such as sales or investment management. It is less easy to impose such discipline in roles where more qualitative factors, such as leadership, or quality of communication are considered important.
“These are more subjective, and there is room both for explicit and unconscious bias to creep in. For example we all consciously or unconsciously have some preconceptions of what leadership looks like. But this can result in the exclusion of many perfectly able candidates, and may count against women.”
But Bardalai says that it’s important to look at the position of women across financial services as a whole, and not just focus on senior levels of management.
As she points out the financial services industry is a lot more inclusive than many other industries – particularly those with larger pay gaps.
Bardalai says: “My assessment is that in terms of overall gender balance the industry performs reasonably well. In fact it is probably a lot better than many people would expect.
“Across the different professions and companies that make up the financial services industry, there is a roughly equal number of men and women in the workforce.”
As she points out this should be seen in relation to other industries which are very often heavily skewed one way or the other, for example 80 per cent female employment in health and social work and education, and around 80 per cent male employment in manufacturing and construction.
In contrast women currently hold around 43 per cent of the jobs in financial services. Encouraging though this may be, Bardalai says there are “still reasons to give pause for thought”.
There is obviously the fact that this broadly equal gender balance diminishes markedly at higher levels within the industry. But Bardalai also points out that it’s worth looking at longer-term trends, rather than just a current snapshot.
While the number of female senior managers may have increased in recent years, this is not the case for women working across financial services as a whole, where numbers have declined over the past decade.
Before 2005 there were actually more women than men working in the industry. By 2008 the split was 48 per cent women and 52 per cent men. Since the financial crash this gap has widened, and today women account for just 43 per cent of the workforce
This seems to be a trend that is specific to financial services. As Bardalai points out data from the Office for National Statistics (ONS) reveals that in the UK overall, both male and female employment has risen fairly steadily since 2000.
“However within financial services, a gap between male and female employment emerged after the financial crisis and has widened since then.”
“A further widening of that gap could potentially become a cause for concern, and this reinforces the need to better understand the drivers of falling financial inclusion of women within the financial services workforce.”
Bardalai says the data doesn’t tell us decisively why this is happening. But there are likely to be a number of reasons.
“One possibility is that women were disproportionately targeted for redundancies during 2008-09 because of discrimination. Another possibility is that women were disproportionately represented in the sorts of roles that are being eliminated because of automation and industry restructuring, which were accelerated by the crisis.”
There is certainly evidence that technological advances may be adversely affecting women’s position in the financial services industry.
A recent report by the Financial Services Skills Taskforce found that it was administration and clerical jobs that are most at risk from increased automation and the adoption of AI processes. Although this report did not include gender-specific data on these jobs, Bardalai says it seems “plausible” to assume women are over- represented in these roles.
She points out that this problem could get worse. A new report from the McKinsey Global Institute on the future of women in the workplace suggests that UK financial services could see 400,000 net job losses by 2030. The report says that these job losses are likely to be borne disproportionately by women.
“Whatever the cause, the point is that this represents a resource problem for the financial services industry. Firstly, it means that the industry is possibly under-utilising a big part of its potential pool of talent. Secondly, if the gap keeps widening, it would mean the industry would become less and less diverse from the gender perspective.” This can potentially impact how effective the industry is when it comes to designing and marketing products and services to its customer-base, half of which are
Some voices in the financial services industry argue there is already a pro-male bias in the design and marketing of products, which can hamper sales to women.”
This can be seen particularly in certain parts of the industry, with men more likely to seek financial advice, contribute to workplace or private pensions, trade shares
or select higher-risk investment portfolios. But Bardalai adds that she doesn’t think this gender bias is as pronounced as in other industries. That said she says the industry as a whole needs to be more “customer- centric” in terms of product design and transparency. This would benefit many people, including women she says.
“On average women tend to be more risk averse than men when it comes to investments. But I don’t think an investment platform or an advisory service that simply selects a lower risk profile for women is really addressing the issue. This seems to be both patronising and selling women short in other ways.
“Rather than putting people into silos according to gender or age, I think it is better to take a more personalised approach, and start from a more neutral stance.
“Some women are more risk averse, but so are many men. I think financial services needs to be more inclusive and customer- centric, delivering more personalised products and solutions.”
Technology advancements in artificial intelligence and big data are helping to deliver this, at a far more efficient cost.
Bardalai says her employment background has given her a particular focus on issues of financial inclusiveness. She has been with TheCityUK for five years, but before that worked for more than a decade for the Economist Intelligence Unit, being based in both New York and London. She also spent two years working with the consultancy Eurasia Group, overseeing the company’s South Asia-focused macroeconomic and political analysis.
She says: “In these roles I focused on emerging markets, and emerging Asia in particular. There are a lot of issues to do with financial inclusion in these regions. The UK market is hugely different but it is striking to note that the core issue of financial inclusion is one that even countries like the UK are still working on.”
There is another important angle to financial inclusion she says, and this is the regional dimension within the UK.
She says that if you look at figures relating to income inequality – ie the difference between the best paid and lowest paid workers – then the UK as a whole is broadly in line with many G7 peers, with an almost identical score to both France and Italy.
But she says a deeper dive into these figures paints a very different picture. “The idea that economic growth has benefited some regions and not others is something that’s being discussed a great deal at the moment.
“When you look at figures that show the extent of income equality across different regions of the UK, you see that this range is far higher when compared to most other countries.”
This she says is also an issue for the financial services industry, and the women that work in it.
“When we talk about financial jobs we tend to think about high paid high powered roles in the City. But it’s important to remember that there are 1.1m people working in financial services, and two thirds of them are based outside of London.”
Addressing issues of financial includes, more equal representation and fairer pay should benefit women working across the financial sector and across all part of the UK, she concludes.