By Hilary Schmidt, International Banker
While it might be tempting to conclude that systemic gender inequality within the corporate world is now a relic of the past, especially given the sheer unbridled force of the global ESG (environmental, social and governance) movement, recent data from various regions of the world show that achieving parity for men and women, at least in the banking sector, remains elusive in 2025. And despite the business case for gender balance and greater diversity within banks having perhaps never been more convincing than it is today—especially among banking leadership but also at lower levels—much more work must be done to achieve true equality in the industry.
Indeed, despite the banking sector’s progress in recent years to rectify the massive gender imbalances that had grown over many decades, pockets of often significant inequalities between men and women continue to rear their ugly heads across various divisions, experience levels and geographies, preventing financial institutions from achieving gender targets. Nonetheless, banks continue to repeat the mantra of having promoted gender equality.
Such equality is not only a human right that is crucial for fostering healthy and inclusive economies, the United Nations Environment Programme Finance Initiative (UNEP FI) recently stated, but it is also a strategic imperative for the banking sector. Given that this industry plays a critical role as a major employer of talented people, UNEP FI—a partnership between the United Nations Environment Programme and the global financial sector—views fostering “gender-inclusive leadership” as a powerful way to drive change from within.
Despite the business case for diversity in the make-up of leadership teams having been proven through multiple studies of the banking industry, demonstrating improvements in performance and financial outcomes, the task of boosting gender diversity within banks seems to be easier said than done.
The annual Gender Balance Index (GBI) tracks the presence of women and men in senior positions at financial institutions and is produced by the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank for central banking, economic policy and public investment across the world. Covering some 6,540 individuals in 335 institutions, including 185 central banks, 50 pension funds, 50 sovereign funds and 50 commercial banks, the latest edition of the index for 2024 revealed that, somewhat positively, the proportion of female leaders in the 335 institutions had risen to 16 percent—its highest ever share—from 14 percent in 2023. Much of this progress was credited to central banks, in which the total number of female central bank governors increased to 29 from 23 during the year, the largest annual jump on record for the index.
That said, of all the institutions that experienced leadership transitions during 2024, the share of women in leadership was the same as in the previous year at 14 percent, underscoring the “glacial pace of change” taking place within financial institutions. What’s more, this was despite several jurisdictions introducing policies requiring minimum thresholds for female participation. Indeed, the OMFIF acknowledged several new initiatives having been rolled out in listed companies in the historically low GBI-scoring Asia-Pacific (APAC) region, with policies in Japan, Australia and Hong Kong designed to improve board representation.
The European Commission (EC) and the United Kingdom’s Financial Conduct Authority (FCA) both introduced measures to improve gender balance at the board level in 2022. However, the effectiveness of these policies remains to be fully seen and evaluated, the OMFIF also acknowledged, with the FCA pausing its efforts on the diversity and inclusion proposals it had set out in its 2023 consultation by May 2024 due to “process complexity”. “Even in countries traditionally considered leaders in gender equality, meeting targets has proved challenging. In Norway, a law was introduced in 2023 to mandate no more than 60% of one gender on the board of directors for large companies,” the OMFIF reported. “While many companies are rushing to comply, there have been some unexpected consequences, with some companies reducing board sizes to meet quotas rather than expanding female representation.”
Indeed, Europe is home to some of the most underwhelming results of late, with efforts to achieve equality across genders in the banking sector widely reported to have failed thus far, with only a modicum of visible progress having been made. In short, women continue to be severely underrepresented in top leadership roles. Published in November 2024, Boston Consulting Group’s (BCG’s) “Gender Equality Study of the European Banking Sector 2024” showed that women held only one-quarter of executive board seats in Europe’s largest banks, while men continued to dominate the industry.
“While there is a slight positive trend in the representation, women currently account for only 24 percent of executive board members at the 50 largest listed European banks. Representation on supervisory boards is higher, with women holding 43 percent of the seats,” the consulting firm stated in the study, which further noted that despite these improvements, the sector remained far from achieving gender parity at the highest levels. “At the executive level, it could take another decade if progress continues at its current pace. For banks, this timeline is a wake-up call—a reminder that traditional, HR-led diversity efforts alone are insufficient to drive meaningful change.”
The report also found that the gender-pay gap was widening rather than closing, with women earning around 20 percent less than men, largely reflecting systemic inequities in role allocation. “While men primarily occupy business-oriented positions, women are often positioned in non-P&L areas like HR and marketing. Such roles, although vital, typically receive lower compensation than core banking functions,” the study also found. “The same picture in supervisory boards: Men often hold top positions like the Chair, while women are typically members or employee-elected, reinforcing the disparity. These patterns not only restrict women’s influence but also affect their financial recognition, deepening gender inequities across the sector.”
That’s not to say that all regions are not doing enough, however. In late April, for instance, it was widely reported that Japan’s biggest financial firms would abolish decades-old practices that have kept women off the corporate ladder, with Nippon Life Insurance Company, the country’s largest insurance company, and MUFG Bank, part of Japan’s biggest banking group (Mitsubishi UFJ Financial Group), among the firms that had scrapped a clerical job category almost entirely made up of women who were paid less than those on the career track.
Merging these job types could help women seize more opportunities to advance to senior positions and thus help resolve a market known for its historic gender disparities. “Given Japan’s urgent need to address labour shortages and secure talent, we believe the promotion of diversity is likely to continue,” JPMorgan Chase strategists, including Rie Nishihara, wrote in a report, as seen by Bloomberg. “Promoting diversity by raising the labour participation rate of women, appointing more women to senior positions, and extending the employment of senior citizens” can help ease worker shortages that weigh on economic growth.
So, what can banks do to improve the situation? According to the UNEP FI’s guidance, which includes a holistic framework for action, metrics to track progress, checklists, indicators and case studies, a bank should:
- Prioritise women’s empowerment as a cornerstone of and pathway to gender equality;
- Establish a holistic understanding of the ways a bank can advance gender equality and women’s empowerment across its value chain;
- Set targets, track progress and establish transparent and accountable reporting practices to ensure gender-equality goals are met in alignment with global standards;
- Act as advocates for gender equality, accelerating the alignment of financial flows with Sustainable Development Goal 5 (which focuses on gender equality) and setting new standards within the financial industry.
On the client-facing side, meanwhile, banks are also encouraged to raise their exposures to female-dominated customer segments. “Aligning finance with gender equality objectives can help banks to tap into new markets, customer segments and unmet demand,” the UNEP FI stated in its December 2024 report “Advancing gender equality and women’s empowerment: Target-setting guidance for banks”, which it co-authored with UN Women.
Citing data from an Oliver Wyman paper entitled “Women in Financial Services 2020: A Panoramic Approach”, moreover, the UN report also argued that a staggering $30 billion in new interest income can be generated by banks that provide small and medium-sized enterprise (SME) loans to women at the same rate as they provide them to men. “Empowering women as leaders, employees, entrepreneurs, suppliers and customers can help a bank to strengthen its climate and social risk governance, boost innovation, and foster trust and loyalty with its customers.”