4 charts showing the financial industry’s lacking racial diversity across all levels
- Financial institutions still have a long way to go before they reach balanced representation within their companies.
- Here are four charts on financial companies’ lack of racial diversity, especially in managerial and C-suite roles.
Following the racial injustices of last year, financial companies’ diversity policies and efforts are getting more attention now. Investors are putting more emphasis on ESG in their investments. Banks and other financial institutions are making diversity promises. Nonprofit organizations like the Greenwood Organization are getting more funding than they ever expected. Things seem to be going in the right direction.
But while plenty of banks and financial institutions are promoting their diversity efforts on their websites, they aren’t doing the same within their own companies. White employees are still much more likely than employees of color to be promoted.
Who’s getting the promotions?
From entry level jobs to C-suite appointments, white employees are getting more promotions than people of color within financial services. The imbalance is noticeable in every level, but especially in higher-ranking positions.
For example, 10.4% of white employees were promoted to managers in 2020, but only 4.6% of Black employees were promoted to that same position, according to recent research published by McKinsey & Co. Interestingly, while Asian employees were just as likely to be promoted to managers as white employees, they were far less likely to be promoted to positions in the C-suite. Only 0.021% of Asian employees were appointed to C-suite positions, as compared to 2.1% of white employees.
These disparities mean we’re still not seeing a balanced representation in higher-ranking positions. White employees occupied 81% of management positions and 88% senior management positions, for example.
C-suite is where lack of diversity shines the most
It seems the higher the position, the less diversity there is, which makes the C-suite the most un-diverse positions in financial services. 90% of C-level positions were filled by white employees in 2020, compared to 61% of entry-level positions.
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At 10%, Black employees already fill a very small proportion of entry roles in financial companies, but that number shrinks significantly when it comes to C-suite roles. Here they only fill 3% of roles. Hispanic and Latinx employees, meanwhile, fill 2% of these positions.
What it feels like being a person of color working in finance
But no matter what position people of color fill within a financial services company, they’re much more likely to experience feelings of exclusion and scrutiny.
McKinsey divides people into onlys -- people who almost always are the only people of their ethnic or racial group in a room, and non-onlys -- people who don’t.
Onlys are more likely to feel they will or have missed an opportunity because of their race. They’re more likely to feel watched and more likely to feel they represent their race as a whole.
Over 75% of Black employees in above-entry positions are onlys -- so are 40% of Latinx employees and 31% of Asian employees.
The findings show that companies may be hiring people of color just to tick a box or get diversity points. As a result, people of color in these companies may be feeling isolated or tokenized.
Top 15 banks in terms of racial diversity shows there’s work to do
Clearly, there’s still work to do when you look at banks noted for top racial diversity in their executive boards. The percentage of people of color in banks’ boards of execs located in California, for example, barely make it past 30%, which means that white employees are still the ones that get to have the most input in decision making.
In California, the average percentage of people of color on financial institutions’ boards was 22% in 2020, according to research from Greenlining Institute. That’s not a lot, especially when you take into account the discrepancy between the top bank on this list -- East West Bank, with 63% people of color, and the second-highest bank on this list -- MUFG Union Bank -- with 38% people of color. Eight banks on this list don’t even make it past 20% people of color on their executive boards. Silicon Valley Bank, for example, has a total of 13 board members. One is Black (8%), one is of mixed race (8%) and four are women (31%).
On top of that, we’re not really seeing any improvement in board diversity compared to last year, which could hint at companies trying to up their diversity numbers by focusing solely on lower-ranking positions. Only one of the banks surveyed last year improved its board diversity numbers this year -- First Republic Bank’s board of execs is now at 20% people of color instead of 18%.
Worryingly, five banks out of this list have a lower percentage of people of color on their executive boards, compared to last year. This is especially true for Citibank, which went from 40% people of color on its executive board in 2019 to 13% in 2020, and Bank of the West, which went from 75% people of color in 2019 to 12% people of color in 2020.
This story includes an update to the diversity composition of Silicon Valley Bank's board.