Women in Banking and Finance: 3 Trends to Take Note Of

Prioritising diversity and inclusion in the workplace can benefit the UK’s banking and finance industry. A feature from The London Institute of Banking & Finance highlights how the number of women CEOs in the UK’s banking sector has risen from 1.7% in 2011 to 9.7% in 2020. Having more women in leadership roles allows banks and financial firms to keep up with the ever-evolving industry and explore new perspectives to tackle challenges.

However, female entrepreneurs and business leaders in the UK continue to work against different challenges that hinder their success. This is why it’s critical for women in male-dominated industries to stay savvy and up-to-date. In a previous post from author and entrepreneur Stephanie Taylor, she details her process of building a million-pound property portfolio by being strategic with low mortgages and the influx of property sales on the market. Taylor’s post exemplifies how important it is for women to know industry trends and work their way around them. Below, we’ll look at three banking and finance trends that women in the industry should take note of:

Stagnant women representation in finance

Findings from surveys and studies last year were not encouraging in terms of women’s representation in the finance sector. According to an analysis by the Centre for Economics and Business Research, women in finance peaked in 1997 as a proportion of workers in the finance sector. In 2022, the number of women working in the industry had declined by more than 30% since its peak in 1997. The London Stock Exchange attributes this to a 50-year-long structural inequity that bars women from professional growth in the sector.

However, this doesn’t mean women aren’t significantly contributing to the UK’s finance sector. Despite low representation, for example, women contributed £64 billion to the UK’s GDP, with a forecasted contribution that could grow by 75% in 2035. A possible explanation for the low representation rate may be their shift to leadership or founder roles. For women at different stages in their careers, seeking out mentors and providing mentorship to newcomers, in turn, can significantly help improve diversity and enrich individuals with new skills or knowledge.

A changing banking landscape

Banking and finance institutions are adopting digital solutions to meet changing customer demands and behaviour. According to a feature from the BBC, customers — 60% of whom are women — are finding ways to avoid debt by cutting back on spending. Despite economic challenges, open banking, payments, and finance improved greatly in the UK in 2022. A feature from Open Banking Expo highlights the possibility of larger financial institutions in the UK using open banking to make more accurate and affordable decisions.

However, this rise in financial technology also means the growing importance of security and monitoring to prevent fraudulent activity and ensure compliance. Wolters Kluwer highlights how UK and European banks are required to follow the implementation of Basel II, Basel III, Basel 3.5 and Basel IV for risk management compliance. The Basel regulatory framework helps banks meet goals beyond regulatory compliance, pushing institutions to improve data management and financial risk analysis to continue profiting. These changes present an opportunity for women to play to their strengths, especially as a study from the University of Exeter found that female directors are better at monitoring than male directors, contributing positively to a bank’s performance.

Increase in female funding activity

Companies invest in digital finance solutions such as fintech to boost economic activity. Female tech founders in the UK have been an active and significant part of the growing UK tech sector. The latest Dealroom analysis found that the UK’s women tech founders raised £3.6 billion in 2022, an increase from the £2.9 billion the previous year. Additionally, eight companies with women founders and co-founders raised over £82 million in 2022.

However, while female funding has contributed to the rise of fintech and the UK’s 144 tech unicorns, only 13 had at least one female founder — a mere 9% of the total unicorns created in the UK. The Financial Times reported that the UK government has since announced an ambition to increase the number of women-launched companies by half by 2030. Similarly, about 190 financial services institutions in the UK are committing to making funding for women more accessible. For aspiring female fintech visionaries, this additional funding could be a trend to keep an eye on and prepare for.

Ultimately, having more women in the banking and finance sector benefits everyone involved. A McKinsey report indicated that organisations with more than 30% of female executives were more likely to outperform those with fewer percentage of female leaders or none at all. With more women in banking and finance leadership, other women will be more encouraged to apply, having access to programmes or initiatives that support their career progression.