Financial services could unlock $700 billion by better serving women
Financial services companies are costing themselves as much as $700 billion every year by failing to take adequate steps to better understand the needs of female clients. Despite the women in these firms could offer in this regard, the growth in women joining the executive committee of financial services firms remains sluggish at best.
Various studies now highlight a business case for improved gender diversity, while for the market as a whole, change in this regard could see $12 trillion added to the global economy. Many businesses and consulting firms have built targets into their corporate plans to boost diversity in their organisations as a result. Despite this, firms in the financial services space seem content to drag their heels on the matter.
According to the latest Women in Financial Services report from Oliver Wyman, it would be more than worth the while of companies to change their approach. The study suggested that financial services companies could generate more than $700 billion in additional revenues every year if they took steps to understand the needs of their female clients better. The consultancy said that despite having more influence as buyers than ever before, women’s financial needs are still not being met, making them the largest underserved group of customers for banks, fund managers and insurers.
The analysis found that women are more likely to be un- and under-insured than men. A staggering $500 billion could be generated if insurers sold life insurance to women at the same proportion of their income as men. Making sure wealth managers invested women’s wealth in the same way as for men would unlock a further $25 billion.
In November, it emerged regulators in the US are investigating whether algorithms used by Apple Card – a credit card joint venture between Apple and Goldman Sachs – have been discriminating against female customers by offering them lower credit limits. If financial services firms can address such issues, it could unlock huge amounts in revenue for the industry.
The report stated than a mix of three similar interventions in the banking sector could add $175 billion to the revenue base. The opportunities could come from “a combination of new clients, new products and services, and increased market share.”
A woman's touch
However, when it comes to fostering a company culture that could actually address these issues, Oliver Wyman found that financial services firms are leaving a vital section of their workforce out in the cold. The promotion of women into the upper echelons of the financial services sector – which has historically been perceived as something of a ‘boys club’ – remains something of a rarity.
Speaking to more than 80 senior executives across the financial services industry, Oliver Wyman found that the proportion of women on executive committees had increased in the last three years. In what is the “fastest progress on increasing the number of women in senior leadership roles” since the firm started tracking such data in 2003, the number of female executives in the sector rose from 16% to 20% in 2019. Meanwhile, the number of women on corporate boards continued to outpace this by 3%. However, ultimately this still represents slow change, with 50:50 parity remaining decades away.
At the same time, financial services firms are not seeing this change translate into the most senior position. While all other executive positions have seen more women in the role, the last three years have actually seen a 2% decrease of women as CEOs in the sector. Other executive roles are often viewed as preparation for taking on the top job, so the fact that there can be more women in these roles, but somehow fewer as CEO highlights the level of ideological and institutional bias they may be up against, with many in financial services still clearly viewing placing a woman in this role as a risky option, with higher scrutiny and expectations.
In a release accompanying the report, Oliver Wyman stated, “Our report has found that the industry is finally making progress on gender diversity in the workforce. Mind-sets are shifting and, as a result of hard work and commitment, progress is beginning to be reflected in the numbers. But that progress – 20% representation of women on executive committees and 23% on boards – is not enough. There is still a long way to go to create an industry in which women have equal access to opportunity and positive outcomes.”
