Leadership in the financial sector is more inclusive than ever, yet it remains far from the goal of equality. As highlighted in OMFIF’s Gender Balance Index, out of the 335 financial institutions surveyed, only 16% of institutions are led by a woman. This disparity isn’t due to a lack of qualified women – it’s a reflection of persistent biases that keep them from reaching the top – and that translates to money left on the table.
We’ve long known that investing in women is smart business. Greater diversity in boardrooms and senior management drives stronger financial performance, boosts sales, enhances decision-making, sparks innovation and fosters more representative corporate cultures. Put simply, increasing the number of women in leadership strengthens all aspects of the triple bottom line: profit, planet and people.
Profit
Studies consistently show that financial institutions with more diverse boards exert greater effectiveness in terms of cost, resources and operations – resulting in greater financial success. The Women on Boards and Beyond 2024 Progress report revealed that globally, companies with 30% or more female directors on their boards saw almost 19% higher cumulative returns compared to those with fewer female directors.
This trend has only grown stronger over time. In 2015, gender-diverse companies were 15% more likely to outperform their non-diverse counterparts. By 2023, that number had surged to 39%, showcasing that having more women in leadership positions drives real financial gains, resilience and business success (Figure 1). In an era of increasing uncertainty lies an important truth: diversity is not just a nice-to-have, it is key to making companies more robust in the face of challenges.
Figure 1. The business case for diversity on executive teams
Difference in likelihood of outperformance, by quartile
Source: McKinsey & Company.
Note: In 2023, eight new countries were incorporated in the gender analyses and two new countries in the ethnicity analyses.
Planet
Research confirms that diverse perspectives bring about a more balanced risk management approach. McKinsey also found that greater diversity on boards and executive teams is correlated with higher social and environmental impact scores.
The positive impact on sustainability becomes most noticeable when women represent at least 30% of members on decision-making bodies. However, figures in GBI 2024 revealed there is still a significant gap before all players in the financial services ecosystem reach this critical threshold.
Higher female participation across all levels of decision-making is crucial to effectively invest in sustainability efforts. For example, countries with greater female representation in parliament are more likely to ratify international environmental treaties, and also to increase renewable energy consumption in their countries.
People
To strengthen the diversity across the workforce, it is important to hire more women. Research emphasised the transformative power that female role models have in bolstering women’s self-assurance and challenging entrenched gender norms. For instance, mentorship programmes between women leaders and women have shown to increase belonging, motivation and confidence.
However, the journey towards gender equality is often hindered by pervasive self-doubt among women. Yet, as more women step into leadership roles and openly share their success stories, these barriers are continuously being reduced.
Opening doors at the top not only drives internal progress but also has a far-reaching impact on women throughout the organisation, even down to fostering greater diversity at the customer level. Women’s World Banking Asset Management’s investment strategy has identified that higher percentages of women staff correlate positively with an increased outreach to women customers, while also correlating to higher returns on investments (Figure 2).
Figure 2. To reach more women, hire more women
Presence of women loan officers (horizontal axis) versus women clients (vertical axis) in 2023, in compound annual growth rate, %
Source: Women’s World Banking
Boards with women members are more likely to also focus on non-financial performance indicators, such as customer satisfaction and corporate social responsibility, and are better able to monitor board accountability and authority, leading to improved corporate governance.
Furthermore, in times of increasing digitalisation, and the rise of AI, investing in women leaders is one of the most effective strategies to increase innovation within organisations. Companies with above-average gender diversity among owners are 21.4% more likely to innovate than those with less diversity, and having a female top manager boosts the likelihood of innovation by an additional 2.2%.
Driving business growth together
When policy-makers, regulators and industry leaders bring a diversity of perspectives to the table, financial policies become more inclusive and effective. Balanced leadership, expertise and insights are needed to inform and shape policies and regulations that don’t discriminate. For central banks and regulatory bodies, this means designing policies that purposefully tackle the barriers that hinder women from fully engaging in the formal financial sector.
One powerful initiative is Women’s World Banking’s Leadership and Diversity for Regulators programme, where teams from central banks and financial regulators across the globe, consisting of a senior leader (male or female) and a top female talent, deliver policy initiatives aimed at increasing women’s financial inclusion. According to survey responses from participants, an impressive 64% of high-potential women leaders reported an expanded scope of responsibility after completing the programme. A notable example of a former LDR participant includes Soraya Munyana Hakuziyaremye, who rose to be the current governor of the National Bank of Rwanda.
Inclusive leadership not only enhances the participation of women in the financial sector but also leads to business opportunities, growth as well as more resilient outcomes for the economy as a whole. Fostering diverse perspectives across the entire financial ecosystem can unlock the $28tn opportunity that would be added to the global GDP if women were to participate equally in the economy, creating economic growth opportunities for all.
Francesca Brown is Director of Policy at Women’s World Banking.
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