A Strong Ecosystem Key to Bridging the Gender Gap in Banking Leadership

In the banking world, where numbers often reign supreme, there is an invisible barrier that hinders the ascent of many talented women in the industry. Obstacles can range from lack of mentors and variable professional support to increased care demands that are not supported by their workplaces. Despite talent, hard work, and commitment, women often advance slower than their male peers and can find themselves struggling to be recognized at work.

?It seems contradictory, especially when globally, commercial banks with 15% or more women in senior manager or higher roles command up to 33% higher return on equity than banks that do not. A growing body of evidence further shows that organizations with more women employees do better business.

Financial inclusion is essential to boost women’s access to credit and help them secure formal jobs or start businesses. More women in banking and financial services also reduces the cost of service delivery and lowers the risk of default. Yet, the financial services industry has historically underserved women as customers while underrepresenting them as employees.

In response, the International Finance Corporation (IFC) initiated a multi-country research study on women’s advancement in private commercial banking in South Asia. It covered 20 banks across Bangladesh, Nepal, and Sri Lanka, where women constitute 30% of the banking sector’s workforce compared to the global average of 52%.

?As one of the first such studies in South Asia, our goal was to identify opportunities that can enable women in the region to advance to senior roles while underlining barriers—inequitable hiring, lack of fair evaluations, sociocultural constraints, and others—that curtail women’s growth prospects across the region. Accordingly, our recommendations, using global evidence, aim to help industry actors direct their efforts to increase women’s representation in leadership in the banking industry.

Gender lens

Women’s representation in commercial banks varied among the study countries, but our research found common, complex, and interlinked threads that led to unequal diversity outcomes.?

While women in all three countries face multiple challenges throughout their careers, Nepal (42%) and Sri Lanka (38%) are closer to achieving gender parity in bank employment while Bangladesh (18%) is far behind. Further, policy mandates in Bangladesh—for example, mandatory transfer of employees every three years—restrict women’s entry and retention in the industry. We also found that in Bangladesh and Nepal, fewer female employees, compared to their male colleagues, receive coaching and mentoring support.

Sociocultural constraints too play a major role in slowing their progress mid-career, as women take on more responsibilities like parenting and/or elder care at home. Forty percent of female respondents in Sri Lanka and 28% in Bangladesh believe that managing household responsibilities has impacted or will impact their careers.

Even when women aspire to succeed—our research found more than 80% of both women and men want to rise to leadership roles—they are less likely to receive critical assignments. Women also tend to receive vague and unclear feedback, especially as many banks lack standardized criteria for an objective performance evaluation.

Road ahead

Across the region, banks and industry actors are trying to better support women in overcoming the challenges they face. Reducing hiring bias and holding diversity-focused town halls, among others, are now common practices in the industry. Closing more gender gaps in the workforce and in leadership, though, will require pushing beyond these and progressing to, what we call, “emerging solutions” and “bold bets” for transformative change.

Our recommendations—tailored to the context of each country—include providing women with professional support and mentoring, helping them access informal professional networking, and ensuring objective evaluations. Flexible work hours and on-site childcare are also key to helping both women and men achieve work-life balance.

Finally, it is essential that regulators, industry bodies, investors, and other stakeholders support this shift in the banking ecosystem.

Industry-level targets can create a system of public accountability for individual banks. Banks that perform well on these targets can be rewarded with incentives, such as access to grants that subsidize employee support solutions (on-site childcare, upskilling platforms, etc.), or lending rate concessions and cheaper capital for consistently exceeding certain diversity criteria.?

It is within our power to foster an environment that can achieve equality of representation within South Asia’s banking industry. It also makes good business sense.??

?Imad N. Fakhoury is Regional Director for South Asia at the International Finance Corporation (IFC). To download the report (Women’s Advancement in Banking in Emerging South Asian Countries) and three country briefs, click here.

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