The gender gap in the finance industry is a persistent issue in the United States, reflecting broader societal challenges around gender equality. Despite progress over recent decades, women in finance continue to face significant barriers in terms of representation, pay equity and career advancement. This gap not only impacts the careers of individual women but also hinders the overall performance and innovation potential of financial institutions. Understanding why this gap exists, what large companies are doing to address it and how technology is helping to bridge the divide offers a comprehensive view of the current landscape.
The gender gap in finance: Causes and current state
According to the World Economic Forum: women in the US are well represented at entry levels, comprising 52% of associated finance jobs in 2021. As of August 2023, close to 30% of senior management positions at UBS globally are held by women — but this success is not replicated across the wider sector. According to the Women in the Workplace report, a McKinsey collaboration with LeanIn.Org, within financial services, only 86 women are promoted to manager for every 100 men, which is on par with the cross-industry Women in the Workplace findings.
Several factors contribute to this gender gap. One significant issue is the presence of unconscious bias, which can influence hiring, promotion and compensation decisions. Studies have shown that women in finance are often evaluated more harshly than their male counterparts, particularly in high-stakes environments such as investment banking or trading. Additionally, the culture in many financial firms has traditionally been male-dominated, creating environments that can be unwelcoming or even hostile to women.
Work-life balance is another critical factor. The demands of finance careers, particularly in areas like investment banking, often require long hours and intense commitment. This environment can be challenging for women, who may face societal expectations or personal desires to prioritise family or caregiving responsibilities. The lack of flexible working arrangements further exacerbates the problem, making it difficult for women to ascend to higher levels of leadership.
Corporate responses: What large companies are doing
In response to these challenges, several large financial institutions have implemented initiatives aimed at closing the gender gap. These efforts include diversity and inclusion programmes, mentorship opportunities and leadership development initiatives specifically designed to support women in finance.
Goldman Sachs, for example, has introduced a ‘Launch with GS’ initiative, a US$500 million investment strategy focused on increasing access to capital for women, Black, Latinx and other diverse entrepreneurs. This programme not only supports diverse business leaders but also aims to create a pipeline of women and minority professionals within the company.
Similarly, Citigroup has made significant strides by publicly disclosing its gender pay gap and committing to improving pay equity. In 2019, Citi became the first major US bank to reveal a median pay gap for both gender and race, setting a new standard for transparency in the industry. The company has also set goals to increase female representation at the assistant vice president through managing director levels globally to at least 40% by the end of 2021.
Bank of America has implemented robust mentorship and sponsorship programmes designed to support women throughout their careers. The company’s ‘Power of 10’ initiative pairs women with senior leaders who provide guidance and advocacy, helping them navigate the challenges of the industry and advance into leadership roles.
These corporate initiatives are essential for addressing the gender gap, but they must be sustained and scaled to create lasting change. It is not enough to focus on diversity at entry-level positions; efforts must be made to ensure that women can advance into senior roles.
The role of technology in bridging the gap
Technology plays a crucial role in bridging the gender gap in finance by providing tools that can promote equality, enhance transparency and support career development for women.
One key area where technology is making a difference is in the recruitment process. Artificial intelligence (AI) and Machine Learning algorithms are being used to reduce bias in hiring by anonymising resumes and ensuring that candidates are evaluated based on their skills and experience rather than gender. Companies like Pymetrics use neuroscience-based games and AI to assess candidates’ potential, helping to level the playing field for women in finance.
Moreover, technology enables more flexible working arrangements, which are critical for retaining women in the finance industry. The rise of remote work technologies, accelerated by the COVID-19 pandemic, has demonstrated that flexible work arrangements are not only possible but can be productive. This shift has the potential to make finance careers more accessible to women who need to balance work with family responsibilities.
Additionally, fintech platforms are empowering women by providing greater access to financial services, investment opportunities and entrepreneurial resources. Companies like Ellevest, a digital investment platform designed by and for women, are helping to close the gender gap in wealth accumulation by offering tailored financial advice and investment strategies.
Conclusion
The gender gap in finance remains a significant challenge in the US, driven by factors such as unconscious bias, workplace culture and work-life balance issues. However, large financial institutions are beginning to take meaningful steps to address these issues through diversity initiatives, pay equity commitments and leadership development programmes. At the same time, technology is playing an increasingly important role in bridging the gap, from reducing bias in hiring to enabling more flexible work arrangements. While progress has been made, sustained efforts from both corporations and the broader industry are necessary to ensure that women in finance can achieve full equality.
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