Financial institutions drop the ball on diversity

Megabanks, including Bank of America, JPMorgan Chase, and Wells Fargo, are still lagging when it comes to diversity and inclusion, the House Financial Services Committee found.

An analysis of diversity data from 2015 to the present provided by the nation’s eight largest banks found that although the financial institutions are making progress, “there is still much to do,” the committee said. For example, the boards of directors at these institutions are comprised of 29% women and 17% minorities. By comparison, the U.S. population is comprised of 50% females and 40% minorities.

Further, senior leadership at the megabanks is lacking when it comes to diversity — 24% of executives are women, and 25% are minorities. All the chief executives are white men, and none have a chief diversity officer in their direct report. As such, policies and practices are also falling by the wayside: Diversity metrics aren’t tied to compensation, and only half the banks tie diversity to performance. With no formal incentive, it’s reported that only 1 in 25,000 employees, on average, is dedicated to diversity.

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The House Financial Services Committee recommends the megabanks work toward closing the pay equity gap for women and minorities; increase recruitment focus through affinity groups and minority universities and colleges; and increase internal investment in leadership and development programs to establish a pipeline of diverse talent.

Data obtained from the March and April hearings with the CEOs of the megabanks is just the first step in the committee’s charge to bring to light diversity and inclusion data in the financial sector. In early June, the Subcommittee on Diversity and Inclusion sent letters to 37 bank holding companies with assets over $50 billion requesting similar diversity data.

Ally Financial, BB&T Bank, BBVA Compass Bancshares, BMO Financial, Capital One Financial, Citizens Financial, Fifth Third Bank Corp., Huntington Bancshares, M&T Back Corporation, PNC Financial, Santander Holdings USA, State Farm Mutual, SunTrust Banks, TD Group, and U.S. Bancorp — among others — were listed.