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Mission Critical: Gender Diversity in the Post-Pandemic Banking Environment


Gender Diversity is critically important to solving the strategic issues facing the financial services industry today. As we usher in a post-pandemic world characterized by devastating losses in certain workforce and industry sectors, social upheaval, and accelerating technological evolution, banks are faced with a new competitive environment:

  • Size and scale have increased in importance. Relevance will be needed to maintain market leadership.
  • Banks will need to invest in digital delivery channels to reduce costs and respond to customer demands.
  • Excess liquidity, competition, and lack of loan growth have accelerated the long-standing trend of net interest margin (NIM) compression, adding to revenue challenges.

Banks that recognize and harness the power of gender diversity, however, have an opportunity to excel over their peers that ignore these market forces. As we will show, research indicates that gender diversity improves operating results for banks, decision-making, deal execution in M&A, and innovation.

Diversity Drives Returns

According to a 2019 Federal Reserve study, banks perform better once they reach a critical level of gender diversity.

  • Efficiency increases once the share of women on boards reaches about 17%.
  • Profitability increases once the share of women on boards reaches about 13%.
  • Risk-adjusted profitability increases once the share of women on boards reaches about 20%.

These results were even more pronounced during the Great Recession, suggesting gender diversity is particularly important for banks navigating difficult operating environments.

Performance benefits have also been established when women are added to the C-suite. An S&P Global study of Russell 3000 index companies found a 20% increase in stock price momentum within 24 months of a female CEO being appointed. The study also found a 6% increase in profitability and 8% larger stock returns with the appointment of a female CFO.

Current Operating Environment


Labor shortages and competition for talent have been exacerbated by the pressures of the pandemic on women. Mothers are more than three times as likely as fathers to be responsible for most of the housework and care giving. Since the pandemic, mothers who are part of a dual career couple are twice as likely as fathers to spend an additional five-plus hours a day on household chores. As a result, one in three mothers have considered leaving the workforce or downshifting their careers.

Banks that understand and are addressing these challenges can harness the talent of qualified women within their workforce and within their markets. This is especially important considering women now receive nearly 60% of all degrees, make up 50% of the workforce, and, prior to the pandemic, held more jobs in the U.S. than men. Companies can’t afford to lose women leaders. The financial consequences could be significant.

Women leaders are also critical to broader employee retention. According to a 2019 study, companies with higher levels of gender diversity and policies that focus on gender diversity have lower employee turnover. Senior-level women are more likely than senior level men to practice ally ship, and to sponsor or mentor colleagues of color.

Revenue Opportunities

Women also offer a solution to the income challenges facing banks today.

Women are the primary breadwinners in over 40% of U.S. households and comprise more than 50% of stock owners. A McKinsey & Co. report found that U.S. women currently control $10.9 trillion in assets. By 2030, that could grow to as much as $30 trillion. Women also started 1,821 net new businesses a day in 2018, employing 9.2 million and recording $1.8 trillion in revenues. Startups founded by women pulled in $18.6 billion in investments across 2,304 deals in 2019. Still, female small business owners report that lack of capital is their greatest challenge.

This lack of capital, combined with the significant number of women owned small businesses that did not qualify for PPP—and the fact that women are overrepresented in some of the industries hit hardest by the pandemic, such as leisure and hospitality— has left women-owned businesses disproportionately impacted by the pandemic. According to a recent study by the U.S. Chamber of Commerce, women business owners who rated the overall health of their business as "somewhat or very good" fell 13 points during the pandemic, from 60% in January 2020 to 47% in July 2020. That compared to a five-point decline for male business owners.

Banks that focus on women as wealth management and lending customers and expand their opportunities to address the current operating challenges can profit from this growing segment of the population. For banks to be successful, however, they will need to be connected to these communities and able to demonstrate to potential female customers and borrowers that they are an institution that understands their needs, and that values diversity as demonstrated by the composition of their workforce and senior management.

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The need to increase scale, accelerate technology investment, diversify markets and business lines, and benefit from cost savings has been driving a resurgence in bank M&A since 2019—with over 250 deals that year. That trend was on pace to continue in 2020 until COVID-19 slowed discussions as concerns over asset quality emerged. Transformative discussions, however, continued throughout the pandemic despite a dramatic decrease in bank stock prices, as evidenced by the significant deal activity in 2021.

As banks struggle with negative leverage caused by limited yield and growth opportunities, and an excess of liquidity, M&A is likely to increase as a strategic driver. As a result, banks will need to differentiate themselves as attractive buyers—and targets— on factors other than price to optimize pro forma returns in a crowded field. Gender diversity may be just that competitive advantage.

Cass Business School review of 16,763 publicly announced M&A transactions globally over the two preceding decades found that boards with female representation of 30% or more performed better in terms of stock price and operational metrics than all-male boards.

Innovation — The Future of Banking

Banking Macro-economic shifts were not the only changes wrought by the pandemic.

  • Technology: The need to create efficiencies in delivery channels, and the demands from bank customers for digitization and contactless payment systems, have been accelerated by the pandemic.
  • Non-bank competitors: Banks today face challenges to market share and perhaps their very existence from a variety of competitors, many of which do not have the same regulatory burden, such as neo-banks, credit unions, fintechs, and others that are eroding banks’ customer share and earnings.
  • Mission-focused customers: In addition to the rise of fintech adaptation and disruptors, we have also seen the growth of mission-driven banking by customers, leading to the meteoric rise of challenger banks.

As a result, the need for banks to innovate encompasses technological, operational, and social adaptations.

According to a McKinsey study, in past crises, companies that invested in innovation delivered superior growth and performance post-crisis. “Organizations that maintained their innovation focus through the 2009 financial crisis, for example, emerged stronger, outperforming the market average by more than 30% and continuing to deliver accelerated growth over the subsequent three to five years,” the study found.

Diversity Drives Innovation

According to several studies, companies experience significant increases in innovation and better assessment of consumer interest and demand when employees believe their organization is committed to inclusion. The Boston Consulting Group found that companies with better management diversity earned “38% more of their revenues, on average, from innovative products and services” compared to companies with lower diversity.


Leaders and organizations will need enhanced problem-solving skills and vision to address dislocations in businesses, industries, and regulatory environments. Strategic agility—the ability to spot and seize game changers—is likely to be a mission-critical trait. It is also likely to be stronger in organizations that can draw on the full spectrum of diverse talent available to them.

Research also supports that diversity enhances the quality of decision making. Cognitive diversity created by teams comprised of members with different backgrounds and viewpoints:

  • Means broader idea generation and limits groupthink.
  • Solves problems faster.
  • Results in more intellectual property such as patents.
  • Resolves conflict better.

Diverse teams are also likely to hold each other more accountable and to make better fact-based decisions. Further, diverse thinking and diverse teams are less likely to engage in the retrenchment commonly found in companies in times of crisis. Instead, they are more likely to seize opportunities for growth and revenue opportunities in times of crisis, and use disruption as a perfect environment for innovation and advancement.

For example, one McKinsey study found that over a two-year period, companies with more women were more likely to introduce radical new innovations into the market. A separate study found that businesses run by culturally diverse leadership teams were more likely to develop new products than those with homogeneous leadership.

Women also more frequently apply three of the four types of behavior—intellectual stimulation, inspiration, and participative decision making—necessary for innovation and successfully addressing the global challenges of the future, according to McKinsey.

Less than 5% of bank CEO positions and less than 20% of bank board seats are currently held by women. Combined with the risk to women in the workforce caused by the pandemic, the net effect may be that banks that do not focus on gender diversity will lack the ability to innovate effectively. By choosing to address these issues, banks will benefit by financially outperforming and out-innovating their competitors.

Gender Diversity Is a Board Priority

As banks attempt to normalize their operations in a post-pandemic world, it’s not surprising that more and more boards are focused on recruiting, retaining, and marketing to women to solve these challenges.

According to the 2021 Governance Best Practices Survey conducted by Bank Director, 65% of directors responding believe their board should recruit more diverse directors, with 72% citing the benefits they’ve experienced from new/varied perspectives enhancing discussions.

Data gathered in polling conducted by our organization, Bank on Women, at industry conferences with bank leaders echoed this finding (Figure 3).


Forward-thinking banks should look to women to address the myriad issues facing banks today. Successful banks of the future will be the ones that focused on recruiting and retaining talented women today for meeting the demands of tomorrow.



TERRIE G. SPIRO is chairman and CEO of TNP Financial Enterprise Consulting Services, Inc. and a cofounder of Bank on Women Inc., a nonprofit dedicated to educating the community banking industry on the importance of adding qualified women to the board and C-Suite. Terrie can be reached at




JENNIFER DOCHERTY is managing director and associate general counsel of Piper Sandler & Co., and a co-founder of Bank on Women Inc. Jennifer can be reached at