It’s true that money makes the world go around, but only if you’re really lucky! Jobs in the financial sector and access to organised bank accounts were only available to a limited set of people, although that is slowly changing. Diversity is growing in the field of finance, but not fast enough. The fact remains that there is an unconscious bias towards underrepresented groups who work in the financial sector, as well as those who are catered to. Financial DEI has three intersections: firstly, the financial workforce needs to be more diverse; second, it ensures that end-consumers have equitable access to financial tools and resources; third, it offers more product diversity and banking innovation.
“Financial inclusion means everyone has equal opportunity to access money,” says Rajashri Cariappa, an economist and economics professor in the US. “It includes awareness of financial assets such as fixed deposits, cash in bank, mutual funds, provident fund, deposits, bonds, etc. It also includes physical assets such as gold, diamonds, and other jewelry, as well as real estate.”
As per the WTW Global Gender Wealth Equity Report 2022, women are expected to accumulate just 64 per cent of the wealth of men at retirement. This staggering pay gap is the highest in the Asia-Pacific Region. “Although women own gold, property and draw in a salary, the funds are most often controlled by a husband or family. With financial inclusion, they can be self-reliant, access credit and loans, and improve their personal standard of living. Financial inclusion doesn’t just stop with women. In the long run, it will also allow us to build equitable solutions for low-income individuals and families and those from rural areas, who require a leg up to be a seamless part of the organised financial sector. Financial literacy programmes, greater transparency, and accountability are the need of the hour.”
According to a study by Oxfam, India’s richest 1 per cent of the population holds 42.5 per cent of the overall national wealth. On the other hand, the poorest 50 per cent hold just 2.8 per cent of this wealth. COVID-19 has already accelerated the digital economy, ensuring that individuals have access to bank accounts and mobile banking, savings, credit, and insurance. The Pradhan Mantri Jan Dhan Yojna scheme also seeks to bridge this gap, with the aim to provide every household in India with a bank account.
The last decade has been significant for banks and NBFIs (Non Banking Financial Institutions) in terms of their product offerings to consumers. For instance, with the number of Gen Z consumers rising, there is a shift from digibanks (traditional banks that also have an online presence) to neobanks (financial institutions that do not have a physical presence but operate solely online) such as RazorpayX, Finin and Jupiter. Product diversification and constant innovation will ensure a wide and varied pool of consumers, and going digital is the key to offering them a comprehensive range of investment and payment solutions. The focus isn’t just on cutting-edge solutions, but also on improved speed and timely delivery.
According to the Ministry of Electronics & IT, “During the last five years, various easy and convenient modes of digital payments, including Bharat Interface for Money-Unified Payments Interface (BHIM-UPI), Immediate Payment Service (IMPS), and National Electronic Toll Collection (NETC) have registered substantial growth and have transformed digital payment ecosystem by increasing person-to-person (P2P) as well as person-to-merchant (P2M) payments. BHIM UPI has emerged as the preferred payment mode of the citizens and has recorded 803.6 crore digital payment transactions with the value of ₹ 12.98 lakh crore in January 2023.”
For the financial sector in India to truly make a difference in the areas of inclusion and product innovation, it has to start from the top, creamy layer of the industry. “India is complex – financial consumers cut across culture, language, caste, religion, gender identity, and gender – and therefore the need to understand and offer scalable solutions to these customers is most effective when the financial workforce is diverse,” says life coach and DEI trainer Reshma T Thomas. “Also, there are a multitude of financial institutions besides banks and digital payment gateways. You also have post offices, credit cooperatives, agents, microfinance firms, which serve customers. Across all these establishments, women are extremely underrepresented. Finance is often seen as a male-dominated profession – and we can’t deny that most boardrooms validate that perception. There are significantly more men in leadership positions, there is a lack of mentorship and training opportunities for women and it is an unforgiving world for those who want to take a break to explore motherhood.”
Thomas believes that human resources teams should focus on equality and respect through all stages of the employee relationship – recruitment, remuneration, retention, and promotions, along with a safe space and zero tolerance for discrimination or harassment. Since the world of finance is often a ‘boys’ club’, these policies can help enhance women’s participation in the workforce.
But what are the added benefits of having women in banks? They bring a unique set of skills that can provide a fresh perspective and increase the value of the firm. For instance, according to a study by SKEMA (School of Knowledge, Economy & Management), having women on the board of banks can help with the risk-management process. Women are less likely to gamble with assets unless they’re sure of success, ‘and were noticeably absent from the worst offending firms during the 2008 crash’.
Banks should also focus on recruiting and retaining a workforce that is ethnically diverse, across all levels and departments. When customers and communities see themselves represented, it brings trust and comfort to the services offered. As Sundar Pichai famously said, “A diverse mix of voices leads to better discussions, decisions, and outcomes for everyone.”