The House Financial Services Committee held a hearing Wednesday to review data on diversity and inclusion within banking institutions in the U.S.
Chairwoman of the Financial Services Committee Maxine Waters (D-California) called Wednesday’s hearing “historic and groundbreaking.”
The 44 banks who submitted data have more than $50 billion assets, and Waters said the information provided is essential to the industry.
“The information they have provided is illuminating and is something that the American public deserves to see,” she said.
Waters added that she hoped the hearing brings diversity “out of the shadows and into the light.”
The report found that banking institutions were 58% white in 2018, which was lower than the national average of 63%. African-Americans made up 12% of the workforce populations of financial institutions, Hispanics accounted for 11%, and the Asian population was 12%.
The Hispanic workforce in American averaged 16% and Asians accounted for 6%.
The banking industry was found to be predominantly female, with females making up 51% of the workforce population. This is a stark contrast from the national average, which shows males made up 53% of the workforce in 2018.
The disparity comes in the boardroom. The report found that the average senior-level employee is 71% male and 81% white.
Sun Trust Bank was found to have females make up 50.9% of senior-level positions and racial minorities account for 32.2% of the population. UBS reportedly had the lowest female share of senior leaders at 15.2%.
Racial and ethnic minorities made up just 5.8% of senior-level positions at BB&T Bank—the lowest among the data reported.
Twenty-seven of the 44 banks reported they conduct an internal review of gender pay equity, the report says. However, only 15 publicly disclosed this information or provided transparency about their efforts to close the pay gap.
“This report confirms that America’s largest banks must be more transparent so that regulators, Congress, and the American people can hold them accountable for real and intentional diversity and inclusion outcomes,” Congresswoman Joyce Beatty (D-Ohio) said during the hearing.
She added that although the report shows there has been a success in recruitment and strategies “there is progress to be made.”
“I believe we must mirror the world we want to live in … when representation and equity is an overarching priority in the banking industry we can develop banks that out-innovate and outperform others and continue to move the needle within the industry,” she said.
Beatty said there are “clear barriers” to retaining and promoting underrepresented groups, and change must come from the top down.
Congresswoman Ann Wagner said the two most common challenges for diversity and inclusion is competition for talent with STEM and finance expertise and the ability to retain a diverse workforce.
“To improve their rate of retention, companies must adjust their culture and promote the adjustment of diverse talent,” Wagner said.
A memo on the heating state Congress included provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to promote diversity and inclusion in the financial industry.
Section 342(e) of the Dodd-Frank Act requires the Offices of Minority Women and Inclusion (OMWI) to submit an annual report to Congress on actions taken by financial institutions.
The committee stated in their memo that regulators agreed that industry compliance in sharing diversity would be “voluntary.”
“As a result, regulators have received limited information from their regulated entities, including banks,” the memo states.
Additionally, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System reported in their 2018 annual OMWI reports that they had 16.7%, percent, 9.3% percent, and 5% percent response rates to their diversity survey, respectively.
Kenneth Bentsen, President and CEO, Securities Industry and Financial Markets Association Diversity and Inclusion Council, gave testimony saying their most recent survey of their clients found all participants have a strategic plan for diversity.
He added that 95% of responding organizations in the U.S. plan to address gender, gender identity, race, and ethnicity. Eighty-percent of the organizations said they plan to address issues around sexual orientation and veterans.
Bentsen the survey from his constituents found women made up 44% of the workforce and the hiring rate and turnover rate compared to their male counterparts is “comparable.” He added the share of women within the industry is expected to grow by 2% over the next five years and 3% over the next decade.
People of color made up one-third of the workforce population and the hiring rate exceeds that for white workers by 5%. The turnover rate for people of color is 2% higher than whites.