Closing the Gender Gap in Financial Services: The Case for Intentional Succession Planning

The root of the problem

In financial services, the path to leadership has shown a reliance on informal networks and subjective promotion methods. Why? The unique risk environment found in holding assets, investing others’ funds, executing trades, or lending money means increased scrutiny and regulation. It’s a complex industry requiring knowledge of laws across jurisdictions and risks associated with errors.

Trusting leaders to protect the interests of all stakeholders means trusting that they can handle the responsibility. Those who are well-known or have been “in the trenches” with others foster more trust. This is hard to replicate with simple assessments or performance review data. These practices have shaped generations of leadership, yet can unintentionally overlook many talented individuals who bring new, relevant perspectives. In a 2022 study, the financial services industry was found to have the second-lowest representation of women in executive roles among all industries.

Additionally, while the number of companies setting goals for the advancement of women has increased, the rate of manager training to eliminate unconscious bias in the succession and promotion process has fallen as priorities have shifted to supporting employee well-being and handling issues arising from remote or hybrid work. This shift, combined with a downward trend in support for DEI programs, has left women to fall back on informal pathways, such as employee resource groups that offer mentors or sponsors and external organizations that offer education or networking.

Rather than targeting women as a subset of the organization, we propose a fresh approach to advancing women, one that removes perceptions of bias, levels the playing field, builds transparency, and instills trust and confidence in the organization’s intent and process. To move forward, financial institutions need a succession planning process that is intentional, data-driven, and designed to support a wide range of leadership skills.

Leaders who excel in fostering resilience, handling complexity, and navigating change are invaluable assets in today’s financial landscape. Many women in the industry embody these strengths, yet outdated promotion practices often mean their potential remains untapped. By rethinking these pathways, financial institutions can build leadership teams that reflect the diverse capabilities needed to succeed in a globalized, digitally advanced market.

Redefining leadership expectations to support change and growth

The demands of financial leadership are evolving. Historically, leadership criteria emphasized business and financial acumen, with a focus on risk management and understanding regulatory conditions. Leaders were evaluated for political savvy, assertiveness, and charisma to win clients and shape market conditions. While these attributes remain relevant, today’s finance leaders also need to demonstrate authenticity, personal accountability, adaptability, inclusiveness in decision-making, and the ability to inspire a shared vision across diverse groups. These skills align well with the financial sector’s complex environment, where building trust and maintaining clarity amid change is crucial.

Managers identifying “ready next” leaders struggle to assess talent for these new criteria, and end up relying on “affinity bias:” putting forward candidates who look the most like them. Taking a fresh approach to evaluating emerging leaders breaks this pattern and levels the playing field for a broader slate of candidates. BTS research shows that evaluating rising leaders for qualities often considered “intangible,” when combined with “hard skills” and relevant experiences, results in better outcomes and long-term success.

To broaden the definition of promotion-ready talent, companies must evaluate three additional dimensions of leadership:

• Style: Beyond appearance, this refers to how leaders influence others, drive engagement, create trust, and execute for results. In finance, effective style translates to confidence that’s reassuring in high-stakes interactions, from regulatory meetings to client relationships.
• Substance: The depth of a leader’s knowledge, judgment, and strategic thinking form their professional credibility. Finance leaders must be able to make well-informed decisions with significant market impact, a skill critical to navigating high-stakes scenarios and maintaining market stability.
• Character: Integrity, values, and authenticity. Trust is essential in financial services, where clients and teams alike must have confidence in their leaders’ principles. Leaders who exhibit strong character foster a culture of trust and accountability across their organizations.

By prioritizing these dimensions in leadership development, financial institutions can build a model of leadership that aligns with modern business needs as well as industry expectations. Women often bring a collaborative, adaptable approach to leadership that complements these qualities. According to the Deloitte data referenced above, as more women advance to C-suite roles, their presence positively influences representation across senior levels, creating a ripple effect that benefits the entire organization.

Future-proofing leadership: Recognizing the strength of diverse perspectives

The financial services industry is undergoing significant transformation, facing everything from technological disruption to evolving regulatory demands. Despite this, many institutions still lean on familiar leadership profiles to guide their teams, overlooking the need for innovative and adaptable skill sets. Leaders who come from varied backgrounds and experiences bring fresh perspectives that can better prepare institutions for the complexities of tomorrow.

For financial institutions, the case for future-proofing leadership through diversity is strong. Leaders who bring inclusive, collaborative approaches to their teams are often better-positioned to respond to customer expectations, regulatory shifts, and market volatility. Women leaders bring essential skills in building cohesive teams, fostering resilience, and managing complex issues – all of which are increasingly necessary as the industry faces unpredictable challenges. By opening the criteria for leadership to include these diverse qualities, financial services companies can strengthen their leadership pipelines and create a competitive advantage that will serve them well into the future.

Succession planning must shift from preserving the old guard to building a leadership team that is agile, resilient, and equipped for the complexities of modern banking. By broadening the scope of what leadership looks like and valuing skills like strategic influence and adaptability, financial institutions can tap into the full potential of their workforce. Meeting diversity targets isn’t the sole focus – it’s about creating leadership teams that can drive innovation and deliver long-term success.

Measuring the impact

To ensure that the above cultural shifts and efforts to diversify leadership are more than just surface-level changes, banks need to measure the impact of their initiatives on creating a more diverse set of successful leaders. Without clear metrics, the opportunity to redefine leadership for the future may be lost.

It’s not enough to simply track the number of women promoted into leadership roles. The focus should also be on how these leaders influence organizational outcomes and drive meaningful change. Metrics that link leadership development to business outcomes are crucial in determining whether intentional succession planning is truly reshaping leadership dynamics or if old patterns persist.

Key indicators of progress include the proportion of women in leadership pipelines, the methods used to assess and develop executive presence, and the overall performance of leadership teams in navigating complex, high-stakes challenges. For example, organizations that focus on developing executive presence in a way that aligns with modern business needs are likely to see improved decision-making and stronger team cohesion. This, in turn, can contribute to better business performance and a more adaptable leadership team.

Research supports the business case for diverse leadership. Companies with a higher number of women in the C-suite are more open to change and focus more on innovation, which can lead to better financial outcomes, according to Harvard Business Review. For banks, this means that investing in the right metrics and adapting leadership development accordingly can lead to tangible business benefits, including enhanced resilience in a volatile market.

By tracking these metrics and remaining adaptable in their approach, banks can ensure that they are not only promoting more women into leadership roles, but also fostering an environment where those leaders can thrive. Creating a culture that values diverse perspectives and prepares all leaders – regardless of gender – to meet the demands of today’s business environment is key.

Building a more inclusive future

The underrepresentation of women in financial services leadership is not a reflection of their ability – it’s a symptom of an industry that hasn’t evolved quickly enough to meet the challenges of the modern world. Addressing this gap requires more than a commitment to diversity; it demands intentional succession planning that prioritizes inclusive leadership development tied to capabilities and competencies that the future organization will require.

By breaking free from outdated norms and investing in leaders who can thrive in today’s complexity, banking leaders can close the gender gap while positioning themselves for long-term resiliency and success. The future depends on making these bold changes today.

Sarah Woods is a Partner and Co-Head of the Global Executive and Team Performance practice for BTS, a global firm that advances how companies perform by leveraging the people side of strategy.

Lisa Sprenkle is an Executive Advisor and leads Executive Succession globally for BTS. She partners with clients from nonprofits to global Fortune 100 companies to develop outstanding leaders and effective teams for positive organizational impact.

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