Women in financial sector: Breaking the glass ceiling

Historically, finance and investment banking have been seen as male bastions. The occasional handbag or the saree did make an appearance once in a blue moon with only a few making it to the top of the financial pyramid across the world. However, a decade into the 21st century, their corporate power and influence is low although women represent half or more of the workforce in many countries. So when US President Barack Obama nominated Janet Yellen as the chairman of the US Federal Reserve, it created shockwaves as she would be the first female leader in its 100-year history. In India, the first woman to become a deputy governor was Kishori J. Udeshi and that was in 2003. The country’s apex bank is yet to see a female RBI governor.

In a country where boys are prized over girls and where many women quit work after marriage and child birth, there has been a surprising rise of women leaders across financial institutions. The country’s top three banks in the country – State Bank of India, ICICI Bank and Axis Bank – are led by women. So is the National Stock Exchange, the Indian arm of JPMorgan Chase, HSBC and Fidelity International. The Indian arms of the Royal Bank of Scotland and UBS were headed by women. The investment banking division of Kotak Mahindra Bank, the Kotak Mahindra Capital Company, was headed by a woman before she decided to quit for greener pastures. HDFC and ICICI venture are also led by women.

What spurred the rise of women leaders in these institutions? Was it the work environment, the presence of mentors, or the women themselves who pushed the boundaries to rewrite history? Our cover story explores the trend of women taking over top leadership roles in the BFSI sector, their aspirations and challenges, what makes it easy for a woman banker to scale the leadership ladder and finally what other sectors can learn from BFSI.

Global Vs Indian scenario

Women are still distressingly under-represented at the top levels of most companies across the globe. Only 15 per cent of women hold C-suite jobs, and 17 per cent of board seats in corporate America. Women hold only 14 per cent of the board seats at S&P composite 1500 index companies, according to Ernst & Young. When Burberry’s CEO Angela Ahrendts decided to quit the company to join Apple Inc, there was a major hue and cry as now only two female CEOs remain in the FTSE. The proportion of women holding executive posts like CEO or finance director in FTSE has risen from a mere 5.5 per cent to 6.1 per cent in two years. In Asia, it is even worse. Women in Asia occupy just 1.1 per cent of CEO, CFO, country head and related positions, according to a 2012 Catalyst Study.

Many countries in Europe are recognizing the need for legislation to include more women on company boards. Norway’s story is a case in point. In 2002, Norway’s Trade and Industry Minister, Ansgar Gabrielsen, proposed a law requiring that 40 per cent of all company board members be women. Even in a society like Norway, where majority of women work outside home and half of the government’s ministers are female, the idea seemed radical to get shock the entire business community. At that time, Norwegian women held less than 7 per cent of private-sector board seats; just under 5 per cent of chief executives were women.

After many public debates and deliberations, the Norwegian parliament gave the nod. Now, female directors make up 40 per cent, while women fill more than a quarter of the board seats at the 65 largest privately held companies.

Other countries like Spain and the Netherlands have passed similar laws, with a 2015 deadline for compliance. France will debate a bill phasing in a female quota by 2016, while Belgium, Britain, Germany and Sweden are considering legislation. In India, only 14 per cent of women are in senior management positions, according to a grant Thornton IBR 2012 report. According to GMI ratings’ Women on Boards Survey 2013, even on the world’s best-known companies, women account for only 11 per cent of total directorships. In India, a sample of 89 companies with more than $1 billion in market valuation, the women percentage is less than 7 per cent.

But, the demand for top-level women executives for the senior management is growing among India Inc. Companies have realized that hiring women leaders has massive benefits and makes good business sense. Companies with female board representation routinely outperform those with no women on the board, as per a recent study by the Credit Suisse Research Institute.

According to executive research firm Mancer Consultancy, the demand for women at senior level is growing at the rate of 10 per cent every year. Besides BFSI, the other sectors where experts expect demand for women executives to soar are it, retail, hospitality, media and entertainment and travel & tourism. Also, the Companies Act 2013 mandates that there should be at least one woman director on board for certain classes of companies. In Budget 2013, the Finance Ministry had mooted the idea of setting up a bank exclusively for women and run by women – the Bharatiya Mahila Bank. It is expected to commence operations from November with six branches across the country.

Current India Story - BFSI sector

In India, only one in 10 companies across all sectors have a woman at the helm, but more than half of these are from the financial services sector, according to a study by executive search firm EMA Partners International.

India’s tryst with women finance leaders began with Tarjani Vakil, who took over the ropes of EXIM Bank, which handles foreign trade, export marketing and consulting, in 1996. She is the first woman to head any large bank in India. The government of India followed up Tarjani’s appointment with Ranjana Kumar, who was appointed the Chairperson and Managing Director of the loss-making Indian bank in 2000. At that time, Kumar was the first woman to head a public sector bank in India. During her tenure, which ended in November 2003, Kumar ensured that the bank was back in the black.

When Arundhati Bhattacharya took over the reins of the country’s largest bank, the State Bank of India, from Diwakar Gupta, she was breaking all sorts of records. She became the first woman chairperson of the State Bank of India in its 206-year-old history. Bhattacharya, whose last posting was as managing director of SBI Capital Markets, began her career in 1977 with SBI as a direct recruit officer. She was involved in setting up many new companies and initiatives of the bank such as SBI General Insurance, SBI Macquarie Infrastructure Fund and SBI SG Global Securities Services. She also spearheaded the launch of it platforms such as mobile banking. In an interview to Economic Times, she said her mantra is to have a very good second line of command at home as well as the workplace.

ICICI Bank, the country’s second-largest bank, has produced seven of India’s top 14 female professionals. Led by the charismatic Chanda Kochhar, who is the protégé of K.V. Kamath, ICICI bank virtually began churning out women leaders under Kamath’s watchful eyes. Naina Lal Kidwai, country head of HSBC India, and Shikha Sharma, CEO of Axis Bank, are other well-known protégés who made it big in the banking space.

Of the 250 banks operating in India, the women leaders who have shattered glass ceilings are: Kalpana Morparia, CEO of JP Morgan India; Vedika Bhandarkar, Managing Director and Vice-Chairman, Credit Suisse; Kaku Nakhate, President and Country Head (India), Bank of America Merrill Lynch; Vijayalakshmi Iyer, CMD, Bank of India; Archana Bhargava, CMD, United Bank of India; Shubhalakshmi PaNSE, CMD of Allahabad Bank; Usha Ananthasubramanian, Executive Director, Punjab National Bank & CMD, Bharatiya Mahila Bank; Usha Sangwan, Executive Director, LIC, to-be first MD of LIC in nearly six decades of existence.

The National Stock Exchange, with a market value of $ 1,178 billion, is ranked 12th in the world as of October 2012, appointed a woman to the CEO and MD post in April 2013. Chitra Ramakrishnan joined the select league of women executives who head stock exchanges – South Africa’s Johannesburg Stock Exchange and China’s Shenzhen Stock Exchange are headed by Nicky Newton-King and Song Liping respectively. Even though there are at least 11 exchanges with market capitalization higher than NSE, including New York Stock Exchange, NASDAQ, London Stock Exchange, Deutsche Boerse and even India’s own Bombay Stock Exchange, none of them have women chiefs.

Sector watchdog RBI too had its share of women in top management too: Shyamala Gopinath, K. J. Udeshi and Usha Thorat were deputy governors. Currently, there are no women at the top level in RBI.

Industry analysts commend the enhanced role of women in banking sector especially given that the rise of women in the general corporate sector has been slow. A combination of good opportunities, at the right time and the presence of mentors helped these women rise up the corporate ladder. Banking was seen as a safe working option for women once upon a time. Now, women are entrusted with safeguarding their success.

“Women started joining banks only in the late 70s and mostly at clerical levels. With career progression reaching an apex, the industry is likely to have more women at the top in the years to come. And when they do come, they are not just considered women, but as leaders and role models,” Subhalakshmi Panse, Chairperson-cum-Managing Director (CMD) of Allahabad Bank, told the new Indian Express in an interview. Panse, who took over the reins in 2012, started her career with Bank of Maharashtra as a trainee officer in 1976.

Women Leaders - Strengths and Weaknesses

So what is it that makes banking/financial sector such an attractive option for women? The BFSI sector is seen as a level-playing field, something that women don’t find in other sectors. “There is a little more level-playing platform that is available in the financial sector just in terms of the views and expectations, which makes it easier for a woman. Secondly, it is perhaps one of the newest sectors compared to hardcore engineering. Thirdly, a lot of financial institutions starts and grows in urban centres where the social strata are definitely more accommodative than a rural location,” Chitra Ramakrishnan, MD & CEO of NSE said.

Some traits that are inherent in a woman like a higher level of empathy, working in a collaborative manner, helping others grow and a natural ability to manage interpersonal relationships come in handy for most women leaders in this sector. “What works in their favour is that they are multi-taskers, team players, very flexible and able to handle all kinds of situations with equanimity,” Allahabad Bank CEO Panse told ET in an interview. They are also seen as moderate risk takers, which is good for the organization in the long run.

But, there is a school of thought that women have to work harder than men to prove themselves. But V.R. Iyer, CMD of Bank of India, points out that if women are efficient then climbing the ladder should not be a problem.

However, during the interviews we conducted for the cover story, it emerged that mobility was one of the major reasons why women leave the workforce or are resigned to not climbing the ladder.

While for a man, his career was seen as his major achievement, the same yardsticks don’t apply to women. They are measured on multiple fronts at the same time – at home, office, personal relationships etc. Another major factor hindering their growth was networking. Even though women are consummate relationship builders, they are not very good at networking. On the other hand, men actively seek out sponsors, mentors and ask for opportunities or jobs. It’s not that a woman is less ambitious, but her priorities evolve during her life and that is something companies need to keep track of if they want to retain female talent.

So what needs to change? Does India need a law to make companies toe the line on gender diversity. ICICI bank’s Kamath says a firm no. An E&Y report on “advancing women into leadership” quotes him thus, “From the first stage, namely merit-based recruitment, we needed to move to strictly merit-based evaluation, with no biases. As positions opened up in the [ICICI bank] organization, we eschewed the tendency to say that certain jobs could be done by only one gender. So opportunities were open to all, and were filled on the basis of merit and potential. There was absolutely no preferential treatment given, nor were there quotas. Our belief is that quotas and so-called “gender-affirmative action” are not the way forward. It is culture change which is needed.”

Dr Anil Khandelwal, who chaired the Khandelwal Committee in 2010, said the lack of a talent pipeline for top management women leaders is a major concern. “Banks have to make a conscious effort towards diversity management, encourage women to increasingly take up roles at the top level and provide support to women executives by grooming them, entrusting them with opportunities and extending for their growth,” Dr Khandelwal said.

The number of early exits is also worrying as most women shift focus from their careers to their family after a point, leading to exits or stagnation. Chitra said, “Support systems among women colleagues are a big motivator. People who have moved up to middle and senior management are able to nurture and talk to some of their younger colleagues.”

This has led to the talks of having sponsors instead of mentors – companies like HCL Technologies, Sodexo and American Express have formalized such programmes internally. Bharatiya Mahila Bank’s CMD Usha Ananthasubramanian felt that women should take a lot of initiatives and be innovative in their approach to work. They need to be supported by their families when they want to take up leadership roles and that plays a major part in helping them keep their work-life balance.

Conclusion - what other sectors can learn

Women leaders are positive that this trend can be sustained, but a lot of work needs to be done. The financial sector is definitely more enabling than other sectors for women as it is mostly about doing your job and not so much about “Being able to back slap but more about being able to show whether targets are being met or not” like Chitra Ramakrishnan says. The level-playing field has resulted in women being exposed to bigger opportunities and more often many taking them up.

As a result, we have today women leaders at the helm of the top 10 banks in India. And these women are doing their bit to forward the cause. Chitra, for example, talks about how in NSE women at senior management levels mentor their juniors on various career and personal matters. Usha Ananthasubramanian encourages women to become active negotiators with their families in order to nurture their careers and exhorts them to take up initiatives. “I push women to take up promotions, I transfer them. When you travel and see the world, it changes your life. The people and the culture are very unique to each city and hence you learn a lot from such trips,” Usha says. V.R. Iyer, CMD of Bank of India, has been advocating that women should seek promotions. “I want to correct the tendency among women to give up half way. I have been encouraging them not to give up so easily,” she says.

Even though this trend of women leaders is not driven by a systematic process in organizations and is instead a chance occurrence, one must not forget that the banking/financial industry at least have women role models to look forward to and these women scaled to the top because of their talent, hard work and help from mentors. With these women doing their bit to forward gender diversity as a business case, it won’t be long before many more women claim the top chairs of management across companies.

Like K.V. Kamath said it is not about bringing a law, it is about changing a culture, a culture that has developed over thousands of years, and removing biases. An organization needs to make sure that recruitment, promotion and career development is merit-based, with no concern for gender and no typecasting of jobs. It should be a search for talent and not gender.