In the 1960s and 1970s - just a generation ago - the consensus among banks was that women were riskier customers than men. In fact, when Barclays introduced the first British credit card in 1966, the majority of successful applicants were men. This was because in those days, women had to get their father or husband to sign for most loans, even if the woman was the higher earner. This all changed in 1975 when the Sex Discrimination Act was introduced to finally outlaw discrimination against women seeking to obtain goods, jobs, or services - including loans or credit.
The Sex Discrimination Act might have opened doors for women, making banking more accessible, but 42 years later fundamental differences in the banking services that women use - and how they use them - are still not being adequately addressed by product design and development teams. Despite equality legislation and repeated attempts to encourage more women into STEM and finance, women’s primary relationship with banks remains as customers: banks may have an almost equal balance of men and women as customers, but only 34 per cent of managers working in the financial sector are female (and it’s even lower in technology teams).
Women in banking: Staff
The history of women as bank customers goes back at least as far as the 18th century, but - with one or two exceptions - women working in banks, especially in senior or technology-focused roles, is a much more modern phenomenon.
Although there are a few scattered examples of banks hiring women in the early years of the 20th century, it wasn’t until the First World War called away so many of the banks’ traditional workforce that ‘lady clerks’ were recruited in significant numbers for the first time.
After the end of the First World War, many women, who had either regarded their bank jobs as simply part of the war effort or worked for managers who saw things that way, handed their roles back to the men returning from war. Others remained however, recognising that both society and the banking sector were changing and there were many jobs that needed to be filled. But despite the increasing presence of women in the banking workforce, the gender pay gap was a problem. In 1931, for example, a man with nine years’ experience working in a London bank branch would have received an annual salary of around £250. A woman with similar experience was paid only around £170. Today, the gender pay gap remains an issue, with the average salary for male bank employees being £36,296 compared to just £28,825 for women, according to data collected by PayScale.
But while the pay gap in banking - as in many other industries - has been well publicised, less widely appreciated is the gap in who men’s and women’s banking needs are (or aren’t) catered for.
Gender gap in consumer banking behaviour
According to Kantar’s ‘Winning over Women’ study, financial institutions have been overlooking female customers’ needs at every major stage in the customer journey, from advertising to advisory services and relationship management. Banks’ failure to properly address the specific needs and behaviour of female customers will affect women’s confidence when looking for financial support, investing more into stocks and shares, and contributing more to their pensions. UK financial institutions could lose out on a £133bn opportunity as a result.
The survey also found behavioural patterns between men and women when it comes to other aspects of personal finance, such as banking transactions, lending, and mortgage borrowing. According to the research, satisfied female clients are twice as likely as men to recommend their bank based on recent transactions. Women also emerged as more responsible borrowers than men, taking a more conservative approach to different elements of the journey to homeownership, such as deposit requirements, monthly affordability, and extra costs.
By failing to develop products and experiences rooted in men and women’s fundamentally different perspectives on finance, financial services institutions are missing out on a very significant business opportunity. Kantar’s research found that reduced levels of female engagement, together with reduced confidence, has depressed saving rates among women, even though data shows that 53 per cent of the UK’s millionaires will be female by 2020.
If financial institutions were more engaging to women, and better able to support women in increasing their financial confidence , they could see as much as an additional £133bn injected into savings and investment. But to address this gap in engagement and be able to cater to female customers, the sector will need to first and foremost bring the issue surrounding gender balance in the workforce to the fore.
If we have more women in product and engineering roles, we can ensure that we are influencing the design of banking services in a way that appeal more to women. For instance, following the growth in female employment during and after the First World War, the UK experienced an increase in the number of women becoming financially active. Today, the UK’s financial sector remains a male-dominated business, but if we have more women building banks and services for women, we may not have to lose out on that £133 billion opportunity after all.