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Naomi Mercer is senior vice-president of diversity, equity and inclusion for the American Bankers Association
Banks are facing mounting pressure to take action on workplace diversity, equity, and inclusion. This applies not only to their internal workforce but also to the communities they serve. As the leading banking trade association in the United States, the American Bankers Association (ABA) is committed to assisting lenders of all sizes in enhancing and expanding their diversity, equity, and inclusion (DEI) programs. Implementing these initiatives not only aligns with ethical principles but also brings significant benefits to businesses.
Banks recognize the need to adapt due to changing demographics and understand the advantages of having diverse and inclusive teams, such as enhanced innovation and agility. Such teams are more likely to remain loyal to an organization and drive better business outcomes. Banks also acknowledge the importance of committing to DEI at all levels, as an inclusive culture fosters a sense of belonging and respect for individuals from various backgrounds.
Among the various initiatives, banks have been providing unconscious bias training for their staff, launching sponsorship programs for employees from under-represented groups, and offering resources for inclusive leadership practices.
ABA collaborates with its members from the $23 trillion US banking industry to create and implement customized training programs. These programs help bankers mitigate their biases, provide unbiased customer service, and leverage the advantages of diverse teams.
Additionally, ABA learns from bankers leading DEI efforts at their own institutions. An advisory group comprising bankers from across the US contributes to shaping ABA’s policies and advocacy efforts. This ensures the industry’s commitment to equitable banking and showcases the dynamic career opportunities it offers.
Furthermore, ABA works with other industry groups to facilitate partnerships between mainstream lenders and minority depository institutions. These partnerships aim to expand the impact of minority depository institutions, which are owned primarily by individuals from racially under-represented backgrounds. Such institutions play a crucial role in providing capital to small businesses and under-represented communities across the US, thus fostering economic opportunities for many Americans.
By collaborating, the banking industry can enhance access to banking services. In collaboration with 21 core providers, ABA strengthened its Bank On movement in 2019. Bank On, led by the non-profit Cities for Financial Empowerment Fund, strives to improve the financial stability of the 5.9 million American households that are unbanked, with a disproportionate impact on black, Hispanic, and indigenous families.
As a result of these efforts, Bank On-certified low and no-fee accounts are now available at 52 percent of branches across the US, and institutions offering Bank On-certified accounts represent 62 percent of the domestic deposit market. This represents a significant improvement, with the unbanked rate decreasing from 5.4 percent in 2019 to 4.5 percent in 2022 — the lowest level since the government began tracking the data in 2009.
However, there is still work to be done to further advance DEI in the banking sector. The data shows that women, people of color, and individuals from other under-represented groups continue to face challenges in securing executive roles. Banks must strive to better reflect the increasingly diverse communities they serve, as this is crucial for success in the highly competitive financial services marketplace of today.
Banks of all sizes, geographies, and cultures are making progress in creating a more equitable, inclusive, and diverse financial industry. However, achieving the necessary transformations through DEI initiatives requires tailoring them to existing workforces and a bank’s intended future culture. This is undoubtedly a challenging task.
It is imperative for banks to prioritize DEI at all levels of their organization — within their workforce, among their customers, and in their communities.
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