Dr Poornima Luthra, author and Imperial College London lecturer in people, culture and inclusion, said underrepresentation was noticeable at university because fewer black students were enrolled on finance courses, limiting their access to the sector.
“We don’t see that representation in our student bodies in universities, so we know there’s a gap there,” she said.
Dr Luthra said this could start at home, where it might not be encouraged or seen to go into the financial services sector as a career path.
“It’s the chicken and egg thing; if you go to the bank and the financial adviser does not represent you, then you won’t think it’s an industry that understands you, and you won’t encourage your children to be a part of it.”
Data from the Black Talent Charter and Bain & Company found that black people made up 2% of the finance, insurance, and professional, scientific and technical services workforce, despite accounting for 8% of university students and 4.4% of the population.
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Luthra said it mattered to have black professionals in the financial services sector to represent the needs of consumers, and to improve understanding around how people from minority ethnic backgrounds prioritised financing.
“Investing in education is a big priority because for most families from minority ethnic backgrounds, they know that it is how the next generation moves up socioeconomically.
“So, when we think about what kind of financial services people reach out to, this is one of the areas that should be considered, because it’s such an integral part of the family’s needs,” she added.
Dr Luthra said that to recruit more black professionals, it was not only about hiring more broadly and thinking about the feeder channels of talent into organisations, such as business schools, adding that the lack of diversity in these schools “is a problem”.
She said addressing this could mean having an adequate representation of black professors in these programmes, adding: “You can’t be what you can’t see.”
The right representation
When asked if the visibility of black professionals was important, not just their seniority, Dr Luthra said it was about having “decision-making power”.
“You probably will find better representation in HR or marketing teams, but it’s about who actually has an impact on decisions and profit and loss roles,” she added.
She said every person from an underrepresented group hired into a company “feels the weight of an entire community if they are the first or one of a few”.
This comes with fears of not being heard, being labelled, and people assuming they are a ‘tick box’ and not capable of doing the job.
She added that she was “cautiously optimistic” when a single or few black professionals made it up the career ladder, because even though seeing one person leading change could influence and encourage others, “there’s something to be said about the force of numbers”.
Dr Luthra said: “Change only happens when there are numbers there; otherwise, it’s also seen as that one person there, rather than a systemic cultural change, which is what we want.”
The need to hire qualified, black professionals who would be good for the business, must be combined with ensuring they feel safe, like they are being heard and can thrive, Dr Luthra said.
“It isn’t just important to get people through the door and add to the data, but even before that, the recruitment process needs to be fair and lead to the best person chosen for the job, who also happens to be black,” she added.
Research from KPMG noted that many firms made diversity and inclusion plans following the Black Lives Matter protests in 2020, but since that year, black representation in financial services has not significantly improved.
It found that in some sectors, such as insurance, representation had actually fallen.
Dr Luthra said change might include reviewing the job description, what is truly needed for the role and removing any hidden biases. She also suggested that employers cast the net wide and look beyond the top universities, as not all students had the support to write the essays needed to get into certain schools, so they could find “even more competent talent” in places they had not looked.
Government research found that the entry rate into higher-tariff universities was lower for black students compared to other groups, at 21%, even though they were “well above average” on the overall rate.
The same research showed black students were more likely to drop out of higher education and achieve a first- or upper-second-class degree, suggesting this was because they did not have access to guidance around university and career options.
Understanding black economics
Within a company, Dr Luthra said it was beneficial to have people from different cultures who looked at things differently because it developed an understanding of various perspectives.
With a spending power of over £375bn among black, Asian and multi-ethnic individuals in the UK, Dr Luthra said businesses should tap into this consumer base, which had the potential to increase with demographic and social mobility trends.
She said the market was untapped and hiring black professionals would help to build trust and relationships, as financial services largely relied on word of mouth.
“If someone has trusted a financial adviser when they buy a home, they will recommend them to another person and their communities,” Dr Luthra added.
On the other hand, Dr Luthra said black and other ethnic minority families might have lower levels of inherited wealth compared to their white counterparts, meaning some of the financial services that might be pitched to some communities did not apply.
She also said people from black backgrounds might have less liquidity, so they were less likely to have a risk-taking attitude because “the safety nets are not as solid”.
She added: “If something goes wrong, if you lose your job, an illness, the ability to fall back on a safety net is not always there, so you’re really thinking of ‘how much liquidity do I get to keep if something goes wrong?’.”
Dr Luthra added that there were occasionally lower levels of trust in financial services and the banking sector, “when you don’t see people like us on the other side when you’re talking about something so dear… building trust with a stranger who doesn’t look like me or understand my background, or empathise with the generations it has taken to get where I am, and to treat that with respect, that’s a big part of why we need to make the case to employ people who look like your customers so they can broker trust.
“Financial services is all about trust. You’re asking people to let go of something that so much effort has gone into building, and it hasn’t always come down from generations.”
To reach out to black consumers, Dr Luthra said to ensure marketing campaigns were relatable, citing Remitly as “brilliant” for its adverts that show an understanding of South Asian cultures.
“Market your services to those groups in a language they understand, but that is hard to do without internal representation,” she added.
