We have a diversity gap in U.S. banks and credit unions:
- Racial and ethnic minorities represent about 40% of the U.S. workforce, but they comprise only about 20% and 25% of bank and credit union leadership, respectively.
- Banks are improving at placing qualified females in positions of leadership, but they still struggle. Females represent a little under 50% of the U.S. workforce, but they comprise only about 30% of bank leadership positions.
- Credit unions have long awarded more leadership positions to females than banks. In fact, CUs now enjoy a higher percentage of female leadership members than the general workforce does.
We can argue about the reasons why the gap exists, and then we’d get all political and red-faced, but the gap exists. The better question is, does the gap matter?
Yes, the diversity gap does matter, and it brings strategic and financial repercussions:
- “Diversity Equity and Inclusion in the Financial Services Industry Statistics” (Gitnux, Ryan Townsend, Feb. 13, 2026) states that diversity index scores have a moderately positive correlation (r = 0.45) to bank revenue growth. That’s the exact same Revenue Growth residing at the top of every bank and credit union’s To-Do list. It’s not a causative relationship, but the study calculated that about 20% of revenue growth variability at financial institutions is explained by diversity.
- In 35 years (my career span), credit union deposits grew about 30% faster annually than bank deposits from 1991 to today. A $1B deposit bank in 1991 would be about $6.8 billion today. A similar credit union in 1991 would be $11.8B now. There’s no cause and effect that I’m prepared to sponsor, but the stats have to make you think.
The big boys over at McKinsey published a study called “Why Diversity Matters” before the topic ever became controversial. Look at what the smart guys say:
- Top quartile businesses for racial and ethnic diversity are 30% more likely to have financial returns above their respective national industry medians.
- Top quartile businesses for gender diversity are 15% more likely to have financial returns above their respective national industry medians.
- There is a linear relationship between racial and ethnic diversity and better financial performance: For every 10% increase in racial and ethnic diversity on the senior executive team, earnings before interest and taxes (EBIT) rise 0.8%.
The gap exists, and it likely affects your bottom line even if you cannot measure how much. It’s not that the act of becoming more diverse magically makes a bank more profitable or faster growing, of course. What matters is what that diversity brings to the organization:
- Marketing – A deep, first-person understanding of diverse market segments means more effective sales and service.
- Recruiting – You’re kidding yourself if you don’t think all of your Gen Z and seasoned recruits (not just minorities and females) are paying attention to your board and management diversity. Non-minority applicants can also get The Icks when they see a homogenous management team! If recruits don’t see minority and female success stories at your bank or credit union, what are they going to think about their own chances of success? You could be losing majority and minority recruits before they get past the leadership picture in the annual report.
- Reputation – Regulators, the public, employees, recruits: they all have a loud opinion on your bank’s diversity.
- Problem Solving – Diversity introduces new ways of analyzing and solving problems, with different perspectives leading to more educated decisions.
What’s a CEO to do? There are countless stats that suggest that diversity has a role in your bank’s long-term success, but you know in your gut that there is no systemic hiring plot at your bank. The truth is that it doesn’t matter if you unintentionally created the diversity gap. It’s there. It gets noticed. It affects your numbers.
This is what you should do:
- Study the stats below across different groups at your bank. If your team doesn’t measure these numbers, that’s telling you something.
- Promotion rate
- Voluntary turnover
- Succession plan composition
- Employee satisfaction and engagement studies
- Recruiting success, especially for experienced hires
- Answer these questions once you have pored over the numbers:
- Are we able to hire and retain the best possible talent?
- When we get a known, star player interviewing with us, do we win?
- Is our job promotion rate consistent across groups?
- Are we losing high performers at high rates?
- Does our succession pipeline reflect where our future leaders are coming from?
- Did we create barriers unintentionally?
If all is fine on those fronts, you may be able to tap the brakes for a year. If you find that your bank or credit union is losing strong talent or failing to recruit it, you have a natural resource problem. You have to do something. It’s not about meeting quotas or caving to media pressure. It’s about acknowledging that diversity not only brings a more satisfying workplace and better decision-making, but it can affect the bottom line.
Scott Hodgins is a senior director at Cornerstone Advisors. Follow him on LinkedIn and X.