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Standing in solidarity with the #BlackLivesMatter movement is more than releasing external statements of support. Corporations must leverage their power to create an equitable landscape for Black people.

Professionals of color face challenges securing quality jobs with livable wages and benefits, especially at the managerial and executive levels. This is the case across most sectors, but very apparent in the finance sector. According to the 2018 EEOC data, African Americans makeup just 3% of executive positions in the finance sector, although they make up 13% of the population. At a time when consumers are calling for institutional accountability around systemic inequities, financial institutions must start by addressing their internal diversity issues.

Equitable representation is essential to providing intergenerational wealth that builds opportunities for people of color. The high-salaries, benefits and stock options associated with private sector positions are essential to helping Black families obtain wealth-building assets. As it stands, Black and White wealth gaps persist at all levels of education. In 2013, the median net worth of Black households headed by someone with at least a bachelor’s degree was $26,300, while for households headed by white college degree holders that net worth was $301,300 — 11 times that of Black people. While high-paying employment opportunities cannot bridge wealth divides entirely, it is instrumental to helping Black families lay the groundwork for future wealth.

Some bank executives claim a limited pool of Black talent to recruit from, but the problem is in large part due to insular recruitment practices. For senior and executive positions, banks conduct themselves like a sports franchise and trade executives like sports teams’ trade players. The rationale being they need executives with relevant “experience,” which ultimately relies upon the existing, and overwhelmingly white, pool to recruit from. Yet, even experienced and talented Black and Latinx professionals within these exclusive recruitment circles are overlooked for executive positions.

Banks’ recruitment practices reinforce the status-quo and a traditional way of conducting business that is increasingly disconnected from the needs of the American public. As populations of color grow to become more of the U.S. population, banks need representation that reflects the communities they serve. This is something that lawmakers like Congresswoman Maxine Waters have called attention to in her report, “Diversity and Inclusion: Holding Large Banks Accountable.” To break the ineffective cycle, banks must move away from their insider’s game and secure diverse leadership.

The Race and Ethnic Representation and Investment (RERI) framework, released by the National Community Reinvestment Coalition (NCRC), outlines a grading scale banks can use to measure their internal representation of different races and ethnicities. Instead of broad diversity and inclusion goals that squeeze in a myriad of priorities, the framework focuses solely on the representation of different races and ethnicities in personnel and supplier contracts. This ensures that race and ethnicity are directly addressed and can correlate better to racial wealth inequality. The grading scale encourages banks to increase their representation from national industry averages to figures that surpass the population rates.

The framework also outlines key steps banks should take to improve racial and ethnic demographics within their internal workforce and supplier contracts. For most institutions, the initial step begins with tracking their diversity data to get a better understanding of their current levels. Collecting diversity data is essential to creating realistic goals and metrics for improving the grade of representation within the institutions. Banks should include assessments of diversity and inclusion efforts in evaluations of all managers and executive leaders. This will ensure that accountability systems are in place and sustaining a diverse workforce is not concentrated in one department or championed by one person.

Banks should also revise commissioned based pay structures, such as those associated with positions like equity advisors, that are intrinsically prohibitive to low-wealth communities. Making a commitment to address the racial wealth inequality as a societal issue is equally important as it shows the institution’s broader role in creating a more just economic landscape.

Some banks, such as JPMorgan Chase, Bank of America and Citi, have already started to make public commitments to improve their diversity and address racial wealth inequality. These efforts show promise and can have a great impact on Black communities, especially if they are more than a one-time commitment and continue after public momentum around racial equity subsides.

Now, more than ever, it is essential for banks to reject the inaccurate assertion that Black talent is scarce in the finance sector and dedicate their efforts to practices that promote race and ethnic representation among their teams. This will ultimately showcase banks’ genuine support for Black communities and align with their public commitments.

Sabrina Terry

Writing since February 2022 · 1 story contributed