Resource Articles Back to Article List

Diversity in the Banking Workplace

Under Section 342 of Dodd Frank, each banking regulatory agency is required to establish an Office of Minority and Women Inclusion. The purpose of the office is primarily to assure that the hiring and promotion practices, and the contracting policies of the various agencies are appropriate. In particular, the Director of each office is to “develop standards for equal opportunity and the racial, ethnic and gender diversity of the work force and senior management of the agency” and “increased participation of minority-owned and women-owned businesses in the programs and contracts of the agency.” The third directed function of the office is to “assess the diversity policies and practices of entities regulated by the agencies.” (Emphasis mine.) In other words, the agencies are first to put their own houses in order and then take a look at yours.

From a diversity standpoint, I have no concern about the inclusion of women in the financial industry. In almost all community financial institutions that I am familiar with, there are two or three women who run the institution. They let the CEO of the institution, if that person is a male, think that he is in control, but the truth of the matter is that such women run the operations of the institution. And the CEO knows it and is very careful not to intrude in their domain. Without the women that are employed in the financial industry, it would come to a halt. If men were responsible, our deposits might not get processed for a week or two and our loan payments might never get credited.

Also from my observations, I have few concerns about ethnic diversity in financial institution employment practices. Whenever I am in a financial organization in a community that has a significant Hispanic population, I always see a large number of Hispanic people that are employees of the bank or members of the financial organization. However, racial diversity in the financial industry, at least from my observation, is a different matter. No matter what part of the country that I am in, I seldom see very many African-American employees in the financial institutions that I visit. When I speak to state banking associations, I seldom see very many African-American bankers in attendance. I don’t know why there are relatively so few African-Americans employed in the financial industry. The apparent lack of diversity is so widespread that I know that it is not a matter of racial prejudice. If it were, it would be isolated to individual financial institutions, but that is not the case.

Nonetheless, there is now an office within the agency that regulates your financial institution that has the directive to assess the diversity policies and practices of your institution. This will probably not happen soon. First, each agency has to develop its own policies and practices, which will probably take a year or so. Once they do that, however, I am fairly confident that these offices will want to flex their muscle over the institutions that they regulate. Each institution should take this time delay to evaluate the diversity in its workforce compared to the diversity in the community that it serves. It should also review its hiring and promotion practices. If an institution finds itself lacking, the following are some of the things that Dodd Frank encourages each of the institutions to do to enhance its employment diversity:

  • Recruit at historically black colleges and universities and other colleges and universities that have a large Hispanic enrollment,
  • Participate in job fairs in urban communities,
  • Advertise in media directed towards minorities and women,
  • Partner with organizations that foster the employment of minorities, and
  • Partner with inner city high schools.

I believe that the diversity of the financial workforce will become a significant issue. The problem with government offices that have a particular directive is that they want to demonstrate how great the problem is that they have been directed to correct and thereby how important they are and why they should be able to expand and become even more important

The above article was provided to Andrews Hooper Pavlik PLC (AHP) courtesy of TriComply, the compliance arm of TriNovus. AHP does not guarantee accuracy of the information provided in the article and it should not be construed as professional advice. If you have any questions regarding this article, please contact Randy Morse, CPA, Partner and leader of AHP’s Financial Institution practice. AHP provides a broad range of accounting, auditing, tax, and consulting services to financial institutions throughout the state of Michigan and beyond.

TriComply compliance service offer banks a full compliance package that provides them with quality assistance at an affordable price. TriComply provides the TriComply knowledgebase, compliance manual, policy manual (written and reviewed), compliance newsletter (weekly), advertisement review, compliance calendar, helpful resources and an online training library of compliance webinars.

The CFPB now has control over certain consumer protection laws. As a result, TriComply has put out a product called CFPB Comparisons: What Really Changed. This produce allows you to see the changes firsthand versus going line by line on your own. Thus saving you hours of stress, anxiety and work. Please contact Starr Largin at 205.588.4316 or or Darryl Brasfield at to receive information regarding TriComply or to schedule a demo.