By Karen Epper Hoffman
Greg Cunningham still vividly remembers the long and meaningful conversation he had on May 26, 2020 with his CEO, U.S. Bancorp’s Andrew Cecere.
It was the day after the now-infamous murder of George Floyd, which took place in Minneapolis, mere minutes from the headquarters of the super-regional bank. Less than 24 hours later, Cunningham (the bank’s chief diversity officer) and his CEO were discussing the potential impact of this event—and the seismic effect it would have on social and business matters. “Andy called me the first thing that morning, and [we discussed] what he and the bank should be doing in response,” Cunningham recalls. “We knew that there was something we needed to do.”
Over the course of this conversation, Cunningham says, he and the bank’s CEO went “from titles to first names” and the pair discussed how the job of a bank’s C-suite has expanded from managing profit and growing shareholder value to “recognizing the role that banks play in social issues. . . . It’s becoming an integral part of our business strategy.” In July 2020, U.S. Bank elevated the position of CDO to report directly to Cecere.
There is no denying that Floyd’s murder and subsequent events last year marked a sea change in how corporations talk about and act on diversity, equity and inclusion priorities. The banking industry in particular has a significant role in providing an equitable economic footing for all consumers and businesses and helping to close homeownership and wealth gaps. And a big part of this sea change was in banks’ internal practices, with many banks responding to calls for action by their own employees.
“The reason the industry got a bad rap is that it earned it,” Cunningham says. “The whole industry was complicit. That’s a historical fact. The industry has had to come to terms with its own history.”
Building DEI expertise
Large U.S. banks have had diversity officers and teams in place for years, according to Naomi Mercer, SVP diversity, equity and inclusion at ABA. But Floyd’s death and the events that unfolded after have created “more of an empathy shock” for many bankers, who might not have realized how deep racial disparities are. As a result, more community and regional banks have been adding diversity officer positions, often housed within human resources, to help support the bank in broadening their employee base to reflect the full communities they serve.
Clara Green, head of diversity and inclusion at Regions Bank, says the Birmingham, Alabama-based bank began its DEI efforts in earnest in 2018, when the bank launched its Regions’ Diversity and Inclusion Center of Expertise. “We are focused not only on impactful conversations but also on substantive actions that demonstrate to our associates, customers, and community partners that Regions is working every day to advance this important work,” Green says. DEI efforts at Regions Bank have ranged from employee to customer-facing developments, across many business departments and geographies, according to Green.
Glenn Jackson has been chief diversity officer at M&T Bank for two and a half years, after working varied positions in recruitment, finance, treasury, retail and community initiatives at the Buffalo, New York-based bank. After taking the position, Jackson interviewed internal stakeholders to get a better sense of what top executives and frontline employees alike viewed the most significant issues for the bank becoming more diverse and inclusive. M&T Bank has reached out systematically to historically underrepresented groups—women, black and brown people, people of Asian descent, employees with disabilities. “We want [all people] to feel they can build a career here, that they see representation across the board,” says Jackson. “That often means unpacking unconscious biases. . . . The themes we see are so common.”
For example, starting with its “journey-mapping” of female employees at the bank, Jackson says M&T leaders came to understand that “if a women chooses to have a child, her whole career should not be on hold.” Many bankers pointed to the idea that addressing these overt and unintentional biases internally were key to understanding why the employee base itself might not be as diverse as it could be, and in turn, why customers and prospects from historically underserved groups might not feel as welcomed by their financial providers.
Increasingly, established banks are not only embracing social justice interests, but they are being launched with that as a foundation to their mission. Case in point: Beneficial State Bank was founded in Oakland, California, in 2008 with the express undertaking of investing in under-served communities, according to Francis Janes, industry relations and partnership director for the Beneficial State Bank’s foundation.
Prior to his arrival 16 months ago, Beneficial State Bank was already working on diversity and equity initiatives, which were somewhat stalled last year in the wake of the COVID shutdown, Janes points out. But in the latter half of 2020, Janes says the bank has been back to working more assiduously through town meetings, staff trainings and other initiatives to “act as a change agent . . . to influence policy through our state and other state banking associations.”
Building diverse workplaces
Linda Navarro, president and CEO of the Oregon Bankers Association, has seen “a lot of activity” around banks developing their social justice positions, particularly more community and regional banks rolling out initiatives. “It’s important to diversify the banks’ employees,” says Navarro, pointing up a key issue for DEI. “We need to understand the opportunities to increase recruitment.”
Janes agrees on the foundational role of diverse workforces. “For all institutions, we need to be more creative in terms of what it looks like to recruit from historically underrepresented groups,” says Janes. “We cannot passively wait for people to apply. For many banks, the diversity issue is already being answered.”
Denver-based FirstBank has already made adjustments to its recruiting and other initiatives, piloting a Black employees resource group” at the bank, according to Tony Oum, EVP for the FirstBank’s multicultural banking center. For FirstBank, like many financial providers, there’s a renewed interest in advocating for up-and-coming employees and initiatives as opposed to simply sponsoring them. The hope is that if senior managers can truly advocate for these disenfranchised employees, the bank will more readily include these female, black, brown, Asian, indigenous and disabled employees.
Oum points out that more than 40 percent of the bank’s employee population identify as non-white or disabled; and more than half of the bank’s management team members are women. The plan is to increase the percentage of board members of color from 17 percent.
Regions’ Clara Green says that “it’s encouraging to know that employers across several industries are increasing their focus on diversity, equity and inclusion. I believe all initiatives should revolve around core qualities such as unity, understanding, collaboration, and teamwork. One of the most common discoveries along a diversity, equity, and inclusion journey is not what’s different about each other but, rather, what we all have in common. We all have different backgrounds, but we all want to be valued.”
The equity component is also crucial to is to diversity, equity, and inclusion, says Green. “A lot of people see equality and equity as the same. But that’s not the case. Equality is about giving everyone the same platform. Equity is about making sure everyone reaches the same heights.”
Advocacy and results
For decades, one of the biggest concerns for people of color in their dealings with the financial industry has been the higher frequency of denial of mortgage loans to people of color or recently immigrants. Homeownership still represents a significant advancement in one’s financial progress and a huge contributor to wealth-building over time.
Teresa L. Gregory, president of Traditions Mortgage and senior business segment leader for DEI at the York, Pennsylvania-based Traditions Bancorp, considers herself “passionate about this issue. . . . It’s embedded in our core values.” In the first quarter of 2020, just 44 percent of black families owned their home, compared with 74 percent of white families, according to the U.S. Census Bureau. And that gap is much wider in some U.S. cities, such as Minneapolis; just one-quarter of black families own a home there, compared to three times that many (76 percent) of white families.
Starting in 2010, Traditions Bank has embraced a “strategic goal on inclusiveness,” which has been ramped up in the past three years, in the wake of the social justice movement and a greater interest in strategically educating and recruiting around diversity. “We are building a greater diversity in our associate base,” Gregory says. “We’re looking at how we recruit . . . how we educate and train too . . . as well as being more inclusive with vendors.”
Myra Caldwell, chief diversity officer at Cadence Bank in Houston, says her bank has reinforced its “long-standing commitment” to DEI in the past year by focusing on more diverse talent recruitment and development. Like many small to midsize banks—Cadence has roughly $19 billion in assets in advance of its in-process merger with BancorpSouth Bank—the bank named a CDO in September 2020, promoting Caldwell from an executive role in treasury and deposit operations. And the bank has been instituting new diversity initiatives and partnering with external community reinvestment groups and other organizations to help foster a more diverse and inclusive employee base. Last year, the bank hired an executive to direct “supplier diversity”—offering support and guidance to pair Cadence with third parties run by women or people of color.
‘Hungry for action’
In recent months, many banks have taken to reaching out with their message of DEI to let customers and prospects know that this is not just a trendy development for them. Like several banks last year, FirstBank issued a statement in the wake of Black Lives Matter protests. “These past months have shown us the best and the worst in humanity. We saw individuals and communities rally together to help those devastated by the pandemic,” read the statement from FirstBank CEO Jim Reuter. “And at the same time, we were given a very stark reminder of how unjust and unequal our world can be.”
“We have a long way to go when it comes to achieving economic and social justice; not just as an organization, as an industry and as a society,” the FirstBank statement continues. “But we are committed to helping. We owe this to our customers, communities and employees.” In early 2020, FirstBank launched its own Multicultural Banking Center, focused on extending financial services to communities of color. “We are hungry for action, substantive action,” says Tony Oum.
“We’re also learning that there is no definitive roadmap to incorporating DEI initiatives into a company’s mission,” he adds. “Rather, there are myriad ways to be purposeful in ensuring a company is truly being inclusive of all walks of life. Whether that’s partnering with external organizations, executive involvement, hiring and training diverse candidates, or just educating your company on the individuals that comprise the company, the financial industry has established itself as a leader in DEI causes.”
Karen Epper Hoffman is a frequent contributor to the ABA Banking Journal.
