Appointments of female board directors to the UK's largest financial services firms declined 28 percentage points year-on-year in 2023, according to the latest EY European Financial Services Boardroom Monitor, which reports that just 33% of all appointments last year were of female directors, down from 61% in 2022. A downward trend in female appointments was also seen across European financial boardrooms, albeit to a lesser degree, where female appointments declined seven percentage points.

The EY Boardroom Monitor charts the profile, experience, training and skillsets of board directors across the MSCI European Financials Index. The data is supplemented with a sentiment polling survey of 300 European financial services investors. When asked about the boardroom gender diversity of a firm they are looking to potentially invest in 82% said it has a significant influence.

While all UK financial services firms monitored have female representation at boardroom level, the current gender split across all firms stands at 57% male and 43% female – remaining unchanged from 2022.

This year, of major European markets, the UK had the lowest proportion of female appointments to financial services boards (33%), falling behind France, where 64% of board directors appointed in 2023 were female, Germany (54%), Italy (45%) and Switzerland (43%).

21% of listed UK financial services firms still report under 40% female representation in their boardroom, ahead of European peers, 31% of which are yet to attain this threshold.* 40% is the level required by the FCA's rules on diversity and inclusion for company boards and executive management, which applied to all listed UK companies for financial accounting periods from 1 April 2022.

Anna Anthony, EY UK Financial Services Managing Partner, comments:

"While annual fluctuations in the make-up of boardrooms are to be expected, a decline in the number of UK female director appointments of this magnitude is concerning. Tougher reporting requirements on gender diversity, requiring firms to comply or explain their current diversity metrics, are clearly not yet driving the necessary change at pace.

"Diversity is a key driver of performance, and increasing female representation on boards is not a nice-to-have, but a must-have. Efforts to grow the pipeline must be prioritised and should go above and beyond regulatory minimum requirements."

C-suite experience in demand on UK boards

C-suite experience was the top criteria for new board recruitment in 2023, with 81% of new appointments to UK financial boards during the year bringing current or past executive management team experience. This compares to 59% of new appointments across Europe bringing c-suite experience. Of directors with c-suite experience appointed to UK financial firms this year, just 36% were female, down from 50% in 2022.

Across UK financial services boardrooms, female directors remain significantly less likely than their male counterparts to have the experience of c-suite role or hold a senior board position. 58% of female directors have the experience of an executive management team role, while 77% of male directors have similar experience. There are no women in senior board positions (Chair, CEO, CFO or Senior Independent Director) at 26% of the UK's listed financial firms. The FCA's "comply or explain" rules on diversity and inclusion for company boards require at least one of the most senior board positions to be held by a woman.

Andrew Hobbs, EMEIA Center for Board Matters Leader, comments:

"C-suite experience is understandably a highly influencing factor in the appointment of financial services board directors given the skills and leadership qualities it brings. While there are de facto a smaller number of female candidates with c-suite experience, the ideal board is not necessarily made up entirely of individuals who have all held the most senior roles. Diversity of experience should not be underestimated, especially as financial services firms increasingly navigate complex new focus areas which require specialist, less traditional skills and experience, for example, in sustainability, technology, risk and geopolitics."

Skills in demand

Data from the EY Boardroom Monitor shows that 16% of UK financial services board directors left their role in 2023, with new appointments lagging departures at 13%.

UK financial boards have used the opportunity of new appointments to continue to expand political, technology and sustainability skillsets and experience this year. Of directors appointed in 2023, 37% bring political experience (down from 39% in 2022); 30% have professional experience in tech (up from 22% in 2022) and 15% have professional experience in sustainability / ESG (down from 31% in 2022).

New appointments are still more likely than existing directors to have tech and political expertise and experience. Across all UK board members, 17% have expertise in sustainability; 22% have expertise in tech; and 36% have political experience.

In the past year, a greater proportion of female directors have brought experience in tech (44%) and ESG (22%) relative to male peers, 22% of whom have tech experience and 11% have ESG and sustainability experience.

Omar Ali, EY EMEIA Financial Services Managing Partner, comments:

"As global geopolitical dynamics continue to evolve, and technology and sustainability demands on firms grow ever more complex, bringing new skills and breadth of experience to the boardroom is a priority for financial services chairs across Europe. Structuring a board that is sufficiently broad in scope yet attuned to the multitude of changes across the sector is a balancing act, which chairs and boards across Europe are proactively addressing."