“Male, pale & stale” is a great line I stole from Meltem Demirors (@melt_dem) in reference to bank management teams.
In reference to the picture above, please note I am sure these gentlemen are great bankers and board members, I am not trying to pick on them. That pic is honestly from a random search I did on bank boards. As a middle aged, white guy myself it might seem odd that I am saying stop making bank boards look like me. (seriously, I would love to be on a bank board)
We all have a drum to beat and I chose this one a while back while doing research before presenting to some of the largest banks in the world about innovation.
I could never understand how the poor souls I presented to about “the future of banking” would ever get approval to actually innovate when their boards resemble a retirement home more than a business ensemble. I highly recommend anytime you are going to present to a large company bank or otherwise, look up their board of directors it is fascinating.
As a side note, minus their founders, Google’s board members are all near or over 60.
It is worth noting the following points from the US census
- Average Age of US Population is 38 years old
- 50% of the US Population is Female
- 13% of the US Population is Foreign Born
In summary bank boards do not represent anything near the US population. Of course, you could counter that bank boards are a mirror of the bank’s wealthiest customers, that is not the point and it represents the past.
I became acutely aware of this issue in 2016 while developing a corporate venture plan for a large bank. I laid out what needed to be done to invest and then drive innovation in the bank from those investments. I was to present the plan to some senior executives and I wanted to see the team behind the team that would ultimately approve a $20M+ plan to invest. That size of investment would require board level approval and as I looked at the investor relations documents and noticed the board was Male, Pale and Stale, I thought, how or why would this team approve the plan?
Around this time, I saw an announcement about someone I like and respect joining a bank board in Canada. Scott Bonham was appointed to the Board of the Bank of Nova Scotia and I thought this was a giant revelation. He was just over 50 at the time but also a Silicon Valley VC and has a tech background, this made him the rogue outsider. Scott is a great guy (like most Canadians) and has a Harvard MBA and was an early investor in Alibaba, clearly an accomplished executive. What made the appointment amazing was he has a tech and investor background instead of an old-world economy resume.
Some stats before I continue my rant about bank board diversity.
Spencer Stuart among others track board demographics in depth. The S&P 500 boards that they track show an average board member age of 63.1 in 2017. Oddly the average in 2007 was 60.1 so it has actually increased over the last 10 years. The female and minority percentages are trending up with some ways to go before they reach a truly diverse board.
So what is the issue with the makeup of bank boards?
The mismatch between what banks need and the authority at the top to do what they need.
The Digital Banking Report 2017 has the following as the top priorities for banks in 2018, most lists have this plus a few others like evaluate blockchain and AI. And of course, partner with Fintechs, which would not be in any current board member’s wheelhouse.
Digital Banking Report, 2018 Retail Banking Trends and Prediction
The point is that bank’s need some technical expertise for their next chapter. How will they fund moon launch type tech projects if nearly everyone on the board is over 60 and has no tech background. It is not enough to have a board member say “my grandson loves the Facebook.” If you think I am exaggerating please reference the embarrassment that was the US Senate “grilling” Mark Zuckerberg about data usage.
Look up any bank board and note that most of these Titans of Industry come from the last generation of businesses. Oil & Gas as well as manufacturing have outsized representation in the board rooms of most banks. As our economy moves on from these previous drivers of value boards should also have new industry and new thought representation.
Am I advocating for a board of annoying 30 year old hipster douchebags?
No of course not, that would be intolerable for all involved and result in more insanity for banks than they deserve. I am advocating that any bank board work to get a person in their 30’s on the board. They add a person from a tech background and I don’t mean a retired CIO, but an actual Silicon Valley (or NYC) type techie that owns some bitcoin, understands blockchain and has coded in something since COBOL was a big deal. (Note: I last coded in COBOL and sucked at it)
No discussion of diversity would be complete without mentioning that with the progress of adding women and minorities to boards has started but has a ways to go. An excuse for not putting more diverse folks on boards is that board nominees need to be former CEOs, thereby reducing the “qualified” candidates by quite a bit. I say drop that requirement as it probably skews the board in a very bad way. Diversity of thought and background are required including schools attended, industries served and job titles held.
Bank customers have changed, the global economy has changed and our world continues to change, bank boards should represent these changes. Diversity is good because it drives better outcomes and that is what every board of directors should be focused on.