The extent to which the banking industry is dominated by those who attended private schools has been revealed. A study found 60% of leaders in financial institutions were privately educated. Only 7% of the general population attends a private school. In response to the study, four leading banks – Barclays, Deutsche Bank, HSBC and Lloyds – have launched a new scheme to improve access to banking jobs for young people from non-privileged backgrounds.
The research, carried out by the Boston Consulting Group on behalf of educational charity the Sutton Trust, looked at 500 leaders and 1800 new recruits from across the whole sector, including banking, hedge funds, insurance and private equity. It found 37% of recent recruits and 60% of leaders in financial services went to private schools. This compares with just 7% of the school population.
These findings neatly tie together concerns over decreasing social mobility with the dominance of the UK’s booming financial services sector. The report estimates that 30-40% of those earning more than £120,000 per year work in finance.
But Chris Roebuck, a former HR executive at several major financial institutions and visiting professor of transformational leadership at Cass Business School, thinks we shouldn’t be overly worried by private schoolkids in the City.
“The days of hiring somebody from a top school because they knew which fork to use at dinner are long gone,” he says. “In my experience, your average HR person or senior executive isn’t too worried about what particular school you went to. Banks are more concerned with what evidence an applicant can provide of their capabilities.”
“Capabilities” in this sense doesn’t just mean A levels or dissertations. According to Roebuck, applicants from private schools are more likely to get a job in finance as their education simply better prepares them for the role, both in terms of academic achievement and extra-curricular experiences.
“Academic ability is important, but so is the ability to get on with others and understand the wider world,” he said.
In Roebuck’s experience, a “well-rounded character” is key for banks, and this can be demonstrated through travel, sport, business interests or running a society at university. If this means people who went to private schools are more likely to get hired, then so be it.
“The key issue is bringing up base standard of state education in this country. This should be seen as a criticism of state education standards, not private education influence.”
But not everyone agrees that banks and hedge funds need necessarily be dominated by the elite. After all, at least one comparable industry has a quite different workforce.
Crawford Spence, professor of accounting at Warwick Business School, recently looked at the makeup of the “Big Four” accountancy firms. “It is more meritocratic”, says Spence, “there are fewer independently educated people, and degrees from non-elite universities are more common”. Compared with banking, “what you do is more important than where you are from”.
Spence points out there is an element of “rational snobbery” behind banks’ hiring procedures. With the clients of most banks being privately educated, it makes sense to hire people from a similar background. This is something Roebuck agrees on, as organisations that require good networks need a “front of house” that can easily work with their clients.
It is debatable whether this snobbery really is in the interests of big financial firms – perhaps it is just the easy option.
The Sutton Trust report highlights that, while most companies see a diverse recruitment base as preferable, it has traditionally been hard to recruit suitable candidates from lower income backgrounds without putting in too much time or effort. For banks, says Roebuck, “the big challenge is to process large numbers of recruits without missing the hidden gems”.