Citi's announcement that Jane Fraser would replace CEO Mike Corbat in the bank's top role when he retires in February was met with praise and excitement in the banking sector.
Fraser, who has been in line to assume the role since her promotion to the bank's No. 2 executive in October, will finally break the industry's glass ceiling as the first woman to head a major U.S. bank.
Goldman Sachs CEO David Solomon called Fraser a "pioneer," while House Financial Services Chairwoman Maxine Waters, a vocal critic of the industry's lack of diversity, said the move represents "historic progress."
Amid the fervor over Citi's leadership decision, many industry experts hope the bank's move will trigger other major financial institutions to follow.
"It's hard to overstate its significance," Lee Hanson, partner and vice chairman of the CEO & Board Practice at executive search firm Heidrick & Struggles, said of Fraser's promotion. "I'm sure the boards of not only the major competitors to Citi, but throughout the sector and even beyond, are talking about this, asking themselves, 'What should we be doing?' Their executive teams are obviously talking about this, too."
Philippa Girling, chief risk officer at digital bank Varo, said Fraser's appointment is an important indicator that some change may be coming to an industry not known for its diversity.
"Diversity at every level is critical for the future success of the industry, and it has been a long time coming at the top," she said.
Women held 21.9% of leadership roles in financial services firms in 2019, according to a study by Deloitte. The company predicts the proportion of women in leadership roles at banks will grow to 31% by 2030.
The industry's record on diversity has drawn criticism from lawmakers in Washington.
A survey released by the House Financial Services Committee last year found the boards of directors of the nation's largest financial institutions are 29% women and 17% nonwhite.
"[Banks should be] increasing their focus on recruiting through affinity groups and minority colleges and universities; closing the pay equity gap for women and minorities; and increasing investment in leadership and development programs for building a pipeline of diverse talent," the committee said.
While progress has been slow, Hanson said she believes banks are more focused on bringing diversity into their executive ranks than in the past, and she's encouraged by the efforts she's seeing.
"Diversifying the boards and focusing on the executive suite, it's something that I'm glad is part of our regular dialogue with our clients in a way that it wasn't a decade ago," she said. "I don't see us going back from that."
But it's not enough to applaud one large bank and hope others will follow, said Katrin Zimmermann, managing director of the Americas at TLGG Consulting.
Banks need to do more than just hope female leadership will create a "trickle-down" effect on organizational culture, she said.
"Too often, successful women in the finance industry are outliers that have made it against the odds," she said. "Yet no woman should be expected to fight an inherently unfair system individually. Instead, we need changes on a structural level. Appointing a female CEO is a start, but more work needs to be done."
To see more women reach the CEO level in banking, Girling said banks need to place more women in revenue-generating leadership roles.
"Women are often only able to rise to C-suite spots in support or back-office areas as a result of the continued unconscious bias that exists in this and many industries," she said.
Fraser's 16-year career at Citi is testament to how revenue-generating leadership roles can prime an executive for the top spot.
Before her promotion to president and CEO of global consumer banking in October, Fraser served as CEO of the bank's Latin American operations.
Prior to that, Fraser served as the top executive in several of the bank's arms, including private banking, mortgages and the U.S. consumer and commercial banking businesses.
Hanson said seeing more women reach the top requires investment in women executives that includes actively preparing them to become "CEO-ready."
"You have to have had a certain set of experiences, [profit and loss] opportunities, and the ability to show that you can lead a massive organization," Hanson said. "It takes a board and a CEO who is thinking about this, taking this seriously. It needs to be purposeful, and it doesn't happen on its own."
Banks also need to take stock of their internal policies and ask themselves what could be hindering women from rising through the ranks, Zimmermann said.
"What are their policies with respect to parental leave? How are they supporting women in entry-level and mid-management positions? How is the company handling sexual harassment claims? How are they facilitating an organization culture that allows for a diversity of perspective, whether that is race, class or gender?" she said.
Fraser's appointment has led to speculation on which major bank will be the next to name a female CEO.
Major banks with potential contenders in their C-suite include Bank of America's Cathy Bessant, the bank's chief operating and technology officer; Marianne Lake, who heads JPMorgan Chase's consumer lending business; Jennifer Piepszak, JPMorgan's CFO; and Susan Huang, who co-heads Morgan Stanley's investment banking business.
While the CEOs of the aforementioned banks haven't provided any indications of retiring any time soon, Hanson said she thinks it won't be long before another woman is named CEO of a major U.S. bank.
"More women at major banks have these roles, and that just wasn't true in the past," she said. "There's a wider pool of available talent now."
Girling said women are also learning how to better play to their strengths.
"Today, women have stopped trying to mold themselves into men in order to succeed and are realizing that their natural approach and style brings valuable diversity and allows them to lead with authenticity," Girling said.
"It is not necessary for women to act more like men in order to be valuable, it is only necessary for them to be at the table and to be heard. Women are adopting a mantra of 'don't change, change the rules.' Fraser's appointment suggests that the rules are finally changing," she said.