Details are being set out as part of a consultation published by UK regulators, The Prudential Regulation Authority (PRA) and The Financial Conduct Authority (FCA), on an EU directive.
Part of the directive looks at how company boards are composed.
The consultation says large financial firms will have to establish a nomination committee to help select the board of directors. This committee will decide on a "target for the representation of the underrepresented gender on the management body".
As well as setting targets, big banks, building societies and investment firms will also have to explain how they are going to meet the goal.
Promoting diversity
The targets will only apply to larger institutions, but all financial firms regulated by the PRA and FCA will be required to publish a policy, which sets out how they propose to promote diversity in the boardroom.
Linda Jones, an employment partner at Pinsent Masons, said: "This is the first time that a regulatory requirement to set gender targets for senior management teams has been imposed on UK businesses.
"While the requirement only applies to financial institutions at the moment, it may be a taste of things to come for other large businesses."
In 2011, a report by Lord Davies recommended all FTSE 100 companies have 25% female representation on their boards by 2015.
However, figures published in May 2013 by professional boards forum Boardwatch, showed the rate of appointments had slowed to 17%.
Davies said if the UK doesn't reach its target by 2015 then quotas could be introduced.
The changes are due to come into force by the start of next year and will affect large banks such as Royal Bank of Scotland and Lloyds Banking Group.
