What Can Financial Institutions Do to Attract and Retain Top Talent in the Digital Era?
Many financial institutions are struggling to both attract and retain top talent, even as they introduce measures such as faster promotions in a bid to win the loyalty of employees. Most also offer market-leading competitive pay. However, they compete not only with each other, but all businesses in their geographical area as consumer-facing institutions of all stripes battle it out to hire the best people with cross-industry skills.
Increasingly, young professionals are finding themselves drawn to tech firms or innovative startups. And this is precisely the problem. As financial institutions undergo their own digital transformations, they need to be attracting employees with the skills to effectively apply new technologies and digital services as they are developed, and they need an agile and adaptive workforce to navigate the changes that will result. However, with the emergence of smaller, niche FinTech players - who are quicker to adapt to the changing market -traditional financial services organizations are struggling to stand out.
So - what can be done to attract the right people with the right skills and retain them for the long term?
Preparing for Workforce Transformation
When we look at the market in which traditional financial institutions are operating today, it comes as no real surprise that incumbent players are now struggling to bring in people with the right skills. Millennials entering the job market are far more digitally-savvy than previous generations. They've grown up with broadband, social media, and smartphones in their pocket and, as a result, are being pulled towards the fun, disruptive, and digital-first startups that are now storming the market.
Technology is also having a negative impact on how some potential candidates perceive the finance world. As financial institutions work hard to update their legacy systems and deploy technology to improve operating effectiveness, many complex processes that have traditionally been carried out by the human workforce are becoming automated, leaving some in fear that their skills are no longer relevant to the financial services sector.
However, with digital transformation, new jobs are created requiring new skillsets in big data, cloud, IT security, and mobile and web development. As one director is quoted as saying in Ernst & Young's April 2018 report 'The Future of Talent in Banking: Workforce Evolution in the Digital Era', "We will not know what the bank of the future will be like until we feel our way there. It is clear, however, that one of the big governors of success will be our ability to bring in tech people and integrate them into the guts of the business."
Banking's Digital Talent Crisis
Last year, a study by Capgemini found that 62% of senior leaders in the banking industry believe that the digital talent gap has been widening over the past couple of years - more than in any other industry surveyed, including retail, insurance, and automotive.
(Image source: capgemini.com)
Banks and credit unions desperately need tech talent. According to a study by Peak 10, more than three-quarters (76%) of financial institutions report that they have created new IT roles in recent years, though half say that hiring IT staff is either "difficult" or "very difficult".
(Image source: peak10.com)
So, the question remains - what must financial organizations do to attract the people they need?
The Millennial Focus - Branding, Flexibility, and Benefits
Millennials are less driven by the high salaries and benefit packages that financial institutions have traditionally relied upon to attract the top talent. Though making money is of course still important to this cohort, they are just as driven by a desire to "make a positive contribution" to their employer's business and to "work with great people", according to findings from ManpowerGroup.
(Image source: manpowergroup.com)
75% of millennials also want the ability to work flexibly and still be on track for a promotion, according to a recent Ernst & Young study. Calling them "Generation Go", EY also notes that 80% of millennials want holistic pay and benefits such as flexibility, 74% want colleagues and supervisors to champion their ability to work flexibly without stigma, and 86% want paid parental leave for women and men.
(Image source: ey.com)
The financial sector also has something of an image problem. As highlighted by one participant in EY's "The Future of Talent in Banking" report, banking leaders need to rethink the way their culture appears to the world if they want to appeal to the right, young talent. "Right now, it's a fear and greed culture. As an industry, we have a problem that everything we do is perceived as just about money."
Movies like The Wolf of Wall Street and The Big Short contribute to the reputational challenges facing the industry today, which depict rampant, narcissistic, and irresponsible behavior as the norm. As one director told EY: "There is a major branding issue in our industry. Our marketing video is unfortunately The Wolf of Wall Street, and it attracts the wrong type of people."
Final Thoughts
The challenges of attracting and retaining the best talent in the financial services sector are indeed many and varied. From struggling with an image problem to competing with nimble FinTech startups and tech giants like Google and Amazon, financial institutions have their work cut out if they are to bring in the right people and successfully achieve their own digital transformation strategies.
As technology and broader employment trends reshape the financial workforce, banks need to be planning their workforce transformation to attract enthusiastic young tech talent - and to do that, many will need a strategy to rebrand. "I don't think we get to the fundamental value of what the financial industry does in the economy globally," one director told EY. "Young people want to make change and improve the world, and you can absolutely do that in our industry."