Academy of BFSI,

Future-Proofing Banking Success with Right Talent

Banks reeling under the disruptive influence of emerging technologies, rapidly changing customer expectations, competition from fintechs and an ever tightening regulatory landscape, are increasingly realizing the need to overhaul their people strategies. Future-proofing the workforce and facilitating and managing change are crucial to thriving in today’s challenging environment. But this is easier said than done.

According to a recent Capgemini report, 64% Indian banking organizations believe that the digital talent gap is widening. What adds to the digital banking woes is the more pronounced gap in soft digital skills. The report highlights the fact that a combination of hard skills and power skills such as team work, communication and critical thinking are critical for professional success across the banking sector. So how can banks tackle this multifaceted skills gap issue and future-proof their workforce?

Tackling Banking’s Critical Digital Talent Crisis

The digital talent gap stands at 62% in the banking industry – the highest among sectors including retail, consumer products, automotive, and telecom. What’s more, 30% of banking employees feel their current skill set is already redundant or will become redundant in the next one-two years. The shortage of digital talent is severely impacting banks’ digital transformation (DX) strategies and striking a blow to their competitiveness. So, why are banks failing to get it right when it comes to digital talent? Here’s a look at three key challenges:

#1 Fragmented digital strategy:

According to a recent IDC research, only a quarter of financial institutions said they approach DX as part of an organisation-wide strategy, while one in five revealed thatDX is only a back-office program. Further, 8% of banking firms admitted that their DX strategies are poorly aligned with IT, leading to further disconnect with enterprise-wide business goals.

#2 Lack of long-term vision:

Most banks approach digital initiatives on a project-to-project basis, focused on fulfilling short-term business goals (most often cloud and mobile related), and try to hire talent based on such goals. 34% of banking and financial institutions (FIs) in IDC’s research revealed their DX goals are focused purely on near-term milestones and are product-related, with no integration to a long-term strategy or roadmap.

#3 Lack of a technology-savvy image:

Compared to tech, retail, and eCommerce, banks and FIs have the least technologically attractive reputation as far as young talent goes. 76% of banks and FIs say that while they have created new IT roles in recent years, they are having a hard time finding the IT talent they need. Over 50% of all financial institutions say that hiring IT staff is either “difficult” or “very difficult”. They attribute it to two key factors – banks’ non tech-savvy image and inability to pay competitive salaries for data scientists and other qualified IT staff as compared to other industries such as tech, retail, and eCommerce.

Landing the Right Banking Talent Is Crucial to Walking the Complex Digital Path

Can banks compete with the likes of Google, Amazon, AirBnB, and other innovative companies that offer lucrative, meaningful, and interesting work opportunities? Yes, provided they are ready to overhaul their talent strategies inside-out. This is because banks and FIs don’t just need people with hard core technical skills but also those who have the soft skills required for effective leadership. Here are five best practices banks and FIs can follow to get their talent game straight:

#1 Ensure quality talent attraction and retention:

Banks must position themselves as employers of choice if they are to acquire and retain star talent at a time when the stakes are high and competition in the recruitment space is coming from none other than the likes of Amazon. The company was a top recruiter at the most distinguished B-schools across developed as well as developing economies in 2017. Replacing ‘antiquated’ hiring practices with novel ideas for recruitment and talent retention is the way forward for banks looking to outperform the competition. Canara Bank, one of India’s leading public sector banks, has embarked upon a novel method of recruitment for probationary officers (POs). It has specially designed Post-graduate Diploma in Banking & Finance (PGDBF) for the POs.

#2 Look within to cultivate the right talent:

Trying to compete with the likes of Google and Amazon for talent is a big mistake most banks are making today. Instead, the industry needs to cultivate talent from within by re-skilling and re-training current employees. It’s easier to teach existing workforce the new-age digital skills they need to stay relevant in the future, than it is to find talented IT grads willing to work in banking. While banks and FIs are slowly waking up to the importance of prioritizing learning and development (L&D) for employees by offering them training, many financial services employees find their company’s training program to be irrelevant to their needs. Banks must move past lip service and deliver highly engaging, gamified, job-role-specific learning content to employees and also reward them for completing the programs. Kotak Mahindra Bank is well known for leveraging its competency framework to help employees effectively transition from ‘managing self’ to ‘managing others’ to ‘managing managers’ roles.

#3 Identify critical roles and build talent pipeline:

The need to upgrade and maintain legacy systems while addressing a stringent regulatory landscape and investing in innovation, puts the focus on acquiring talent with new skills. These include data science, analytics, software engineering, agile development, and change management. Adopting an innovative and creative approach towards building an internal talent pipeline will be key to success. Banking leadership has a critical role to play here. Banking CEOs must demonstrate “ambidextrous leadership” i.e. seamlessly lead the core business while simultaneously thinking about innovation and where the industry is going. Canara Bank’s ‘Talent Bank Scheme’ is a classic example of creating a pool of talent in the critical areas identified. The bank provides opportunities and training for generalist officers to don the role of specialists and occupy key and/or critical positions in the future.

#4 Ensure talent mobility both vertically and horizontally:

According to a recent McKinsey report, machines are poised to take over 30% of the work at banks in the next few years. As automation takes over certain banking tasks, strategic workforce planning is important to determining which human capabilities can be augmented, where they are needed the most, and how to ensure talent mobility to maximize value.In most industries, including banking, the business cycle moves faster than the people development cycle. This makes internal mobility a top c-suite priority. Internal mobility broadly refers to deploying staff from one department to another by re-skilling or training employees to do different jobs. YES bank reorients employees in terms of knowledge, skills and attitude using a demand-led skilling approach with focus on design thinking, innovation, soft skills, and technology.

#5 Align employee values with those of the organisation:

Selling employees on the organisational vision and providing the right incentives to help them align with the vision is fundamental to driving transformation. Banks must do a better job of describing their role in the economy and the society, which in turn, could provide a sense of identity and purpose that modern employees desire. YES bank did a good job of this in its Digital Diya campaign that aimed to impart financial literacy to rural folks across 50 Indian villages. The widely promoted campaign urged YES bank’s employees to spread awareness on the importance of financial literacy and visit the bank’s microsite specially created for this campaign. For every digital diya-lit on the digital diya website, the bank added an equal amount of funds towards spreading Digital Financial literacy. The mission of the bank is “Building the Finest Quality Bank of the World in India” by 2020.

Talent Strategy and Board Strategy Must Go Hand-in-Hand for Competitive Success

Banks are increasingly realizing that human capital decisions are critical to competitive differentiation. JPMorgan, Morgan Stanley, and Barclays, among others, are expanding the role of compensation committees on their boards to incorporate talent development and management into their corporate strategy. A participant in EY’s recent The Future of Talent in Banking report revealed that their compensation committee now focused 75% of its time on broader talent issues and just 25% on compensation and incentives. It’s clear that making talent integral to the board’s long-term vision and deploying training and reskilling programs is the way to win the fierce talent wars and sustain long-term success.

Reference sources:

[1]Capgemini, The Digital Talent Gap, https://www.capgemini.com/wp-content/uploads/2017/10/dti_the-digital-talent-gap_20171109.pdf

[1]Capgemini, The Digital Talent Gap, https://www.capgemini.com/wp-content/uploads/2017/10/report_the-digital-talent-gap_final.pdf

[1] The Financial Brand, Building the Future-Proof Digital Bank, https://thefinancialbrand.com/61322/building-future-proof-digital-bank/

[1] The Financial Brand, Banking’s Digital Talent Crisis: Who Will Fill the Tech Void, https://thefinancialbrand.com/69774/digital-banking-hr-technology-hiring-jobs/

[1] Banking Frontiers, Future-Proofing with the Right Talent, http://bankingfrontiers.com/future-proofing-right-talent/

[1]Banking Frontiers, Future-Proofing with the Right Talent, http://bankingfrontiers.com/future-proofing-right-talent/

[1] Bloomberg, Machines Poised to Take Over30% of Work at Banks, McKinsey Says, https://www.bloomberg.com/news/articles/2017-07-20/machines-poised-to-take-over-30-of-work-at-banks-mckinsey-says

[1]Banking Frontiers, Future-Proofing with the Right Talent, http://bankingfrontiers.com/future-proofing-right-talent/

[1] Business World, YES Bank’s Digital Diya Campaign Spreads Digital Financial Literacy,http://businessworld.in/article/YES-Bank-s-Digital-Diya-Campaign-Spreads-Digital-Financial-Literacy/25-10-2017-129503/

[1]EY, The Future of Talent in Banking: Workforce Evolution in the Digital Era, http://www.ey.com/Publication/vwLUAssets/ey-the-future-of-talent-in-banking/$FILE/ey-the-future-of-talent-in-banking.pdf

 

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