| 20 min read |
a seismic cultural shift in talent expectations
The banking, financial services and insurance (BFSI) sector has historically attracted the best and brightest talent through arguably the most compelling way: unrivaled compensation packages. In fact, payouts on Wall Street this year have been at their highest levels in a decade after a remarkably strong performance for the sector in 2021. Even as bankers saw sizable 2022 bonuses around the world, a seismic cultural shift is occurring in the wake of the pandemic, and BFSI professionals are swept up in the Great Resignation.
What does this mean for employers and their workforce strategies? Around the world, competition for top talent remains heated, even in the face of a possible global slowdown. Companies continue to actively recruit for critical and high-demand roles in investment banking, mergers and acquisitions, research, private equity and venture capital, trading and commodities, and hedge fund management.
At the same time, continued digitalization is driving up demand for diversified tech and digital skills across all sectors, creating greater competition. Randstad Sourceright’s 2022 Talent Trends research, which surveyed more than 900 human capital and C-suite leaders across all sectors in 18 markets around the world, shows many BFSI employers recognize the need for more upskilling to keep up with digital transformation.
This conclusion is often supported by the increasing utilization of data science and predictive analytics — an increasingly powerful resource in the toolbox of human capital leaders. By having access to nuanced data and insights, leaders level up agility and decision making to better support the business.
The transformative journey of financial services businesses isn’t restricted to skills alone. More than ever, talent is seeking a new social contract with banks, insurers and other major financial institutions around the world. The days of unreasonable hours, seven days a week, are becoming unacceptable to even junior associates entering the industry.
Wellness has taken center stage at many institutions as they look to provide a better work-life balance and a healthier culture that nurtures loyalty and satisfaction. While compensation will always be the most pivotal value proposition for many BFSI star performers, a more people-focused strategy has clearly emerged at many banks in the aftermath of the pandemic, and this shift will likely remain for the foreseeable future as the expectations of employers and employees change.
As in many other sectors, diversity, equity and inclusion are becoming more critical to banking and financial services leaders as they seek greater parity in workforce makeup and opportunities. And resistance to mandatory in-office working appears to be winning, as more companies offer flexible working to be competitive.
Human capital leaders in the sector have arrived at a precarious and uncertain time. Based on Randstad Sourceright’s 2022 Talent Trends research this special sector report examines these key talent acquisition trends and provides actionable insights that you can use to stay ahead of the competition for talent.
cybersecurity concerns escalate
According to a 2022 report from VMware, 63% of financial institutions experienced an increase in destructive attacks this year, which is 17% higher than the previous year. Even more concerning is that three-quarters of the 130 security leaders surveyed around the world say their companies have experienced one or more ransomware attacks, with 63% having paid the ransom. This has led to nearly one-third planning to increase their cybersecurity budgets 20% to 30% this year.
And it’s no surprise why. Financial institutions continue to increase their budgets for cybersecurity driven by customer expectations, ever evolving regulations (domestic and global), and increasingly frequent and sophisticated cyberattacks. This type of investment includes acquiring and developing more skills to stay ahead of cyber criminals, minimizing risks and ensuring compliance with a variety of internal and external mandates.
While many of the skills needed are technical in nature — for example, DevOps, scripting and framework skills — others are in regulatory and compliance practices. These may involve legal work, customer relations, data management and governance.
The rapid rise in threats has exponentially increased the need for organizations to fill these roles — finding the right people to protect their data and technology — especially as intrusion incidents can be highly costly to remediate. And the competition for these individuals is fierce.
Randstad Sourceright’s “Global future in-demand skills 2021” report cites cybersecurity skills as one of the top nine high-demand skills. The research shows the lowest supply available to meet demand is in Hong Kong, where there are two applicants available for every posted role (2:1), followed by Singapore (3:1), Canada (4:1), Hungary (4:1) and Poland (4:1).
The U.S. and U.K. have just five qualified candidates for every job posting (5:1), while those in Switzerland see just eight qualified professionals per open role (8:1).
increasing demand for digital innovation skills
One of the most remarkable developments in BFSI is how dynamic the industry has become, despite being highly regulated. After undergoing years of digital transformation, the business has accelerated change on both the retail and institutional sides. The wider adoption of technology, particularly automation and AI, enhances risk management and client interaction. Greater use of data sciences is leading to better business outcomes as well.
In fact, according to Deloitte, companies that are more digitally advanced have better revenue expectations this year than companies that are less advanced. And McKinsey reports that a rigorous approach to analytics and supporting processes produces 5% to 15% higher revenues from business campaigns, as well as being able to launch them two to four times faster.
The use of innovative technologies not only offers risk and service enhancements, but is also transforming the customer experience. For years, the retail side of the sector has pushed to bring about a more consumer-centric service model, and more than ever today’s institutions are delivering on that promise.
Online deposits, mobile banking and e-bill payments have become the norm, with more than 200 million in the U.S. alone banking digitally. The growth of online-only banks, for instance, is emulating the explosion of many other online services. These businesses now represent 10% of all accounts in the U.K., compared to just 1% in 2018.
As this area of the business grows, 49% of banking and financial services leaders report talent scarcity for IT skills in Randstad Sourceright’s 2022 Talent Trends research.
But it’s not just tooling that financial institutions are focused on. Fifty-two percent (52%) of banking and financial services leaders say they’re also using technology to improve how work is performed at their organizations. They are optimizing the balance of human touch with technology to perfect both the customer and employee experiences.
According to IBM, insurance companies are redesigning their systems to improve workflows for both agents and policyholders. Innovation such as touchless claims processing, automating customer touch points, and facilitating transactions using AI and data enable employees to better serve customers, who feel more tended to. For example, Prudential Financial’s PruFast Track, a digital platform that accelerates the underwriting process, uses big data to get clients policies two to four weeks faster than they would with traditional underwriting, with most approved within 48 hours.
Aside from the rise of digital services, digital currencies continue to be a sizable part of the market despite entering into its recent “crypto winter.” Even though some digital coins have collapsed, stables such as bitcoin remain well above their value just two years ago. This means, as a competitor for talent, these institutions are still viewed by many workers as attractive employers.
The skills needed range from executive leadership to technical competencies in subjects such as Java, Python, artificial intelligence (AI), Node.js and Amazon Web Services. According to Monster, this segment employs a variety of professionals, from data scientists (who typically earn more than $111,000) to financial analysts (over $81,000) to marketing managers ($127,000). Another source estimates annual salaries range from $74,000 to $115,000 for non-technical positions and $100,000 to $142,000 per year for developer positions.
Fintech businesses in general have been one of the fastest-growing groups of employers in recent years. Their need for talent may be slowing this year, but demand is not going away. Specialized parts of the sector, such as software as a service (SaaS) or fintech insurers, are driving the need for specialized skills. And as more startups mature, they will expand the list of roles they need filled to include traditional jobs in many back-office functions.
'the most challenging market'
Although financial compensation for last year was the highest it’s been in recent times, BFSI employers still struggled with hiring challenges throughout 2021 and the first half of 2022. Like many others, the sector also experienced high turnover and wage inflation.
Companies such as Bank of America announced several pay increase initiatives this year alone. An anonymous longtime U.S. employee in the bank’s loan servicing operation for small and midsized business operations said the announcements were welcomed news for attracting new hires and retaining employees.
Despite economic concerns of a retracting global economy, her business unit still saw hiring challenges for a number of positions. She added that the compensation adjustments were also seen as necessary to offset the high rise of inflation in the Northeast, where her business is based.
But higher compensation alone is not enough to help offset resignations and shifting sentiments among BFSI workers. In an interview with Randstad Sourceright, Rachel Glaze, the U.K. resourcing lead for insurance giant Aviva, explains the competition for top talent has led her company to examine its employee value proposition (EVP) and culture in a bid to become more attractive to prospective employees.
Attrition has risen for roles in technology, niche accounting and marketing — Aviva is ensuring that both financial and non-wage offerings align with ongoing industry practices.
“We’re in the most challenging market we’ve seen in a very long time. Employment in the U.K. is challenging, the candidate pool is smaller, and the pace of change is faster,” she says.
Glaze points out that there are considerably more compensation negotiations and counteroffers for a variety of jobs. This includes for front-office roles, such as contact centers workers, customer service agents and similar functions. The company not only sees increased competition within the BFSI sector, but from other industries seeking the same type of skills as well.
Aviva’s need for talent is partly driven by strong growth that includes its best half-year performance for general insurance sales in the past 10 years. In addition to its current needs, Aviva is keeping an eye out for long-term growth and is planning accordingly, Glaze adds.
This means evolving with a highly dynamic financial services sector, meeting the expectations of customers and other stakeholders and, most of all, realizing the vision of CEO Amanda Blanc. “Under the leadership of Amanda, change at Aviva has accelerated. Aviva is focused on delivering for our customers and shareholders,” Glaze points out.
Aviva is not alone in its transformation among insurers, banks and other financial institutions. Major employers in this sector are also adapting, driven by the global economic shifts during the pandemic.
For example, while previously frowned upon, remote working expectations and policies have changed permanently. Similarly, while long working hours were often accepted at many organizations prior to 2020, companies have made significant strides to provide people with better work-life balance.
Many institutions are taking more concrete actions to achieve greater diversity, equity and inclusion at work, including at the C-suite level. And others are looking to digital transformation to both improve the way their people work and the way they acquire talent. All of these developments point to a massive cultural shift that is helping the sector to better attract and retain talent.
01. evolve talent strategies with data, AI, automation and RPA
Digitalization is permeating across all functions within banks, insurers and other financial institutions for both front- and back-office services. This proliferation of technologies, data and automation is especially front and center for human capital leaders, who are investing more in technology to drive talent excellence as well as operational efficiencies. This is being done for both people services and across other functions.
According to Forbes, 80% of the customer experience at banks is driven by activities occurring in the back office, and more companies are investing in innovation to improve these processes. For people leaders, improvements in workflow, customer touch points, and training and development are some of the top priorities for institutions. They are also considering data and technology investments to drive a better candidate experience in the recruitment continuum.
In addition to the 52% who say they are using technology to improve how work is performed as part of their talent experience efforts, the 2022 Talent Trends research finds that a majority of banking and financial services employers (76%) believe internal talent analytics play a critical role in sourcing, attracting, engaging and retaining talent.
Just as many (76%) say external market data is critical to hiring as well. Nearly half (43%) are using innovation to improve their recruitment efforts. These are all positive developments in the eyes of most leaders. In fact, more than two-thirds (69%) say digitalization of HR has had a positive impact on their business.
In particular, when asked how AI, automation and robotic process automation (RPA) benefit their organization, BFSI human capital leaders cite greater efficiency and consistency more often than any other value (41%). This is followed by the ability to automate workflows (33%), reduced costs associated with labor (32%) and the ability to identify employees with specific skill sets (32%).
But it’s not just AI and automation transforming how BFSI businesses operate. The ability to better leverage data for a host of purposes — from enhancing customer intelligence to assessing returns on assets due to climate change — has changed how work is done and how talent is sourced, engaged and hired. By pairing labor market data with internal workforce analytics, human capital leaders can better anticipate resourcing needs, conduct workforce planning based on availability of talent, and identify current and future skills needed to fulfill business mandates.
For instance, the use of data from aggregators such as Lightcast allows employers to easily view current insights from government agencies, job boards, online profiles and other sources to determine supply and demand for skills, competitive compensation levels and trending developments in the labor market locally, regionally and globally.
Using data to improve workforce strategy opens up greater access to talent, helps leaders understand how to enhance engagement, and allows employers to become more cost effective in their recruitment processes. In fact, 79% of the BFSI leaders we surveyed say they are investing more in analytics to enhance the attraction of and engagement with talent — the highest percentage of all reported sectors, with 76% believing external market intelligence plays a critical role in their recruitment.
3 ways to drive your data strategy forward
How can human capital leaders further leverage data and insights to create organizational agility and drive value for the business?
- Focus on data integration.
In an ideal world, talent strategies and execution should be supported by integrated talent, business and market data. Decisions based on a holistic picture of macro and unique information result in better outcomes. This is a journey that is unlikely to have an endpoint, but you can establish a strong foundation by ensuring all streams are integrated to create a comprehensive story.
- Assemble a world-class insights team.
Building data competencies is no small task, but if your organization is intent on making better decisions, you’ll want to have the right skills in place. Be clear about the value that this team can bring to your organization, and reinforce that such an investment will have long-term and deep benefits for the business.
- Democratize your data tools.
Having the right technology to transform numbers into insights is only half the journey. Giving business leaders access to this insight any time they need it is the true value of an effective strategy. Make sure your dashboard functionality is thorough, robust and, most of all, easy to use.
02. triumph with a flexible, people-first employee experience
Undoubtedly, one of the most enduring challenges in BFSI appears to be the adoption of remote working and flexible work hours. Even as the pandemic has faded and most markets have lifted restrictions and the wearing of masks, remote work has become an accepted practice on Wall Street, in London’s Canary Wharf and Singapore’s CBD. For a number of banks, hybrid schedules have become the norm.
As Randstad’s 2021 Workmonitor survey reveals, workers experienced a “Great Enlightenment” as a result of the pandemic and have developed more clarity around their personal and professional goals, including how and when they want to work.
As a result, many banking organizations that had tried to revert to full-time, on-premise schedules saw their policies criticized and ignored by their workforce. In the most recent Workmonitor survey of talent around the world, nearly three-quarters of workers say flexibility of work location is important, and 83% want work hours that complement their lives.
A New York-based associate analyst at a large Asia-based global bank recently told Randstad Sourceright that while her company has been keen to have its workforce back in the office, many colleagues prefer a hybrid schedule and are in the office about three times a week. Requesting to remain anonymous, the 27-year-old says avoiding the daily commute means time and cost savings for her. She adds that she and her team continue to work long hours, but often these are flexible and can accommodate personal schedules.
That flexibility and respect for personal needs should be a key consideration for any BFSI employers that want to remain competitive when recruiting and retaining talent. In the 2022 Talent Trends research, 80% of banking and financial services leaders say providing flexible working schedules and arrangements is an effective way to address talent shortages, but just 38% report using this strategy. Those that don’t are missing an opportunity to stand out in the competitive world of financial services recruiting.
Aviva’s Glaze says her company is focused on the outcomes of individuals rather than just hours spent. For instance, workers are empowered to take time during the day for personal appointments or volunteer work when needed, and they have been effective in achieving a healthy balance. She says the business is focused on “energizing talent, setting the right strategies, enhancing company culture, offering broader rewards and achieving a good work-life balance.”
3 ways to put people first
How can your company elevate the talent experience to nurture loyalty and satisfaction?
- Create a framework for talent experience.
Strengthen your strategy with a rigorous framework that includes identifying the services and benefits that are most valuable to your workforce. This framework should not only include fulfillment but also regular surveying of employees, contractors and job candidates so you have a comprehensive understanding.
- Make wellness a pillar of talent experience.
The sector’s emphasis on employee wellness — physical, emotional and financial — has never been stronger. Following the pandemic, banks and other institutions understand a fit and focused workforce is key to gaining a competitive advantage. Consider creating a chief wellness role if you haven’t done so, and strive to be as inclusive as possible.
- Prioritize satisfaction over engagement.
High engagement is not always an indicator of a positive experience. Focus on critical feedback from employee and candidate surveys, and set up recurring touch points between employees and managers to enhance both satisfaction and engagement.
03. make diversity, equity and inclusion your strength
A persistent criticism of the BFSI sector is lack of diversity and inclusion among its workforce and C-suite, and leaders are keenly aware of this. The social justice movement has gained tremendous momentum, with banks around the world pledging billions of dollars in programs designed to fight inequity. At the same time, companies are reporting more progress in their diversity, equity and inclusion (DEI) efforts in the workplace.
For instance, in his annual shareholder letter, JP Morgan Chase CEO Jamie Dimon points out that the company promoted more women to managing director and executive director positions in 2021 than ever before. The company also created three new centers of excellence: Advancing Hispanics and Latinos, The Office of Asian and Pacific Islander Affairs, and The Office of LGBT+ Affairs.
In 2021, Citi hired Erika Irish Brown to lead its diversity and inclusion strategy, help drive the company’s billion-dollar investment to bridge the racial wealth gap and increase economic mobility for people of color in the United States. And in his shareholder letter, Goldman Sachs CEO David Solomon says that diversity and inclusion are a top priority, and that the company’s 2021 managing director class was “the most diverse to date.”
TIAA president and CEO Thasunda Brown Duckett is not only working with The Equity Project™ to address the gender retirement gap, but is leading “with intentionality” to sustainably close gender and racial wealth gaps.
Why are more BFSI employers focused on DEI? While the business imperative has been clear for some time, talent shortages and heightened awareness of economic and social inequities have positioned banks as leaders of change. As Solomon and Duckett each point out, financial institutions can bring about progress in both their own workforces and the world at large.
In fact, BFSI recruitment practices have leaned toward expanding talent pools and creating greater equity, providing advancement opportunities for groups that have historically been marginalized, and leveraging technology to find diverse candidates.
Our 2022 Talent Trends research reveals that more than half (56%) of banking and financial services employers are increasing their investments in diversity search and match enablement, and 83% say their DEI strategies will influence their business in 2022. The top benefits they report experiencing include improved employee retention (43%), increased ability to attract a more qualified workforce (41%) and access to a broader range of skills (40%).
On the other hand, while 74% believe DEI is fundamental to attracting, engaging and retaining great talent, just 41% say their hiring practices supported their diversity goals in 2021 — the lowest percentage of reported-on sectors — indicating opportunities for improvement.
These DEI initiatives are a direct reflection of C-suite efforts to diversify the workforce, close societal gaps and bring innovation to their organizations. At the same time, it’s a reflection of talent expectations of their employers. The 2022 Randstad Workmonitor research finds that nearly half (41%) of all workers would not join a company that doesn’t proactively enhance its DEI policies, with 48% of those under age 35 feeling this way.
Beyond wanting to work for an employer that values diversity, talent increasingly is focused on work that is meaningful and makes a societal difference. Workmonitor data shows that 39% of talent won’t accept a job with a company that isn't actively pursuing sustainable practices, and human capital leaders understand this is an imperative they need to support.
In our Talent Trends research, 78% of banking and financial services leaders say demonstrating sustainable and ethical practices helps attract Generation Z talent. Initiatives like these will give BFSI employers a competitive edge as they meet those talent expectations.
3 ways to prioritize diversity, equity and inclusion
How can you advance your DEI initiatives to ensure they deliver results?
- Start with the right data.
Tracking gender-based data is low-hanging fruit, yet most organizations rely on this to gauge the success of their DEI efforts. To gain a true picture of your progress, review data that is inclusive of all diverse populations. Diversity doesn’t stop at hiring, so be sure to look at your retention, career progression, skills building and individual feedback data as well.
- Provide robust resources to your employee resource groups (ERGs).
By giving ERGs more support, your business can better fulfill the ambitions of its members. This may not have to be funding alone; it can also mean providing access to training and development, mentorship from executive leaders or even a platform for sharing and communicating across the enterprise.
- Incentivize milestone achievements.
Giving managers and executives financial incentives to increase diverse hiring and retention may help companies create a more inclusive workforce, but this is a debated approach requiring careful structuring. Also consider non-monetary incentives such as additional time off.
preparing for murky waters ahead
Even as BFSI employers look for more effective ways to attract talent and make their work meaningful, the industry faces an uncertain future in its business and talent strategies. With the threat of a global recession rising, a number of businesses have started reducing their workforces through layoffs and attrition. In fintech, especially, layoffs have been adding up. Even traditional institutions are taking a close look at costs as performance slows in the second quarter.
Human capital leaders will struggle as they look ahead to 2023 workforce planning; the length and severity of an economic downturn are still uncertain. But one thing is clear: even as cost-cutting measures are being planned, the need for skilled digital professionals remains high as forward-looking firms realize they need talent to advance their transformation and protect their data.
Organizations such as Citi are considering investments in people in spite of economic uncertainty. Citing opportunities to grow in the technology, healthcare and financial services sectors, CEO Jane Fraser said: “We are continuing to strategically invest in talent and in the platform.”
Even as the industry faces uncertain times ahead, employers must consider how they can be responsive to shifts in business. This will entail investing in resources to inspire and motivate their people. While compensation remains a powerful incentive, recent wage inflation and record bonuses are unsustainable. Focusing on non-financial offerings may have a more enduring impact on attraction and retention.
Creating a positive and integrated talent experience will not only help win great people but also lead to higher satisfaction and productivity. Aligning corporate values with those of the workforce, and prioritizing DEI goals, will all be important to the talent journey.
Even though BFSI employers are often viewed as traditional, conservative organizations slow to change in their people strategies, recent developments have shown otherwise. Banks, insurers and other institutions today are investing heavily in HR technology, serving up more opportunities for diverse talent and creating talent experiences that recognize the importance of balance and personal needs.
They do this all while undertaking the biggest cultural metamorphosis in years. This evolutionary moment will help the industry better prepare its workforce for the economic challenges rising in the near-term and ongoing business transformation that will last well into the next decade.