“How can banks bring purpose to life, and meanings to people’s work, to create an engaged workforce that improve performance and profit?”

Transforming Talents in Banking

Reading Time: 5:30 minutes

By Dr. Hadi Wijaya — Financial Services Industry Leader, Southeast Asia

Disruption continues

Banking counts among one of the most disrupted industries of today. Even so, the major forces that have shaped the industry’s unprecedented change shows no signs of relenting.

As consumers become accustomed to better products and services, they will demand more from their banking experience. FinTechs and BigTechs – such as Australia’s cloud-based Xinja and the latest credit card from Apple – are heightening competition. All while virtual banking fundamentally alters business models and reshapes the way banks run (see my previous article).

As silo systems become increasingly unwieldy and regulatory compliance – still manned by an entire department – encumber innovation, pressure is mounting for banks to tackle their internal inefficiencies.

Workforce of the Future in Already Here

Against this backdrop, banks have been focusing their transformation on business models and products. But banking business is fundamentally about people.  Why? Over the next five years, digitization will impact banking workforce in a way like never before.

Banks will have fewer employees. Singapore expects one in three bank jobs to merge or change due to artificial intelligence (AI), machine learning (ML) and robotic process automation (RPA). Digital ambassadors will predict customers’ needs and offer advisory services – replacing roles performed by the bank teller, relationship manager, and customer service officer.

In 2017, UBS unveiled two AI systems that help traders perform better. The first is a post-trade allocation request system which scans, processes and executes instructions in client emails. It does in two minutes what would have taken a person 45 minutes. The second uses ML to develop new strategies for trading volatility. These initiatives free up investment bankers for more complex tasks which generate greater value.

In the same year, JPMorgan Chase announced an ML program – Contract Intelligence. The software, which interprets commercial-loan agreements, achieves in seconds what took lawyers 360,000 hours.

This year, Citigroup hinted that machines will massively replace jobs in its call centers. The intention? Radically improve customer experience while cutting costs. Citigroup’s subsequent move advertising roles for its Smart Automation Center signals the robotic revolution is well underway.

Future-proofing the Workforce: The Imperatives

To compete as a credible player in the face of such change, banks need to answer a vital question: How can banks bring purpose to life, and meanings to people’s work, to create an engaged workforce that improve performance and profit?

Doing so entail three aspects.

1. Understand the New Workforce Landscape

Traditional workforce consist of full-time, co-located workers. Hardly anymore. Up to 50% of workforce in organizations today are offsite-based non-employees. This includes contractors, freelancers, and hackathoners who widen workforce diversity. Millennial and Gen Z – increasing among a multi-generational workforce – further broaden it.

As the contingent workforce grows, the ability to manage them seamlessly as part of the total workforce becomes critical. For example, banks need to authenticate the workers’ identities and validate their expertise to ensure compliance. Plus, build trust and transparency to boost engagement, commitment, and performance.

An illustration of a bank doing well in this is MUFG Union Bank. By harnessing innovative Human Capital Management solutions, the bank built a talent base of more than 2,500 contractors introduced through referrals. The bank saves by directly sourcing these workers. The ability to communicate in real-time fosters trusted relationships. Skill-set learning curve is also shortened, enabling quicker deployment.

2. Adapt to the Changing Nature of Work

Bankers are formerly counted upon to follow a straight-through career for decades. That era is bygone. Careers are now more transactional and fluid – with internal career shifts and shorter job tenures becoming the norm.

Changing demographics have impacted the way employees expect to be managed. Money is no longer the sole motivating factor. Instead, flexible working, collaborative work environments, purposeful work, and work-life balance have risen in importance.

Technology advances discussed earlier are redefining jobs. As it replaces some roles, it is raising demand in other areas. Not only do skill-sets and mindsets need to evolve, human workers need to learn how to co-exist with robots.

3. Get the Talent Transformation Right

The war for talent has intensified. Banks recruit not only against banking competitors, but also tech startups and BigTechs (Amazon, Google, Facebook, Apple, etc.).

A study revealed banks have lost their appeal as employers with MBA graduates of leading business schools. At Columbia Business School, graduates choosing to work for banks fell from 27% in 2011 to 14% in 2016. Similar trends are reported in the U.S., Europe, and Asia. Graduates are turning to BigTechs. At Stanford, students who chose tech increased 2.5 times between 2011 and 2016.

Changing demographics is intensifying the recruitment challenge. 66% of financial services leaders in Singapore found Gen Y the toughest to recruit. Followed by Gen X and Baby Boomers. Retention isn’t faring well either – with average tenures falling. A study of global investment banks showed analysts and associates who left in 2015 averaged a 17-month tenure. Compared to 26 months in 2005. And 30 months two decades earlier.

The message is resounding. Banks need to respond with urgency or face a talent crisis. But how? In today’s experience economy, one area stands out: Understand your employees’ experience.

Banks need to know the key drivers that keep employees happy. And what’s making them leave. They also need to move beyond lag indicators to next-level insights (e.g. the top employees who would leave if the organization didn’t act on an identified issue now, or top 3 areas that could drive staff attrition down by 10%).

In the past, sense-making entailed primarily operational data (O-data). For example, employee tenure, promotion history, or most recent performance rating. Banks would know if John excelled in the last quarter. But not if John felt satisfied about his career development, or what John thinks about his leader’s trustworthiness.

Leading banks are not satisfied with only tracking O-data. This O-data is only the basic we need. We need to dive deeper into understanding the drivers for the O-data (e.g. why the trends, how the numbers come about). The in-depth insights come from the experience data (X-data). Combining experience data (i.e. employee’s sentiment about work life) with O-data enables banks to get the complete analytical, action-driven picture about their workforce, to improve the business strategy and employee experience.

The Best Banks Are People Driven

Indeed, when one assesses the cost in terms of money, time, and effort it takes to recruit and train new employees, it is exceedingly clear:  People are not only an HR problem.  They’re a company-wide responsibility. Leading banks create workplace for people to engage, find meanings, discover their purpose, and thrive on change.  Because people who love what they do, do it better.  With greater workforce engagement and higher performance, the banks reap superior business results.

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