The world of retail banking has rapidly changed over recent years and continues to do so. The age-old days of a physical branch being the sole route to consumer financial products are well and truly behind us. Indeed, the latest reports from the BBC revealed that over 600 branches have closed in the last year as customers move to online banking.
According to a recent survey of 7,000 people by Fujitsu, more than a third of European consumers would move away from a bank that did not offer up-to-date technology. And thanks to the universal Current Account Switch Service, introduced in 2013, retaining customer loyalty is more problematic than ever. Against this backdrop, the sector has witnessed the rise of ‘Challenger Banks’, with upstarts such as Virgin Money and Metro Bank luring consumers both on and off-line with their vibrant branding and super-efficient fintech systems.
Customer requirements are changing as they seek out the quickest and easiest route to managing funds. Consumers now expect a tailored, personalised online experience reflecting that which we would have previously expected in person. Aside from the changing direction of investment now required of banks, this has had a direct impact on the talent needed in this field.
According to advisory firm KPMG, smaller banks, including Aldermore, Metro, OneSavings and Shawbrook, delivered a 17 per cent Return on Equity (ROE) last year, up from 15.8 per cent in 2014. By contrast, the big five banks, produced a ROE of 4.6 per cent in 2015, up from 2.8 per cent. This is arguably because the new banks can provide faster, superior services than the incumbents, which are bogged down by archaic IT systems as well as inefficient internal processes.
Traditional banks, as well as their fledging counterparts, now need to source, attract, engage and retain digital experts with a strong understanding of customer engagement in order to provide the best possible consumer experience. And as most of us in this field know, these individuals are in short supply and high demand.
Not only are retail banks now fighting for such talent but other, arguably more ‘sexy’, industries are targeting these experts as well. Big brands such as Google, Apple, Facebook and many more are also after the best digital specialists. And with such well-known household names and some unusual, but attractive, employee value propositions (EVPs) behind them, these global brands are currently winning the battle.
So how can retail banks arm themselves against the competition to secure and hold on to the top digital professionals who will be intrinsic to their success? By taking a similarly rigorous approach to data that they use in shaping the customer experience, but this time applying it to the challenges of talent acquisition in the form of predictive analytics.
Arguably the biggest challenge in attracting such individuals in the first place is that retail banks haven’t historically needed them. As such, they are having to look beyond their normal channels for talent. Undoubtedly, to successfully engage with the right individuals, technology must be utilised.
While some of us may perhaps be wary of relying too heavily on tech in relation to people processes such as hiring, the simple fact is that with digital talent in particular, this is essential. And for employers, it is often more efficient and cost effective in the long run.
In this case, predictive analytics is perhaps the best example to use. In the first instance tools analyse social feeds and key databases to identify where the best digital talent can be found and where it is potentially heading. With a clearer indication as to where to engage with these individuals, retail banks will be in a better position to compete with large tech brands, for example, in the war for talent. Added to this, the analysis of social feeds provides banks with a greater indication of what these individuals want from an employer, making it much easier to create an attractive EVP that is tailored to this target talent pool.
Predictive analytics also enable retail banks to scientifically assess an individual’s core competencies, soft skills and personal profile in line with the role and company culture. Given that retail banks are in essence trying to identify a new type of candidate, it can be difficult to recognise who will meet the job requirements while also fitting in with the rest of the business. Hiring the wrong person can be hugely disruptive to teams, so it’s important to consider how well an individual will ‘gel’ with the people already in place. While in the past this decision may have heavily relied on human instinct, predictive analytics provide a more robust, scientific analysis of a candidate’s suitability, reducing much of the risk.
Perhaps more importantly, though, is the fact that tools such as these can also be used to pre-empt which existing employees might be looking to make a job move – vital information given the shortage of digital talent with customer service experience. By predicting when an individual might leave the retail bank, employers will be able to pipeline future talent to ensure a smooth transition process that doesn’t expose the bank to online failures.
Strategic workforce planning must now also take into account today’s increasingly flexible workforce. According to official statistics, up to 15 per cent of all professionals are now self-employed – a figure which is expected to rise to around 20 per cent within the next five years. The growth of this ‘gig economy’ means that HR professionals within financial services must not only consider how to engage with the brightest candidates, but also how they are willing to ‘contract’ with them amid the war for talent. Retail banks must be more open and less prescriptive about the nature of employment – creating opportunities for contractors, interims, associates, part-time staff and flexible workers – if they want to attract top talent.
By using predictive analytics to track and manage trends relating to this increasingly complex workforce, HR teams can ensure that there is consistently sufficient talent available to deliver business objectives with little risk of surplus. The rise of the contractor also has the added advantage of allowing banks to bring on board specialist and niche skills sets to manage change, update systems and lead innovation without the associated permanent headcount cost.
While the continued popularity of online banking will certainly disrupt the way retail banks operate, it does present numerous opportunities for new and more efficient ways of banking. But it will require organisations to adjust their talent attraction and retention plans. If firms are to compete against the likes of Google, Apple and Facebook, they need to take a smarter approach to how they use technology. By embracing the ever more sophisticated use of data in this form, banks will be in a better position to engage with the right people, in the right place and at the right time.
Nicola Hancock, Director of Global Client Services at Alexander Mann Solutions