By Ben Cowan. Published on 9 February 2017
In the not so distant past, the banking sector ruled the roost when it came to recruitment. Enormous budgets, eye-watering compensation packages, an environment of deregulation and a lack of viable competitors made the sector a magnet for top talent across the board. Fast-forward a decade, and the scene looks very different. Recruiters are, in fact, seeing an exodus of talent away from banking. So what’s behind the U-turn?
The changing environment of banking
Recurrent regulatory failings, mis-selling scandals, a global financial crisis, record-breaking fines, widespread criticism of its bonus culture and a period of rapid re-regulation have changed the banking landscape indefinitely.
Not only has the past decade caused considerable reputational damage to specific banks – and the sector’s standing as a whole, banks are now operating in an entirely different environment.
Recessive economies around the world and strict regulation regarding capital reserves means that banks have far less money at their disposal. As a case in point, since the financial crisis the world’s top 20 banks have handed over $235 billion in fines, according to Reuters. Not only is there less cash to splash – there’s less cash to operate and reinvest.
As a result of these financial challenges and the drive to be more cost/benefit driven, redundancies are rife, reinvestment has suffered and the recruitment process itself has become increasingly commoditised, drawn out and rigorous – and the trend looks set to continue.
The upshot is that many are questioning: has the sector’s reformation come at the cost of innovation? Arguably, yes.
This outcome is most visible when it comes to business transformation. Understandably, financing new initiatives and investing in progressive technology hasn’t been a top priority for struggling banks. This does mean, however, that business transformation in the banking sector no longer has a monopoly on attracting top change professionals.
Fighting off new challengers
As more malleable, dynamic, and exciting start-ups are springing up around the world, the prospect of working in a fast-paced, ground-breaking environment with the potential for swifter salary growth and more interesting work is tempting experienced hires – and graduates – away from traditional banking environments.
There are other factors at play, too. The once “too big to fail” mantra that defined many of the top banks has now become a hindrance in some respects. Technology is evolving at a rapid pace – from driverless cars to big data, we’re seeing unprecedented change in industries around the world. And that applies to financial services too. Not only are smaller fintech companies bursting onto the scene, consumers are increasingly attracted to mobile banking and apps that make their lives simpler. The scale of most banks means they simply can’t adapt their infrastructure to compete with the pace of change demonstrated by their smaller competitors.
Adding to the sector’s woes, they’re also facing competition from new disrupters with far greater technological and financial resources. China’s WeChat is one such example. The social media platform boasts 700 million users and generated $1.8 billion in mobile revenue in the first quarter of 2016. It recently fused its social media platform with online payment services – achieving vast success. Indeed, last February, to celebrate Chinese New Year, more than 400 million WeChatters sent 32 billion packets of digital cash to their families and friends.
With such exciting players taking the financial services scene by storm, it’s little surprise that business transformation employees are gravitating towards these organisations. They offer cutting-edge technology, greater investment in their transformation programmes and exponential growth – not just in the business itself, but in career opportunities and remuneration.
Appeasing future talent
Start-up companies have another advantage when it comes to attracting an important resource to secure their future: millennials. Flexible working, flatter structures, more informal environments, less siloed roles, and a conception of value based on output rather than hours resonates, understandably, with a generation repelled by the rigidity of corporate life.
If start-ups are the future of business growth, moving into this arena offers more open-ended career opportunities than heading into the narrower world of traditional banking.
With all these factors at play, I can see why we’re seeing a talent exodus. Reflecting the essence of their vocation, today’s change and transformation professionals are gravitating towards environments that aren’t just embracing change – they’re leading the charge.