December 15, 2022

How ‘trailblazer’ banks are defining the future of financial services

New global research from The Josh Bersin Company reveals how industry-leading “trailblazer” banks are melding the future of financial services and the future of work.  

When it comes to digital transformation, these “trailblazer” banks understand that equipping talent with digital skills is equally, if not more important than upgrading tech stacks. 

When banks recognize how key talent is in accelerating innovation, they can discover profound results through intelligent reskilling, recruiting, and work redesign. 

Introducing the research results in a recent webinar, The Josh Bersin Company’s SVP of Research Kathi Enderes, and Senior Manager of Research Stella Ioannidou, laid out the broader landscape that will drive future work challenges and issues specific to consumer banking. 

The research is part of the company’s ongoing Global Workforce Intelligence Project, powered by Eightfold AI data to help HR leaders better understand the significant workforce and industry trends shaping their organizations for the future.

Learn how organizations can use AI and skills data to inform workforce decisions and architect future jobs.

5 takeaways from the research

1. Banks must offer compelling digital customer experiences to compete in the market and stay relevant.

A vital part of the financial services sector, consumer banking is a $26 trillion global industry employing some 8 million people. Banks are primary drivers of the economy, structurally complex, and thrive on maintaining stability by understanding and managing risk. 

But like companies in many other industries, banks are faced with considerable risk caused by:

  • Digital trends reshaping the industry, including digital banking, blockchain, AI and big data, cloud computing, payments, cybersecurity, and open banking and APIs.
  • Market convergence, as fintechs, big retailers, big tech, and telecom companies leverage tech stacks to move into traditional banking spheres, these organizations are forcing banks to compete to retain customers. 
  • Pandemic-fueled disruption, forcing banks to greatly accelerate their digital transformation plans to meet consumer demands for seamless online/mobile capabilities and hastening the decline of physical branches.

Many banks rely on legacy enterprise technologies that challenge them to address these risks. Unfortunately, this shortcoming impacts the ability to attract, retain, and compete for talent in an extraordinarily tight and converging market.

2. Most banks still need key tech capabilities to offer the digital experiences customers want.

These missing capabilities aren’t just software engineering or infrastructure resources. Most banks also lack enough user interface designers, user experience designers, product owners, testers — everyone involved in the product management life cycle. 

Banks will need to invest heavily in acquiring or advancing tech skills — or risk becoming obsolete within the next five years. At the same time, existing banking staff will also need upskilling within the next three to five years to keep their skills relevant.  

3. Developing next-gen tech capabilities is an inside job calling for banks to intelligently reskill, recruit, and redesign how they work. 

To date, the primary strategy has been focused on hiring highly skilled tech talent. As a result, tech job postings have increased by 27 percent in the last year, and advertised wages increased by 36 percent to be more attractive to prospective employees. 

Additionally, banks are looking to acquire or partner with fintechs for technology and talent. These organizations also access talent and the latest tech by outsourcing parts of IT as a temporary patch. 

Why the heavy emphasis on recruiting? Banks compete with other industries in recruiting highly coveted tech talent. Consulting firms, staffing firms, IT service providers, and companies in aerospace and defense, insurance, and big tech are outpacing them. However, banks’ recruiting practices are on par with the market, so it still makes sense to lean into recruiting.

4. “Trailblazer” banks have a forward-looking talent mix because they design workplaces that attract and retain qualified tech talent.

Consumer banks outperform the market in other areas, including retention, reskilling, and work redesign. Banks dubbed “trailblazers” in the study exploit this opportunity and lead the way.

Banks do this by giving customers great digital experiences. These organizations have managed to increase profits and return on equity. Lower-value tasks are automated to shift attention to higher-value activities. And banks have incorporated flexibility or agility in the way their people work.

Trailblazer banks have a different employee mix than traditional banks and place people differently in the organization. For example, trailblazers have 1.3 times more people in IT operations and 1.6 times fewer in middle and back office roles. 

Investing in IT operations means having more people focused on creating new digital solutions, including 7.6 times more senior software engineers and 2.3 times more people in transformation roles. Trailblazers operate under leaner structures, many with only one layer between a software engineer and the CIO. These organizations leverage smaller, self-organized teams with the autonomy and agency to create digital solutions.

In terms of technical skills, trailblazer banks have 1.4 times more forward-looking skills that lead to better and more modern user interfaces. In addition, these organizations have better analytics to understand customers, monitor behavior, and make better predictions. 

5. Talent intelligence combines data and insights to give banks the information needed to make strategic talent decisions. 

Trailblazers know the power of data. Talent intelligence gathers and analyzes a wide range of internal and external data to drive decision-making. This includes data about jobs, economic factors, skills, credentials, learning content, and industry-specific requirements.

Trailblazer banks excel at using data to be strategic about talent in four key areas:

  • Recruiting, expanding talent searches geographically and prioritizing diversity, and hiring for upskilling potential.
  • Retaining through career-growth opportunities, work-life balance and flexibility, internal mobility, and employee-experience improvements. 
  • Reskilling, aligning talent and learning around skills, and leveraging capability academies and talent marketplaces. 
  • Redesigning how work is done. Trailblazers organize around the work rather than available jobs, automate low-value and redundant tasks, and outsource based on future capabilities.

What trailblazer banks don’t do is approach digital transformation as a talent (or lack of talent) issue for CHROs to address. These organizations don’t see it as a project but as a business imperative that requires alignment and enablement across the C-suite.

How ‘trailblazer’ banks are defining the future of financial services

Putting talent intelligence into practice

To date, the Global Workforce Intelligence Project has focused on two industries: healthcare and consumer banking. Both have different talent problems (read more about healthcare research here), but an intelligent, data-driven approach to talent challenges is one that any organization can adopt. 

Operationalizing talent intelligence involves six steps:

  1. Build a talent intelligence center of excellence, a team drawn from people throughout the HR organization to surface talent challenges and best practices.
  2. Identify the critical talent challenge to focus on. For example, there might be a skills gap (missing essential skills and capabilities), a capacity gap (not enough people), or a misalignment issue (people working on the wrong things).
  3. Analyze roles, skills, and organizational trends in the target talent segment. For example, are the skills and roles in question changing rapidly, somewhat, or are they primarily stable? 
  4. Determine which solutions fit the problem. By drawing on the 4 Rs (recruit, retain, reskill, redesign), look for alternatives to address skills gaps and ways to re-prioritize work and projects. 
  5. Work across the organization to plan, design, develop, and implement the chosen solutions.
  6. Measure success, iterate, and continuously improve. 

A final word

“If there’s one thing to take away from this discussion, it’s that you need to intelligently think of the organization as an ecosystem and plan your way around challenges systematically,” Ioannidou said. “The complexity is notable, the competition is fierce, and especially for consumer banks, you need to speed up the pace to remain relevant in the market.”

Watch the webinar for more about how the consumer banking industry can use talent intelligence.