Retaining talented employees has never been harder – especially in the retail banking sector. Peru Principal Consultant, Ashley Pick and Head of psd Banking and Financial Services, Gail Danvers, look at how retail banks can address the skills gaps they face, and become the employer of choice.

People are integral to the performance of every business, and so in an age when there are many new or different suitors, securing and retaining talent is always difficult.  For the ‘traditional’ Retail Banks, with shiny new challengers arriving all the time, making themselves a desirable place to work to attract the best people is becoming a major issue.

According to Peru Consulting‘s latest research – Turn to face the Change conducted with 100 senior retail banking IT leaders, almost a quarter felt a lack of access to the best skills was the biggest challenge their industry faced.

So, faced with the task of securing and retaining the best in the business ahead of the competition, retail banks need to either up their own recruiting game, or look to fill these gaps through acquisition, partnering or outsourcing.

Competition for talent

In recent years recruiting and retaining talent has become even more of a challenge with the growth of new market entrants, new technologies and the changing needs of potential employees.  Some 41% of IT Directors believe talent will be attracted to the GAFAs (Google, Amazon, Facebook and Apple), with 37% accepting the current crop of Fintechs will also be a major contributor to the potential skills shortage.

But it’s more than just the prospect of permanent dress-down days, ‘imagineering’ rooms and an unlimited supply of choccamoccachinos with an extra shot.  The legacy of the financial crisis, and more recent libor and other trading scandals, has led to a loss of trust in the traditional banks – not just by consumers, but by employees as well. Combine that with the genuine shift in the working culture demanded by newer generations of talent, more closely aligned with the types of cultures offered by Fintechs and GAFAs, and the skills challenge for retail banks becomes starkly obvious.

Time to get equal?

Personal agendas have also changed. While the traditional banking world has certainly come a long way of the stereotyped men in bowler hats look of the 20s and 30s black and white films, there are new and very emotional agendas in today’s work environment. Sustainability, CSR, and gender diversity are often high on the list of values influencing a potential employee’s decision.  Taking the latter, and with FTSE 350 boards being targeted to change the proportion of their Boards by 2020 to 33% female, retail banks face a major overhaul in their historically male-dominated cultures, not only to achieve this target but to attract talent from a wider talent pool generally.

And then along comes Brexit. The UK’s exit from the EU creates a further significant employment challenge to retail banks on many levels. Location complexities and globalisation has already intensified the talent challenge.  Now Brexit has the retail banks struggling to understand how they might comply with future regulatory requirements, whilst at the same time balancing their global operating models to optimise efficiencies.

Help may be at hand

To meet the talent challenges of the next five years and beyond, retail banks have three main options:

1. Resolve the talent challenge within their own organisations.
2. Use capability from the supply market.
3. Acquire businesses which will not only add to their product portfolio, but inject new skills.

In all three options, the key will be to create sustainable relationships with the right people (and organisations), who can help navigate the complexities and competitiveness of the talent market.

When meeting their own organisational challenges, Retail Banks should look to create long-term relationships with highly specialised recruitment partners, who have a good understanding of their organisation and the issues they face in sourcing the best people.

Given the highly competitive market, these partners will help deliver the right messages to candidates, while their cross-sector market knowledge and extensive network means agencies such as psd Group can create a pipeline of potential candidates with specific skills such as Big Data and Digital.

Outsourcing & Acquisition: Opportunities & Challenges

Costs savings, a focus on core operations and transformation of historic estates are some of the main trends driving the current trend for outsourcing, but these relationships are also often exploited to fill gaps in capability and skills.

However, along with the obvious benefits, outsourced relationships also bring pitfalls. According to Peru’s research, 40% of retail banking IT leaders felt performance of outsourced partners – in particular offshore – was the single largest issue, followed by lack of innovation (32%) and flexibility (31%).

In Peru’s experience, a strategic sourcing review can often reveal symptoms early, allowing retail banks and other organisations to weigh-up the balance of outsourcing issues against an increase in relevant skills. Appropriate due diligence should be undertaken at the start of a complex outsource or acquisition, with the right level of focus then applied during the sourcing, implementation and ongoing management of these critical relationships, including regular contract and relationship reviews.

What else?

As with any organisation, there will be a regular turnover of staff for all the usual reasons.  That, in turn, means a well-developed recruitment and retention process is needed based on some fundamental principles:

Learn from the competition: The talent you want the most will also be looking at opportunities from your main or emerging competitors.  Don’t rest on your laurels: proactively assess what competitors are offering and how they are seeking to beat you in the transfer market.

Play to your strengths: You’ll probably already have many great things in place which you can use to help facilitate the creation and management of a great team.  Identify these clearly and learn how to articulate them to potential employees. These can include rewards and incentives, training, working environment, collaborative or remote working structures, etc. Ask your recruitment agencies how your benefit packages or overall company proposition compare in the wider market.

Identify allies: Whether from an agency perspective, a potential acquisition target, or through technology suppliers, ensure you have a thorough approach to securing the best partners to support you in securing the optimum talent for your business.

Make Your Relationships Work: Where outsourced relationships are in place and are under-performing, look to rebuild the relationship through either a health check or a comprehensive review to ensure their own teams are fulfilling the potential you originally identified.

And finally – accept who you are!

The development and implementation of a holistic approach to managing and retaining great people is hugely important for any business, but retail banks in particular.