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Trends and challenges for London banks

January 2020
Eva Kingston
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The impact on recruitment in 2020

By Eva Kingston

At the start of a new decade, we look at the trends that might come to the forefront to influence recruitment in the banking sector in London in 2020. Predictions of technology and AI tools taking over recruitment may be exaggerated (particularly when hiring senior candidates), but if you are going to be a winner in this decade’s talent wars, technology cannot be overlooked. With millennials entering leadership roles, there will be more emphasis on authenticity, and merely stating that “people are our biggest asset” is no longer going to cut it if your mission and policies are not aligned to the empowerment and well-being of your employees. Authentic culture, i.e., really defining the mission of your company and being frank about positives and negatives, might allow for candidate self-selection (and result in fewer disappointments) in a way that employer branding just wasn’t able to do.

 

Below is a short overview of some of the trends that could be shaping your recruitment strategies in the years to come:

 

The talent pool continues to shrink …

The exodus from the banks to fintechs, startups, and the impact industry continues. According to a December 21, 2019[1], article in Wired, the year 2020 will mark a new phase of Europe’s war for talent as traditional career paths such as banking, law, and consulting are abandoned for the primary career goal of “having an impact” ― with setting up your own company seen as a potential vehicle to achieve this. This large-scale shift in aspirations is accompanied by large sums of venture capital money waiting to be invested in clever ideas and smart founders.

At the same time, global banks that have been shedding employees in past years are hiring thousands of technology experts, coders, and data scientists as technology continues to reshape the business of banking.

Outside of technology recruitment ― and irrespective of where you are on the digital transformation journey ― digital awareness will be of great importance in all your senior hires, and competition for COOs, CFOs, CROs, etc., with experience in leading digital transformation in their areas of expertise will continue to be fierce.

Meanwhile, EU nationals are, at the very least, quietly exploring options back home, further contributing to the shrinking of top talent in the city ― see Brexit below.

 

Diversity and Inclusion at the forefront ― it is time to speed up diversity hiring

Optimists might hope that the 2020s will be the decade when we finally stop talking about diversity because it will no longer be an issue. In the meantime, a survey published by the FCA “Gender diversity in UK financial services”[2] at the end of last year, suggests there is still a lot to be done. Here are its findings:

  • “Diversity has remained consistently low at industry level (approximately 17%), notwithstanding some variation by role seniority, firm size, and sector.”
  • “Generally, we find greater gender diversity in firms that are larger and less in customer-dealing roles. There is wide variation across individual firms in the sample, with gender diversity of senior management ranging from less than 5% to over 40%.”

In 2018, the FCA also set targets for BAME diversity at senior levels ― 8% to be reached in 2020 and increasing to 13% by 2025. In its latest annual survey, in July 2019, the number stood at 7%.

With raised awareness around diversity, consumers are now much more likely to investigate a bank’s diversity record and potentially vote with their feet. The industry has been through tough times and continues to face unprecedented competition from technological developments, not to mention innovative new market entrants. Rebuilding lost trust with consumers is paramount, and recruiting from the widest possible talent pools can only enhance a deeper understanding of customer needs and help develop better ways of serving them.

 

The decade of authentic culture

In the last decade, many HR man-hours were spent defining the Employer Brand as well as the Employee Value Proposition. A strong Employer Brand was seen as a way of attracting, engaging, and retaining top talent in the organisation. Despite all these efforts, organisations, including banks, were, and still are, faced with a lack of engagement and low motivation in their workforce.  Employer branding has often been disconnected from the core drivers of the business and from an honest assessment of the behaviours and values that the company promotes. Surveys confirm that workers value culture over cash, and this trend will only increase in the coming years as meaning and purpose become clear career drivers. To attract and retain the people you need, it will be imperative to be honest about your company culture, warts and all, and to consider whether social enterprise thinking might be the way forward to increasing financial profitability, customer satisfaction, and employee engagement (see Social Enterprise). Surveys show that one of the biggest drivers of employee satisfaction and talent attraction is a clear and authentic company mission. This doesn’t mean that flexible working structures, autonomy, career progression, learning, fairness, and transparency will not attract candidates to your firm.

 

Hire for innovation and resilience

Uncertainty and the predictability of constant change means that it is no longer enough to hire candidates with the right skills and experience, leadership potential, or managerial know-how. Creative and innovative thinkers at all levels are essential to continued business growth, and leaders will need to have critical new competencies such as leading through change and embracing ambiguity and uncertainty. They will also, crucially, need to understand digital, cognitive, and AI-driven technologies. Resilience and adaptability in the face of change are valued characteristics that should be incorporated into your candidate assessment process. Recession-proofing your business means expecting change and creating a culture where innovative or “disruptive” thinking is not only allowed but encouraged.

 

… Brexit?

While we now know that Brexit is definitely happening ― and banks have been moving billions of balance sheet assets to the continent in preparation ― there is still uncertainty about post-transition period passporting rights. These will be negotiated with the EU Commission in the course of this year and will require agreement on the equivalence framework. In a recent internal briefing, Commission officials said it would not be business as usual for the City of London after Brexit. The possibility of a no-deal Brexit Sword of Damocles is still hanging over our heads and will significantly affect hiring if it happens.

 

The social enterprise

Respondents to Deloitte’s 2019 Global Human Capital Trends Report[3] identify the move towards social enterprise ― defined as an organisation whose mission combines revenue growth and profit-making with the need to respect and support its environment and stakeholder network ― as the most urgent and only way of addressing societal and human capital issues of our times. In the same survey, CEOs (on a global and cross-industry basis) were asked to rate their most important measure of success, and the number one issue they cited was “impact on society, including income inequality, diversity, and the environment,” further showing the urgency of this transition. The link between a social enterprise approach and improved financial performance has now been firmly established ― a motivated and enthusiastic workforce will, without a doubt, be more productive.

To what extent are banks ― historically followers rather than leaders in human capital trends ― reinventing themselves along the social enterprise model? How far down the path of “profit meets purpose” is your organisation?

 

Recruitment in 2020 is going to be harder than ever

Talent scarcity, aggressive competition for talent, a challenging post-Brexit business environment, a workforce looking for meaning and fairness ― we all have our work cut out for us! Recruitment is no longer about finding the right person for you ― now your chosen candidates will be scrutinising you to see if you are right for them.

What can you do? You could give some thought to the above trends, align your talent acquisition with your authentic corporate culture (and business strategy, of course), interrogate and review your current talent acquisition approach, and consider it through the prism of human focus. The talent is out there ― if you are having difficulties finding the right people for your company, we would be happy to help. Happy New Year!

[1]  Wired Europe’s Tech Talent War is about to enter an empowered new phase
[2] FCA, Gender diversity in UK financial services, December 2019
[3] Deloitte, Global Human Capital Trends Report 2019

About the author: Eva Kingston is Head of Financial Services UK, Global Sector Leader Fintech and Digital in Stanton Chase International, London.

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