what the future of banking means for staffing … the future of banking... · ved what the future...

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WHAT THE FUTURE

OF BANKING MEANS

FOR STAFFING

31 March 2016

Shirish Apte

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OVERVIEW

Significant changes in technology and telecommunications are driving global macro

trends in all industries, including financial services.

Companies and financial institutions have to rethink their business model and value

proposition.

This change has significant implications for staffing levels in organizations, and

particularly for banks.

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EMERGING MACRO-ECONOMIC TRENDS

Source: Hay Group analysis 3

▪ Technology driving disruption in all industries – E.g. Uber, AirBnB, Amazon, eBay

▪ Demographic change – aging populations and millennials… leading to multiple

‘megatrends’

▪ Transparency and power shift to customers

▪ New players leading to disintermediation

Compounded by post 2008 financial crisis effects

▪ Limited economic growth and low global interest rates

▪ Increased regulation especially in the financial services sector

▪ Pressure from shareholders to continue to deliver returns

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In 2013, 12.4m people in the UK downloaded banking apps,

and conducted 18.6m transactions a week on their mobile

phones – more than double the rate for the previous year,

according to the British Banking Association.

Source: From Financial Times Article, “London’s ‘fintech’ start-ups aim high .” 13 April 2014

Anything that can be moved on to the web will be moved.

Innovation and agility is not an option... it is an imperative.

“Innovators are nibbling away at all the different financial

services….One day soon the big banks will turn round

and realise that half their sector has been taken out.”

- Nick Hungerford, chief executive of Nutmeg*

“The seismic decline in the use of banks’ high street outlets

is largely explained by a quiet, but dramatic, revolution in

the way we spend, move and manage our money”

- Anthony Browne, chief executive, British Banking

Association

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FIVE EMERGING BANKING TRENDS…

Distribution: Changing nature of product distribution

Products: Increasing product complexity

Customer behavior: Change in customer buying behavior

Processes: Move towards increased digitization

Competition: Increasing competition from non-banking players

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Overarching issue:

Emergence of strong Domestic banks

“SCALE MATTERS”

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3

4

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DISTRIBUTION – TOUCH POINTS IN THE

PAST AND NOW…

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Private, face-to-face advice

Secure paperless banking with

digital signature

Teleportal banking

at ABN Amro

A common look and feel

across all channels

Past Present

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Role of branches, use of social media to connect with a new tech savvy client base, use of

skype and FaceTime to provide a different user experience, understanding the customer

through more sophisticated CRM tools.

CUSTOMER INTERFACE

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“The seismic decline in the use of banks’ high street outlets is largely explained by a

quiet, but dramatic, revolution in the way we spend, move and manage our money”

– Anthony Browne, British Banking Association

Payments Transfers LendingPersonal Finance

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WHAT THE FUTURE LOOKS LIKE FOR THE

BANKING ORGANIZATION…

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Branch Internet Mobile Wearables Interconnected

Monthly Weekly Daily Several times a day All the time

Cost of

interaction

Frequency of

interaction

Source: Harvard Business Review

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CUSTOMERS ACTIVELY COMPARE PRODUCTS &

SERVICES FOR VALUE…

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WHAT THE BANKING CUSTOMER LOOKS LIKE…

INCREASINGLY DIGITAL & ‘DISLOYAL’

11Source: Javelin Strategy & Research, in “The Financial Brand”

71% Mobile customers say

that online & mobile

banking is sufficient for

their needs

74%

Consumers

access banking

information on

their computer

More than 30%

Consumers switched

banks due to good

customer service and

value for money

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COMPETITION FROM NON-BANKING PLAYERS…

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Capital One cards

Personal Loans

Mortgage Brokers and Monoline Mortgage Providers

Alibaba Money management

Emergence of Monolines

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BANK’S RESPONSE TO TRENDS

Incremental

improvementLearn from others

Anticipate the

future

Whole bank

transformation

Significant change

Selective evolution

Degree of innovation

and disruption

Breadth of

change

and

complexity

High

High

Low

Low

Hedge fundsNew digital

players


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BANK’S RESPONSE TO TRENDS

Incremental

improvement

Learn from

others

Anticipate the

future

▪ Focus on core

business

▪ Cost cutting &

efficiency

▪ Sales of risky

assets for capital

adequacy

▪ On-line branch

▪ Selective

acquisitions,

internationalizati-

on

▪ Ethics

▪ Piloting of

new ideas

▪ Descriptive

analytics

▪ Adaptation to

customers’

needs; clearer

segmentation

▪ Partnerships

▪ Transparency

▪ New business

models

▪ Innovative and

customer-

focused culture

▪ Prescriptive

analytics

▪ Simplicity

▪ Social

responsibility

Whole bank

transformation

Significant

change

Selective

evolution

Degree of innovation

and disruption

Breadth of

change

and

complexity

High

High

Low

Low

How to

maximize

ROE?


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EXPENSE MANAGEMENT

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Costs Risk Ma

na

gem

en

t

RegulationHeadcount

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AREAS WHERE BANKS WILL NEED TO

CONSIDER CHANGE…

The organizational culture of banks

The way banks are organized and

designed, structurally

The way talent is managed in banks

16Source: Hay Group analysis

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BANKS HAVE TO EVOLVE THEIR

ORGANIZATIONAL CULTURE…

17Source: The Financial Brand

“We are managing information, not money”

Balancing a ‘culture of innovation’ and a ‘risk culture’

What drives the current culture?

What will support the new culture?

Softwiring: Create the change programme, talent and performance

management

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STAFFING IMPLICATIONS

Decline in staffing levels in the Banking Industry

Move from Centralized processing to Straight Through Processing

Change in Tooth-To-Tail ratio

Change in the nature of relationship with customers, and Relationship

Manager skills set

Change in nature of relationships among teams

Increasing importance of, and changing nature of learning and

development

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IN THE US, EMPLOYMENT IN THE INDUSTRY

DROPPED AND IS STILL RECOVERING…

19Source: US Bureau of Labor Statistics, Finance and Insurance

Jan 2007 - 6,215,100 Jan 2016 - 6,094,600

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ed 0%

20%

40%

60%

80%

100%

Current Future?

Distribution of job roles in banks

Front Office Middle Office Technology & Operations

EMPLOYEE MIX IN BANKS WILL HAVE TO

CHANGE – BANKS HAVE TO CONSIDER THE

RIGHT COMPOSITION OF WORKFORCE…

20Source: Hay Group analysis

~60%

~18%

?%

?%

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RIGHT

SIZEThe required number of

people for the jobs that

are needed to achieve

the strategic goals

efficiently and effectively

RIGHT SHAPE

The right composition of

workforce, in terms of

structure and purpose, in

– and outsourcing, as

well as the appropriate

diversity mix

Clarity about the

capabilities that are

necessary and pivotal to

bridge current gaps and

meet future goals

RIGHT SKILLS

Availability of people with

the right capabilities at the

right locations, ensuring

critical mass, to meet

changing requirements RIGHT SITE

RIGHT

SPEND

THE 5 RIGHTS

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‘Know’ is about evaluating the

gap between the capabilities you

need and the capabilities you

currently have

The best companies ensure a mix

of objective external

assessments, internal

discussions and talent

benchmarking forums to ensure

a rounded view

Having done the ‘So’, companies

often find hidden gems at this

stage: past performance does

not always predict future

success

‘Grow’ is about reducing the gap between future talent demand and

current talent supply, either by growing internal talent or hiring

external talent

The best companies invest heavily in growing talent from within –

using a ‘laser focus’ instead of a ‘peanut butter’ approach

HR IN BANKS HAVE TO TAKE TALENT

MANAGEMENT SERIOUSLY…

So?Strategic Orientation

or ‘So What?’

KnowEvaluate

the Gap

GrowReduce

the Gap

FlowOptimize

Deployment

Most companies do a decent job of developing ‘supply’ –

identifying talent

But few devote the same effort to identifying

‘demand’ – what kinds of roles are needed

tomorrow

The best companies invest time and

effort into decoding how their strategic

direction impacts current and future

role demands

‘Flow’ is

succession

planning in action

The best

companies

constantly

expose

talent to

the right

opportuniti

es to

provide the

right

amount of

stretch and

growth

Source: Hay Group analysis

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Prove their worth –

Show why the issues it addresses matter to the business

(clear ROIs) and that it has sensible ways to manage them

(e.g. ability to articulate a point of view on every people-related

topic relevant to the business)

Be more strategic and business-focused –

Acquire business knowledge, Quantifying costs and benefits turns

talent decisions into business decisions and impact

Be more innovative in anticipating the future –

Identify new challenges in the environment in which the

organization operates and designing tools to meet them

HR HAS TO EVOLVE – THE FUTURE OF HR…

23Source: Harvard Business Review

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