The Financial Sector is undergoing massive changes, in part due to post recession regulations, that are attempting to restrict practices that have led to the meltdown of the global economy; in part because of the other most prominent external change trigger, namely digitalisation.
Up to 15 years ago getting a job in a bank was considered hitting the jackpot: above average salaries, great benefits, significant bonuses and a job for life. None of these elements are viable or true nowadays.
Digitalisation is revolutionising the way people do banking: the branch has lost its importance (most people, especially Millenials do their banking using their mobile phone and the internet) and the pressures of managing massive organisations that “are too big to fail” is putting a strain on the profitability of banks. Their business model is broken and there is already an alternative on the horizon, which is growing in leaps and bounces: Fintech.
- One of the main issues Financial Services is facing is the ability to attract and retain talented individuals. The industry culture is not appealing to the most in demand individuals. In the 90s working an average of 14 hours a day, flaunting big bonuses and devoting the life to the career was seen as the way to go (there are people that took Gordon Gekko, the popular fictional character of the movie Wall Street, as their role model). This way of planning a career has crumbled as younger generations of talented individuals value work and privale life balance and focus mostly on doing a job they love and that makes a positive impact on society over earning high bonuses.
- Financial Services have also seen their reputation badly beaten: the recession showed that reckless behaviour aimed at making as much money as possible regardless the consequences for the clients was mainly encouraged and rewarded (I suggest watching a great movie called The Big Short to get an idea of the prevailing culture in financial services). This legacy does not help when trying to attract individuals that value making an impact on society over earning big bonuses.
- Financial Services are under attack from several angles: their business model is dated and the increasing competition from Fintechs is making attracting and retaining talented people more difficult. Some banks have made attempts to attract talent by relaxing their dress code (as if allowing someone to go to work in jeans rather than in a suit is enough!) or by introducing reversed mentoring (tech savvy junior staff mentor senior employees in the company on digitalisation). However, being at the centre of the “real action”, like working for Google, Apple, Facebook or Microsoft is perceived by many as more rewarding and fulfilling.
- We also have to consider an additional issue that has came up recently, Brexit. The UK, which is the central hub for Financial Services in Europe, has voted to leave the European Union. Negotiations have not started yet, but this choice signals an anachronistic path: in a world where globalisation is the norm, where the internet has literally erased barriers to entry in many sectors (e.g. media and music), the UK is looking to restrict immigration and to pick and choose who can work in the country.
In this post I am not going into the political implications, the potential outcomes of Brexit and the ramifications of leaving the single market. But I think that the line the British government is taking is very shortsighted: Financial Services are one of the main contributors to their economy. This industry is already struggling to attract talented people that can contribute to its digitalisation. The British government is looking to create even more obstacles to attract and retain global talent as they seems to believe that non-UK individuals will be prepared to pay over priced university fees and having to go through a VISA process, when the neighbour EU countries are already in the position to offer high quality education at a much lower cost (in some cases even free high quality education), free movement, international work environments and career opportunities. It sounds like a kamikaze strategy to me.
What the Financial Sector truly requires is a significant cultural change: on one side, being able to embrace digitalisation with its challenges and great opportunities. And on the other leverage digitalisation itself to offer high quality jobs that are in line with talented people’s expectations, that are fulfilling and closer to their values.
Minor cosmetic changes are not going to work. Just because you dress a dinosaur in jeans, it does not mean that it is not a dinosaur anymore.