Bankers of tomorrow: How to catch and keep the elusive gen-hop
The future of banking is restless.
Hi,
“You can’t put tomorrow’s talent in yesterday’s jobs.”
Stefanie Coleman, Principal at Ernst & Young LLP's People Advisory Services in the United States, aptly emphasized the relevance of her statement concerning evolving generational job expectations, a notion that holds even more validity in today's dynamic landscape
The attrition rates at major private banks in India are the bellwethers of that statement.
The largest chunk of the attrition is happening at entry-level jobs, people between the ages of 21 and 30!
Source: MoneyControl
According to data from multiple surveys by software firm Adobe, tech has nestled itself into the latest stack of labor issues, as 70% of Gen Z employees — those born between 1997 and 2012 — tell Adobe researchers they would leave their job for better technology.
Source: CFO.com
And not just that, one MoneyControl article said -
“Millennials and Gen Z employees — a major part of the employee churn at HDFC Bank and Kotak Mahindra Bank — often seek more growth opportunities, learning and skilling opportunities at their workplace.”
The most popular argument for attrition in banks is because of digitisation and that technology attracts the younger generation.
However, I run a company where most of the employees are anywhere between 23 and 31 years of age, and thinking about the why, what and how of retention from a generational perspective helps.
The Job-hopping generation and what they want
Millennials have a reputation for job-hopping. Unattached to organisations and institutions, people from this generation -- born between 1980 and 1996 -- are said to move freely from company to company, more so than any other generation.
This is backed up by the data. A recent Gallup report on millennials shows that 21% of them changed jobs in the last year, which is more than three times the number of non-millennials who did the same.
Why do millennials switch jobs so often? There could be many reasons, but one could be their lack of engagement at work. According to Gallup, only 29% of millennials are emotionally and behaviourally connected to their job and company, while 16% are actively disengaged, meaning they are almost out to harm their company. This makes up the majority of millennials (55%), leading the pack in disengagement compared to other generations.
This disengagement is a huge problem for organisations. Most millennial workers are just "checked out" and not putting any energy or passion into their jobs. They show up, do the minimum, and leave.
Maybe many millennials don't actually want to switch jobs, but their companies aren't giving them good reasons to stay. When they see what seems like a better opportunity elsewhere, they'll jump on it. It's not that they always want more, they just want a job that feels fulfilling, and they won't stop searching until they find it.
So, attracting and retaining millennials is crucial for businesses. They are like consumers in the workplace, always looking for better options. Leaders need to figure out how to both attract millennials from other companies and keep their existing millennial employees happy and engaged.
The cultural shift with GenZ
Gen Z, the upcoming generation, holds the key to the future of banking talent. By 2025, they are projected to comprise a substantial 27% of the workforce.
Having grown up in an era dominated by digital technology, Gen Z members are true digital natives. From an early age, they have been seamlessly connected to smartphones, instant access to information, and social media platforms that shape their digital identities. Unlike any other generation before them, they have navigated through a recession, a climate crisis, and a politically polarized landscape during their formative years.
Also, the pandemic has left a lasting impact on this generation, instilling in them a heightened focus on health and well-being. They also value flexibility and remote work options as a natural expectation.
Considering the critical importance of a resilient financial system in the face of capital and liquidity crises, the banking sector must acknowledge and cater to the unique attributes of Gen Z.
As we confront significant generational shifts in the workforce, it becomes imperative to initiate a dialogue about the appeal of the banking sector to the next generation of workers.
Especially because bank branch expansion isn’t slowing down
As of the latest data available, HDFC Bank boasts a network of 846 branches, reflecting a remarkable growth of 14.3%. Meanwhile, ICICI Bank has expanded to 346 branches, showing a steady 6.4% growth. Axis Bank has also seen progress, with 160 branches and a modest growth of 1.73%. Kotak Mahindra Bank, not to be outdone, has reached an impressive 98 branches, marking a noteworthy growth of 5.43%.
Source: CNBC
Branch expansion is essential for loan growth and has contributed to significant market share gains for HDFC Bank (113bps), ICICI Bank (62bps), and Axis Bank (12bps) over the last five quarters.
Source: CNBC
The retail portfolio benefits from physical branches to be close to customers, attracting them from NBFCs and improving their CASA ratio.
Despite the rise of digital transactions, private banks' emphasis on branch expansion is not unexpected - with a focus on loan growth and addressing liquidity issues, branch expansion will play a crucial role in maintaining business momentum.
So, how do you get ‘feet-on-street’, especially the Gen Z and millennial ones? And more importantly, how do you get the newer generations to be excited about banking?
This extensive EY report has some brilliant conclusions and recommendations that I’ve tried to summarise -
The belief that Gen Z workers would commit to a single career for a lifetime, similar to their parent's generation, has been proven false. Instead, they are embracing a new trend of "episodic" careers that offer diversity and richness in experiences. The pandemic has significantly influenced their job preferences and expectations, leading to a dramatic shift in their approach. Moreover, they are unafraid to challenge conventional norms in their pursuit of fulfilling professional aspiration.
Gen Z prioritises professional development and seeks employer support for industry-recognized certifications. Digital training is crucial for banks to stay competitive and attract Gen Z talent, preparing them for episodic careers and varied skill demand. They’re also the first generation to grow up with smartphone-internet access from an early age, and have a significant learning advantage. To connect with them in the digital world, banks must offer modern learning experiences.
For years, banks have tried to transform the digital banking experience by positioning themselves as tech firms. But they face tough competition for tech and data talent and have struggled to keep up. Some Millennials who started in finance are now drawn to tech companies for exciting projects, a dynamic corporate culture, and potentially significant equity packages.
However, transformation efforts are stalling due to a lack of job-ready digital talent. IT executives cited talent shortages as the biggest barrier to adopting emerging technologies in a 2021 Gartner survey, and the availability has only tightened since then.
Big Tech and FinTech are attracting talent away from banks, and although there maybe some opportunities from recent technology sector layoffs, this won't last unless the banking industry acts quickly.
On the bright side, there is potential in Gen Z, who are digital natives, as a pool of tech talent for banks. Some are interested in banking careers, but not all are convinced. It's crucial to shape the banking narrative for this generation to tap into their potential for the future.
GenZ is purpose-driven and social media has heightened the need to be identified with a cause or a purpose. And for a generation that was raised in the aftermath of the financial crisis of ‘08, distrusts traditional banks.
“Young people trust FinTech firms with their money more than they trust traditional banks (37% versus 33%)17 and in Asia-Pacific, more than half of consumers now trust big tech firms to fulfill banking services more than a traditional bank”
In the last three years, the world of work has transformed, and employee flexibility has been a major change. Gen Z workers have embraced the benefits of flexible hours and remote work, leading to the Great Resignation trend. However, the balance has shifted again with widespread layoffs, recession warnings, and recruitment challenges for employers.
Today's workers consider flexible work arrangements essential and are willing to sacrifice pay and benefits for them. Employers offering flexibility have a better chance of attracting top talent, with some banks finding it necessary to offer flexibility to secure second interviews.
In light of the new generation’s ambitions and work ethic, here are my humble recommendations
Modernise legacy technology so GenZ can work with market-leading technologies - everything from AI to VR!
Change and strengthen the workplace hierarchy and architecture. e. If the financial crisis, the pandemic and recessionary threats have taught us anything, it’s this - have a resilient workforce. That involves adapting to a post-crisis world; one that involves new job roles - wellness officers, universal bankers, CX/UX designers, product engineers, behavioural scientists, ethical hackers, holistic wealth managers, environmental, social and governance (ESG) and sustainability specialists and more.
Get flexible and trust a little. The new generation wants remote work, but it depends on how much you can trust them to get the job done.
Acknowledge and amplify the message around these social issues (human rights, climate, geopolitical, etc) to customers, employees, candidates and shareholders
The banking sector is experiencing a thrilling disruption, opening doors to a multitude of next-generation jobs and unprecedented chances to create a profound social impact. Embracing these opportunities as an integral part of the banking talent proposition, we can pave the way for banking to become the global sector of choice for the upcoming generation of workers!
Create jobs today, for tomorrow’s talent.
I’d love to hear your thoughts!
Cheers,
Rajat