© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
WHAT THE FUTURE
OF BANKING MEANS
FOR STAFFING
31 March 2016
Shirish Apte
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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.
2
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
4
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
1
Overarching issue:
Emergence of strong Domestic banks
“SCALE MATTERS”
2
3
4
5
5
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
DISTRIBUTION – TOUCH POINTS IN THE
PAST AND NOW…
6
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
7
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
8
“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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
WHAT THE FUTURE LOOKS LIKE FOR THE
BANKING ORGANIZATION…
9
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
CUSTOMERS ACTIVELY COMPARE PRODUCTS &
SERVICES FOR VALUE…
10
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
COMPETITION FROM NON-BANKING PLAYERS…
12
Capital One cards
Personal Loans
Mortgage Brokers and Monoline Mortgage Providers
Alibaba Money management
Emergence of Monolines
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
Source: Hay Group analysis 13
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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?
Source: Hay Group analysis 14
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
EXPENSE MANAGEMENT
15
Costs Risk Ma
na
gem
en
t
RegulationHeadcount
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
18
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
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%
?%
?%
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
21
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
22
‘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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
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
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
QUESTIONS?
24
© 2
015
Ha
y G
rou
p.
All
rig
hts
res
erv
ed
THANK YOU
25
Top Related