An eye on tomorrow
Top trends shaping talent acquisition in the banking industry
The last few years have been unsettled for the financial services industry.
Banks have had to adjust to new ways of working. An increased requirement for more agile talent processes and digital transformation has re-shaped hiring practices. In addition, global uncertainty has meant the industry has had to brace for recession and adapt to a reduced talent pool. And there has been a raft of new diversity, equity and inclusion (DEI) strategies to absorb.
As we look ahead, it’s evident that banking recruitment strategies will need to continue to evolve to stay ahead of future challenges.
This whitepaper explores predictions and trends across the international banking sector – and provides advice on how TA Leaders can be prepared for what’s next.
AMS is the market leader in partnering with large scale, complex global banks to deliver world class talent acquisition services (6 of the top 8 global banks partner with us today) with over 2,500 specialists supporting experienced hire, campus and contingent worker hiring in banking. In 2023, we delivered 125,000 hires for our banking clients globally.
The story so far
When it comes to the banking talent market, it’s easy to forget what normal looks like. The last few years have been extremely turbulent, and predicting what will happen next has been virtually impossible.
Take 2022, for instance. This was a record year for hiring, but just one year later, banks concluded they had over-hired on the assumption that the economy would continue to grow. In fact, it had started to slow down.
In every region, hiring volumes significantly decreased across AMS’s extensive global banking portfolio by up to 50% between 2022 and 2023.
Many of the big banks have cut their workforce significantly. For example, Wells Fargo, Bank of America and Citigroup reduced their combined workforces by 17,700 last year.1 The only US bank to buck the trend was JP Morgan Chase, adding 16,200 employees after the purchase of First Republic Bank in May 2023 and adding 470 people to its corporate and investment bank in the second quarter.
Whilst overall hiring reduced, banks have continued to focus on strategic hiring initiatives. For example, whilst Bank of America focused its efforts on repurposing its existing workforce, they continued to make ongoing investments in fixed income professionals in London and roughly doubled its sales and trading workforce in EMEA over the last two years.
Areas of growth
With the outlook remaining uncertain, many TA leaders are still very cautious about hiring levels for 2024.
But there are areas within banking that are seeing growth, and one of those is the acquisition of digital talent. 91% of global banks are increasing their cloud-enabled digital transformation investments as they realize the urgency to compete and stay relevant in today’s digital-first world.2
Although digital maturity is gradually rising across the banking sector (especially in areas such as account opening, bancassurance, investment services, and card management), most banks still have a long way to go until they can respond to customer expectations around digital services.3
Another area that’s also growing is internal mobility. With the reluctance to invest in new talent, many banks are looking at their current staff, and providing training and development opportunities to fill specific skills gaps.
Remember, this new post-industrial economy is moving toward a further shortage of workers. The recent U.S. BLS workforce outlook shows the U.S. workforce will only grow at 0.3% per year over the next decade, while the GDP is expected to grow at 1.9%. Where will these workers come from? The answer lies in internal hiring.4
In the Internal Hiring Factbook, developed in partnership between AMS and The Josh Bersin Company as part of The Talent Climate Series, consumer banking has the largest internal hiring rate of all sectors at 42%. Investment banking saw an uptick from 25-27% from 2022 to 2023 during a period of restricted external hiring. Banks will need to consider how to retain and improve these rates during periods of fewer hiring restrictions.
We will definitely see a greater focus on operationalizing skills-based hiring and prioritizing career pathing and reskilling of the internal workforce is a great place to start. Organisations who can successfully identify critical future skills and train and develop their existing workforce will be able to demonstrate far greater agility when responding to critical programs of work and rely less on expensive external hires.
Our global predictions for the banking sector in 2024
A steady workforce
Banks will be cautious about further reductions in their workforce as they anticipate a rebound in the market. Hiring volumes in 2024 are expected to run in-line with 2023.
Centralized expense
Expense control will be centralized at HR and Talent Acquisition (TA) level, focus on hiring budgets and ‘doing more with less’
Increased automation
Fewer people will be needed to administer manual back office tasks and for TA departments, we will see greater automation of highly manual processes such as candidate screening, job-advert writing, candidate shortlisting and interview scheduling.5
Technological turbulence
The rate of technological advancement will increase as banks address some of the latest opportunities in fin-tech innovations include Open Banking, RegTech, Autonomous Finance and Voice Integration. Specialized tech areas where banks are predicted to invest and recruit or upskill in 2024 include AI, ML, cloud, and cybersecurity.
New skills adoption
Banks will seek to secure or develop expert teams of quants, modelers, translators and AI skills such as prompt engineering and database curation. According to McKinsey, generative AI alone has the potential to deliver significant new value to banks between $200bn to $340bn benefitting Corporate, Retail banking and Risk functions the most.6
Bridging the green skills gap
While several Wall Street asset management companies have recently scaled back their participation in Climate Action 100+7, Banks are continuing to experience increasing revenues from Sustainable Finance, and we will continue to see TA teams focusing on building talent pipelines to secure EST/Renewables market experts.
UK & EMEA
The impact of Brexit
There has been much noise about the impact of Brexit in the banking industry. Unsurprisingly, one of the biggest losers of the deal was London.
The relocation of financial operations has seen around 7,000 banking employees move from London to the EU.8
The decision for the UK to leave the EU has had a negative effect on the London banking industry. In 2017, London was the undisputed global leader in the Global Financial Services Index, followed by New York. 9London has since dropped to second place and hubs such as Frankfurt have risen from 23rd to 13th place and Paris from 29th to 14th position globally. For example, Paris is attracting major investment with the likes of Morgan Stanley, JP Morgan and Bank of America expanding their operations there.
This shift has sent shockwaves through the banking industry and has created long-term change in recruitment. With US investment banks gaining European market share, local banks like BNP Paribas and Société Générale are starting to experience more competition in attracting and retaining candidates. With all these big players fishing in the same pool, it has dramatically changed the whole dynamic of what’s available in the marketplace.
Looking to new regional markets for digital talent
According to McKinsey, as digital talent shortages increase in the rest of Europe, “Africa will become a technology hotspot in the next five years as an inflow of developers revolutionizes the continent into a “world-leading startup ecosystem.”10 Africa will have the world’s largest working age population by 2040 and holds immense potential for companies seeking new markets and talent, and the research reports a 30% increase in developer talent in Africa with increased venture capital funding.
Recommendations for TA leaders in UK & EMEA
- Ensure the organisation has retention plans for their best performers. Competition for talent is fierce. Proactively present the best internal job opportunities to your top talent before going to the external market, and provide the best coaching and training to ensure their success in stretch assignments.
- Conduct an analysis against other banks. How competitive are your compensation packages? What or who are your attrition risks?
- Forward-plan to combat attrition and movement in the market. Focus on pipelining and external talent-succession planning.
- Move past traditional adverts and into a broader mix of attraction strategies. As well as traditional LinkedIn targeting, use programmatic advertising and attraction like geofencing to attract more passive talent.
- Look to new talent markets such as Africa for scarce digital skills.
APAC
A post-Covid return to growth
In 2023, hiring in the region grew by 4.6%, higher than the global average of 3.3%.11 Expansion is expected to continue in 2024, driven by emerging SEA markets and recovery in China.
Increased economic uncertainty and fluctuating market conditions have intensified job seekers' efforts. Year on year, job seeker activity was elevated by 16% in Australia and 19% in India.12
Major players including Deutsche Bank and Nomura are strategically adjusting their approaches in response to the shifting dynamics in the APAC investment-banking landscape, investing more in the region to profit from the higher growth compared to other markets.
There has been significant growth in the Fintech market where growth is expected to exceed 16% CAGR between 2024 and 2029.13 Developing markets are seeing 70% more finance app installs than developed markets and fintech adoption is up to 67% in Singapore, Hong Kong and South Korea. There has been significant excitement around the launch of Hong Kong’s 8 digital challenger banks including ZA Bank, Airstar, Ant Bank and Mox Bank (backed by Standard Chartered).
Growth in wealth market
Right now, there’s a huge shift in the high-net-worth market.
Traditional markets like the US and EMEA have shrunk in the last few years. In contrast, emerging markets like Africa, Middle East and Singapore are seeing a surge in high-net-worth customers.
So, what’s driving this change? Fluctuating populations. In the US and EMEA, the older and wealthier population is shrinking while in emerging markets there is real growth. More people means more wealth and inheritance, so the customer base for high-net-worth in the APAC region is growing. In fact, an industry report indicates that Asia will surpass the US in financial wealth by 2025.
As a result of this, major banks including BNP Paribas, Credit Suisse, Citibank, UBS and HSBC are moving to hire more private bankers and appoint senior leaders to wealth management. In addition, there's been a massive tightening in the market for licensed relationship managers to support Wealth customers. This means these managers are now much more in demand, with big banks competing hard to attract them so they can make the most of this lucrative market.
Tech hiring is on the up
Even though the hiring market is going through a significant transition, tech hiring is still surging ahead.
In this digital world, banks know that they need to stay competitive and that investing in tech talent helps them do this. But attracting and retaining this talent is challenging as they're competing with other sectors investing in digital transformation.
We’re seeing some banking businesses embedding generative AI in their operations, which is intensifying the talent crunch in the sector. Here, banks are re-prioritising investment money and investing in reskilling their staff, which they expect will deliver longer investment gains.
Additionally, organisationsare now looking in new areas to boost their digital capabilities, with a large percentage of tech workers coming from Australia, India and Singapore.
Recommendations for TA Leaders in APAC
- Increase your focus on diverse hiring to offset population decline in traditional markets.
- Improve diversity by providing more female leadership roles.
- Grow your own strategy for wealth relationship managers. Start this at Early Careers stage. Then train and invest in Early Careers and Campus (EC&C) candidates, as there's fierce competition for this group.
- Consider India for digital talent. The market here is growing and there's much investment. Many global banks have already tapped into this new supply of digital talent.
NORTH AMERICA
Adapting to the change in job markets
For many years, the North America banking business has been the world’s largest financial market. It benefitted from a strong global economy and decreased interest rates that boosted profit margins, as well as affordable credit that resulted in a surge of Merger and Acquisitions’ activity. To cope with this demand, banking experienced unprecedented hiring, adding to increased talent costs.
But all that has now changed. Due to increased interest rates, reduced spending and shifting global economics, banks are being more selective in their hiring, evolving from a volume-based approach to a strategic one.
Major North American banks have cut roughly 20,000 jobs in 2023 due to reduced market activity and economic uncertainties.14
In addition, this new approach is changing the way banks are doing their hiring. Automation and digital products are now doing much of the heavy lifting, helping to stack and rank candidate searches for instance.
Much of this new TA modernisation is being driven by the banks’ HQs. They want to create greater hiring efficiency, removing time-consuming and costly activities so TA teams can provide a more strategic service for the business.
The return to office
Many sectors are struggling to get employees to return to the office. Banking is no exception.
Before the pandemic, remote working was rare. Even more so in banking institutions. During COVID-19, banks had little choice but to allow a more flexible approach due to an inability to mandate office attendance.
Many banks are now bringing talent back to the office on a flexible basis, typically requiring three days in the office. However, a recent survey of financial services executives revealed that 66% of employees would quit their current positions if forced to go back to the office full-time.15
As a result, many banks are vying for the much more rare talent that wants to return the office, especially those in front-office roles. According to the GFCI 35 rankings, San Francisco, Chicago, Los Angeles, Washington DC, San Diego and Boston all sit in the top 30 financial centres globally. Most interestingly, Toronto and Montreal have seen significant increases in their rankings to appear in the top 30 globally for the first time. 16
60% of net job growth by 2030 may come from the 25 mega-cities and high-growth hubs, even though they only have 44% of the population.17
The rise of digital
Like every market, the North American banking sector is investing heavily in digital transformation. They are trialling new technologies – including AI, robotics process automation and predictive analytics – to increase efficiencies.
They're also improving their hiring processes. In a competitive talent market, creating a better hiring experience will enhance the ability to attract new talent. In addition, these advances will improve team efficiency, reduce labour-based costs and create more scalable models for TA departments. According to Aptitude Research, 63% of companies are investing or planning to invest in AI solutions for talent acquisition in 2024, compared to 42% in 2020. Use cases include generating inclusive job descriptions, summarising data, sourcing, generating personalised email templates and new hire onboarding experiences.18
Recommendations for TA leaders in North America
- Create new attractive propositions in key locations (and establish global centres) which can tap into different talent segments at potentially lower costs.
- Ensure you are keeping pace with competitors in digitising your TA operations. Automating response handling and interview scheduling can release investment for more strategic, higher value TA activities.
- Consider your location strategy. North America headquartered banks have typically retained a higher proportion of resources in high-cost locations than other sectors.
- Explore the efficiencies and scalability of other near/offshore locations for administrative and non-hiring manager facing tasks.
INDIA
Technology driving growth
One of the biggest developments in the Indian banking industry has been the adoption of technology.
Due to a lack of skilled workers, the government launched Skill India in 2015 to ensure Indian workers were ready for the future. This program has not only provided help with reskilling and upskilling the population, it’s also encouraged growth in the sector.19
This increase in tech talent means many global banks are shifting their centres of excellence to India as talent in other markets has dried up. This is also more cost-effective for accessing the digital skills needed to ensure competitiveness. In fact, Michael Pizzi, MD and Head of US Banks and Technology for Morgan Stanley, cited India as the best market outside the US for tech talent, particularly cloud computing and generative AI, for multinational banking firms.20
India’s access to a large, cost effective , diverse and high-quality talent pool positions it to become the world's leading workforce provider, with its workforce expected to reach 1.1bn by 2050.
New trends emerging
Many new trends are now emerging in the Indian workforce.
Remote working, which was once unheard-of in the market, has become more acceptable since the pandemic, with many businesses accepting there's a need for a work-life balance. Also, diversity has become an increasing priority in TA.
Around 88% of Indian professionals are now considering a new job in 2024, up by 4% from 2023, indicating a shift in attitude towards career growth, according to a recent LinkedIn study. Better work-life balance and higher salary are the key motivators for changing jobs, while individuals are also open to opportunities outside their industry or role.
Transitioning towards digital-first
India’s drive to become a digital-first economy isn’t slowing down. Even though it took off later than the US and UK, there's major investment in digital transformation. According to a 2024 report by the Indian Council for Research on International Economic Relations (ICRIER), India has secured the position of the world's third-largest digital economy, trailing only the US and China. With one of the world's largest digital talent pools and a government eager for digital adoption, investment in tech talent is set to continue to rise.
The Indian Banking sector is seeing the emergence in digital banking, cyber security, AI, data analytics and many more digital technologies. According to Bersin’s Labour Market Insights report on Consumer Banking, demand for talent in these areas is increasing exponentially, with roles like front-end engineers and data scientists becoming sought-after positions.21 With this growth expected to continue, many large investment banks (e.g. Deutsche Bank, The NatWest Group, UBS, J.P Morgan, Goldman Sachs etc.) are investing heavily in their Indian infrastructure.
Recommendations for TA leaders in India
- Consider increasing your investment in your India infrastructure as seen by Deutsche Bank, The NatWest Group, Lloyds Banking Group and Goldman Sachs in the last 48 months.
- Differentiate yourselves in the India tech skills market - technology innovations are making banking organisations a sought-after career move for many millennial and Gen-Z candidates. We'll see more sustainability and eco-friendly strategies in sector EVPs to attract Gen Z and millennial workers.
- With increasing competition from the international banks, Indian TA organisations will need to become more flexible to attract the best talent, offering more flexible working and remote working, and considering gig workers for agility and expertise.
Conclusion
The future of banking talent
Today’s banking regions have a number of considerations and challenges to address when defining their future talent strategies.
In the UK and EMEA, Brexit has meant many large banks have relocated to European cities, creating a surge in hiring requirements in these locations. The US is still grappling with uncertainty and is changing its approach to hiring, using technology to do the heavy lifting so TA can become more strategic. APAC hiring levels are recovering but are still way off pre-Covid levels, with new growth in the high-net worth market. While India’s investment in technology skills is attracting interest from all over the world, with major banks moving operations to the country.
But while each region has its challenges, there are also new opportunities emerging that banks can take advantage of.
AMS is a trusted TA partner for global banking institutions wanting to enhance their talent capabilities. We work with some of the leading banks from around the world and have a deep understanding of the talent market. If you are looking for supporting in building a robust talent strategy for your region, get in touch today.
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