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Who Will Fill Tech Roles in Banking?

Posted by Jeff Pelliccio on Jun 18, 2018 9:00:00 AM

In ICS insights, hiring trends

Banks and credit unions are undergoing a pervasive digital transformation and would like to move even faster. However, there just aren't enough tech employees to go around. With unemployment at historic lows, financial organizations are having a hard time filling positions needed to achieve their digital transformation.

It's a seller's market for tech talent looking to change positions or careers. Since demand is higher than supply, key openings go unfilled. Whether it's experts in data analytics, user experience design (UXD), artificial intelligence (AI) or software engineers, talent is scarce. The tech folks that are available aren't looking to get jobs at banks and community credit unions. They are hoping Google, Amazon, or some other company with deep pockets takes them in.

Capgemini released a study that found that 62 percent of senior management in banking think that the gap in available talent is increasing. This beats out similar concerns, with lower percentages, in auto, retail, utilities, and insurance. So, how can banks compete for resources in a tight labor market? IT hiring managers have a tough time convincing rising stars to come work in their institution when tech giants offer perks like Free Beer Fridays and ping pong tables.

The Capgemini report indicates that this goes beyond a human resources challenge. Retail financial organizations face a problem that's endemic to their entire industry. Banks and credit unions suffer a debilitating shortage of reliable IT talent. In fact, three-fourths of all financial institutions say they've created new roles two years ago that haven't been filled. Survey respondents describe the IT hiring process as very difficult or difficult.

HR executives recruiting for IT talent at financial services organizations say this is a major challenge that impacts all areas of business. Cornerstone partner Terrance Roche said that the two biggest areas of improvement were business lending experts, followed by IT professionals. There is a shortage in data management and business intelligence specializations.

An Ugly Reality

So, the challenge is this: how do banks attract well-educated college graduates in software engineering, IT management or computer programming? Since the industry doesn't have the best reputation, it's a difficult prospect. From the perspective of the most recent graduates, it's been a long line of bad PR. First, we had the financial crisis that ruined whatever good faith people placed in financial institutions. Then, films such as Wall Street and The Wolf of Wall Street shamed the industry. Let's not forget the uncovering of the subprime lending scandals that brought the world economy to a screeching halt. Most recently, Wells Fargo's fraud against its customers provided yet another example of poor leadership and bad actors.

In contrast, 2011 Columbia University MBA grads chose banking whenever they could (27 percent ended up at financial institutions). By 2016, that proportion dropped to 14 percent. Looking at this from another angle, MBA graduates selecting Silicon Valley careers in 2013 represented 13 percent of graduates. By 2016, the percentage was 33 percent.

So, how do banks and credit unions compete with the hot technology incubators? Other industries are believed to be more technologically sophisticated, so they attract the most desirable job seekers. The jobs aren't necessarily more interesting, but the hiring companies are. These industries are scooping up all the IT talent that bankers so desperately need.

To complicate recruiting further, most credit unions and banks can't pay the expected salaries demanded by qualified IT staff. According to Glassdoor, data scientists make an average of $128,549 a year. To get an entry-level data scientist, it costs about $118,748. Tech giants like Google, Amazon, or Airbnb will pay them a lot more.

Quinlan & Associates expands the scope of the problem beyond luring young graduates into banking. Once you get them, retention becomes another juggernaut. This hollowing out of talent makes it difficult to fill a roster and build bench strength. Qualified candidates for critical IT leadership roles are also on the wish list of IT staff needed at most banks.

Banking institutions now must contend with the turnover of talent that leaves for greener pastures. HR directors are left to deal with the aftermath of this constant cycle. Capgemini asked hiring managers what roles would become available within the next two to three years. Here are the top 10:

  1. Information security
  2. Chief Digital Officer
  3. Data Architect
  4. Digital project manager
  5. Data specialist
  6. Chief customer officer
  7. Personal web manager
  8. Chief IoT officer
  9. Data scientist
  10. Chief Analytics Officer

Everyone thinks of data analytics and programming as hard skills needed to help these institutions to thrive, but there are plenty of soft skills that banks and credit unions need to move forward with the digital transformation.

Everyone has dealt with the rude, crusty tech guy that you must talk to get your data needs satisfied, then run from as fast as your legs will carry you. He sits in sulky silence typing away as you talk to the back of his hand. Worse, he rants about obscure aspects of IT infrastructure you have no interest in. 

As banking institutions navigate the digital divide, they aren't expecting tech divas who make life more difficult. Instead, banks and credit unions need reasonable people with tech chops and some sensibility to fellow employees.

Cultivate IT Talent from Within

If banks turned to current employees, they could recruit people with a stake in the organization and an understanding of operational needs. Training current staff in data analytics, machine learning, and business intelligence could resolve the tech talent shortage in banking. Banking providers should try to motivate current employees to step into the needed roles instead of competing with Silicon Valley.

If you're already sending employees to training programs, this may seem like old news to you. If you are progressive, you might even be sending key employees to training for database management. However, in banking, over half of those attending these programs deem then unhelpful. The classes are typically after hours or require employees to take time off to attend them. In fact, in the Capgemini study, 45 percent said their company's training program was boring and ineffective.

Financial institutions need to find ambitious, smart employees and put them in formal certification programs. The bottom line is that it's easier to train people from scratch than to find someone willing to work in banking. So, if they're already working for you, that's half the battle.

Capgemini offers the following suggestions to develop and retain IT tech specialists from within your organization.

  • Think laterally. It’s tough to compete with Google and Amazon, so don't. You won't be able to match their salaries anyway. Instead, diversify your recruiting strategy by looking for smart people in non-IT departments. Alternatively, recruit recent grads that can move into IT roles in business intelligence, data analytics, and other skills.
  • Prioritize learning. Over half of the IT talent said they would move to a company with better digital skill development. Make training and retention a priority if you expect to keep any of the talent you score or train in-house. Reward employees for taking and finishing key training. Nothing speaks to people like money.
  • Get leadership to prioritize the talent strategy. The entire banking organization must focus on its digital transformation strategy for any of these efforts to hit pay dirt. 
  • Engendering loyalty. This is another great way to keep tech resources you train in the company.

Novel Recruitment Perks

Just down the road from Silicon Valley, First Republic Bank in San Francisco feels the pain of trying to bring in young IT talent among millennials. They understand that new graduates are battling student loan debt and aren't thinking about retirement. Instead of 401(k) savings plan, they are focusing on paying back tens of thousands of dollars in debt.

First Republic added an incentive that spoke to these earnest young graduates. In a brilliant move, they rolled out a new program to attract and keep young tech talent. Student loan repayment became a benefit to full-time or part-time employees. The program is also available to First Republic employees who owe money for their children's education loans. Here is the general gist of the payouts, tied to tenure.

  • $100 per month of loan repayment is provided to employees during the first year of eligibility 
  • $150 per month of loan repayment is provided to employees during the second year of eligibility 
  • $200 per month of loan repayment thereafter

So, how does a program with such little monetary draw work to retain millennials? It might not be a lot of money and doesn't cost the bank much, but the theory is that whittling away at student loans makes the bank a much more attractive employment option. It's innovations like this that can help banks fill their rosters and finish their transformations to digital entities. 

The question is what strategies will work for your organization? What hidden talent lies in your finance, HR, and other departments?  Try some innovative recruiting and retention from within and consider perks like the one First Republic employed.

What Now?

Contact ICS for the right strategy and talent. We'll make sure we find you the people you want and work with you to understand exactly what your company needs. ICS has experience with staffing banking roles and we bring that experience to every screening interview. Gone are the days of sub-par candidates when you partner with us. Click below to get started. 

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