Lydia Goutas is Managing Partner of Cornerstone Vienna and an authority on the current evolution of the banking industry. Following is Part 1 of her remarks to a recent conference on the challenges of finding the bank employees of tomorrow.
I was recently asked to speak on Shaping the Future – the topic of the people factor in the Bank of Tomorrow. It’s actually easiest to spot the Bank of Yesterday.
As Chris Skinner, chairman of the financial services club stated, he can tell when the vocabulary of a bank is old fashioned even though they claim they are digital. It´s not about channel, it’s about access, it’s not about product, it’s about the customer, it’s not about cross-functional, it’s about culture.
Some banks are setting up structures for the future, defining themselves as agile, low hierarchy (Ing Diba); more traditional ones are calling themselves adaptable. Banks want to be different organizations but with the inability of some to change and/or regulations, major challenges exist.
According to Whatchado co-founder Ali Mahlodji, 75% of the new jobs we will see in the next 10 years have not yet been created. The question is whether the Banking industry will follow the trends of consumer sectors. According to Cornerstone International Group´s FMCG practice lead James Ng, they will have positions such as Chief Growth Officer, Virtual Reality Officer, Manager of Customer Success and Manager of Motion Design/Animation which will collaborate and interact with product and engineering.
In contrast, the banking sector is more satisfied with creating customer experience positions. What does stand out is the emphasis on the regulatory: Data Privacy officers, Data Engineers, Risk Profiles using social media, Distributed Ledger and Regtech. Banks like ING Diba have started using Block Chain but it is little understood.
In Central Europe, regulators are discouraging banks from any forays into Crypto but the high interest level of a highly educated demographic is hard to argue with as a customer base. As a result, experts in both are not yet present in–house.
Silicon Valley meets Wall Street
CB Insights recently reported that Fintechs are now building beyond the initial business case/use case so that their products are deployable in multiple ways. US Fintech startup Imatchative/ALTX is a good example of this – describing itself as “a silicon valley approach to solve a Wall street problem”.
Their key people are “Economic Psychologists”. This brings up another challenge: everyone will be defining the jobs differently because no- one knows how their banks will adjust, what Fintech services they will buy.
The current gap among the competing needs of the stakeholders has never been bigger-between
- what the customer wants (instant service, responsiveness access independent)
- what the regulator wants (increased information/reporting/scenarios)
- what the banker wants (challenge, work, life, money)
- what the shareholder wants (profits, better margins, decreased staff, decreased costs)
Since 2013, salaries have decreased for the rank and file, bonuses are banked or reduced. Many banks need to “re-price” packages for the new people/positions just as the telcos did in 1998-1999. Decreased staff means doing more with less but this means work-life balance is shifted in favor of work at a time when more people are demanding more life.
Banks also face the challenge of finding people with unique profiles who expect a premium package at a time when budgeted salaries decreased as banks increasingly invest in compliance, regulatory, and new IT systems.
All this means that partnering with Fintechs, or introducing AI, machine learning and automated processes, is time and investment that needs to be spent to meet other needs.