The challenges the financial services industry has faced in recent years have been numerous. Here Rutherford Cross’ Stephanie Livingston shares her thoughts on the impact of regulatory changes and technological advancements on the industry, the importance of competitive agility and talent attraction, and how the right people can help business to navigate the change generated by each.
It’s no secret I’m not an accountant, rather a finance recruiter attempting to get my head round the technical accounting implications of the ’08 financial crisis. Whether that’s the recent IFRS 9 implementation, the introduction of the CASS rulebook or the Solvency II directive, these regulatory changes all aim to protect consumers and/or increase transparency. The other notable regulatory change in the industry is not only allowing new entrants into the market but offering them a level playing field. This change has resulted in the creation of challenger banks and the rise of FinTech. Whilst increased transparency and alternative product offerings have had a positive impact on customer numbers, challenger banks need to be at the forefront of innovation during a period of change.
I recently shared an article on LinkedIn written by an employee of PwC that discussed the prevalence of technology and automation and the rising need for FinTech in FS. Both automation & FinTech are impacting different businesses in different ways, whether that be headcount, service/product offering or market share.
In 2015, EY published a report that found an average of 16% of surveyed consumers globally had used two or more FinTech services in the last six months. Fast forward eighteen months and that figure has doubled to 33%, with the UK having the third highest adoption rate at 42% of surveyed consumers. The 2017 report highlights that 25-34 year-olds are generally more tech savvy and less likely to have developed a strong relationship with a provider, thus increasing the likelihood they will embrace the FinTech phenomenon, and that businesses looking to retain their custom must attract talent capable of innovating and integrating FinTech into their service offering.
Agility in a Competitive Market – Product Offering & People Strategy
There are many reasons behind the rapid success of Fintech: the focus on customer proposition as opposed to a product focus; their use of technology to reduce costs and offer services free of charge; seamless and personalised user experiences; utilisation of social media to go “viral” and build customer traction. So, should we view FinTech companies as a threat or an opportunity to existing incumbents?
Research conducted by Simmons & Simmons highlighted that 31% of banks and asset managers plan to make a FinTech acquisition in the next eighteen months. A separate report concluded that 81% of businesses in the FS industry intend to enter into strategic partnerships with FinTech business. If the established providers recognise this opportunity, they will be able to partner with these businesses and benefit from this success whilst also offering plenty in return.
The success of these collaborations will come down to whether the established organisations have the internal capability to assess acquisition opportunities, understand the regulatory implications, and anticipate the cultural challenges on the horizon. Will the banks need to adjust their culture and leadership to suit a digital mindset?
The FS industry is incredibly competitive and top-tier candidates often receive multiple and/or counter offers. For this reason, it is crucial that businesses understand not only what their organisation can offer a candidate but what competitors are able to offer, just as they would when assessing their product range. Challenger banks talk about the exposure to senior management and business-wide view; large institutions talk about the vast array of opportunities and experiences that arise because of their size and scale, sometimes globally. Whatever that USP is, interviewers must be stressing it throughout the recruitment process to maximise engagement.
Talent – Attraction, Retention & Succession Planning
When discussing the developments within the industry, particularly those related to automation and FinTech, many of my clients stress the importance of qualities in candidates that cannot be replaced by technology e.g. adaptability, collaboration, innovation, interpersonal skills and leadership skills.
In the FS industry, many of the larger and more established companies are cutting costs whilst many smaller businesses are experiencing growth, be that organically or through acquisition. Regardless of the stage of a company lifecycle, people and talent strategy must be prioritised.
Whilst people are typically one of the highest costs for a business and an obvious focus for cost cutting, it is essential that a business maintains a workforce of high calibre individuals who are efficient, effective, and able to identify process improvements. Ensuring a high calibre workforce during periods of growth and increase in headcount is also of paramount importance. Growing businesses must ensure they attract the right calibre of people who are able to marry the culture and aspirations of the business.
We’re all aware of the impact Millennials are having on the work place and how their expectations differ to previous generations. A recent PwC study suggested that the biggest draw for Millennials is the opportunity for career progression. I have been impressed with the genuine desire to retain and promote talent both horizontally and vertically across FS and believe this has been key to talent attraction. Consequently, the highest volume of activity is at the newly qualified level as, assuming businesses get these key hires right, the managerial opportunities that materialise over time can often allow businesses to promote internal talent.
It is clear to me that the four areas discussed above present a real opportunity for organisations across the FS industry. Regulatory changes offer greater transparency to consumers repairing some of the trust that has been broken in the past. FinTech and automation are reshaping how financial services operate now and in the future, and offer an opportunity for traditional banks to enter into strategic partnerships with innovative organisations. Essentially however, it is investing in talent that will determine the success of the industry now and in the future.
Stephanie Livingston is a recruiter with financial services specialists, Rutherford Cross. Contact Stephanie at [email protected]