Global banking outlook 2016

Transforming talentThe banker of the future

Transforming talent: The banker of the future

Contents

1 Executive summary

3 Redefiningtalent

7 Understandingtheexpectations ofanewgenerationofbankers

9 Assessingtheimpactof technologyontheworkforce

15 Transformingtalent

16 Changingculturetoencourage diversityofthought

23 Nurturingandempoweringa collaborativeworkforce

29 Mobilizingintelligence

31 Contacts

Globalbankingoutlook2016

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

p erf orm ance. To overcom e th eir traditional h om og eneity, b ank s m ust draw tal ent f rom a b roader p ool and b uil d a cul ture th at sup p orts and retains p eop l e f rom dif f erent b ack g rounds, w ith dif f erent view s and exp eriences.

1 . U n d e r s t a n d t h e e x p e c t a t i o n s o f a n e w g e n e r a t i o n o f b a n k e r s Al so k now n as G eneration Y , m il l ennial s w ere b orn b etw een 1 9 8 1 and 2 0 0 0 and w il l constitute 7 2 % of th e g l ob al w ork f orce b y 2 0 2 5 . Th eir asp irations and attitudes tow ard w ork w il l sh ap e th e w ork p l aces of th e f uture. U nderstanding th is very dif f erent g eneration of b ank ers is vital to th e industry’ s success. B ank s m ust not onl y h ire th e rig h t p eop l e f or th e rig h t rol es, b ut estab l ish th e rig h t cul ture, targ ets and asp irations to retain and b ring out th e b est in th eir staf f .

2 . A s s e s s t e c h n o l o g y ’ s i m p a c t o n t h e w o r k f o r c e Tech nol og ical advancem ent w il l rep l ace som e rol es th at w ere p reviousl y p l ayed b y em p l oyees. I n m any oth er instances, staf f p erf orm ance w il l b e enh anced b y sup p orting tech nol og y — f or exam p l e, sal es staf f in b ranch es w il l b e aided b y tab l ets w ith ap p l ications th at sup p ort th e sal es p rocess. M eanw h il e, new rol es w il l b e created across org aniz ations to devel op and dep l oy new tech nol og y. B ank s sh oul d review th eir op erations to assess w h ere tech nol og y w il l h ave th e g reatest im p act on th eir w ork f orce.

3 . C h a n g e c u l t u r e t o e n c o u r a g e d i v e r s i t y o f t h o u g h t I t is no l ong er enoug h f or b ank s m erel y to em p l oy th e b est individual s — to outp erf orm , th ey m ust em p l oy th e b est com b ination of individual s in a team . Th ere is considerab l e evidence th at w ork cul tures th at encourag e a diverse workforce deliver im roved nancial

And yet, m ore com p l iance staf f aside, th e com p l exion of th e b ank ing w ork f orce today l ook s

rem ark ab l y sim il ar to th e one b ef ore the global nancial crisis. eading global b ank s h ave sp ent th e years since th e crisis reinventing th em sel ves: ref ocusing on their core businesses rede ning their structure and resh ap ing th em sel ves th roug h th e use of tech nol og y. Th is h as b een crucial in adap ting to new reg ul atory and com p etitive constraints and trying to nd a ath to ro table g row th . B ut in a rap idl y ch ang ing w orl d, ref orm ing op erating structures and tech nol og ies w il l tak e an org aniz ation onl y so f ar. I f b ank s w ant to tack l e th e cul tural ch al l eng es th e industry f aces and im rove nancial erformance th ey need to ask th em sel ves, w h o is th e b ank er of th e f uture?

S om e stil l see b ank ing as an industry with an ethical de cit. t is erceived as h aving l ost its social p urp ose, and its em p l oyees are view ed as m otivated b y

nancial rewards rather than customer outcom es. I nnovation th at im p roves th e custom er exp erience h as al l too of ten com e f rom outside th e sector. B ank s m ust catch up w ith industries th at p ioneer innovations internal l y and encourag e a cul ture of entrep reneurism . Th is w il l req uire new sk il l s and a cul ture th at sup p orts and nurtures diversity of th oug h t.

W h ere in th e org aniz ation w il l p eop l e b e needed? W h at sk il l s w il l th ey req uire? H ow can th ose sk il l s b e h arnessed to del iver b etter outcom es? P redicting th e future is dif cult but we believe there are four s eci c actions banks can take today to ensure th eir em p l oyees w il l h ave th e req uisite ap titude to del iver success in tom orrow ’ s w orl d.

E x e c u t i v e s u m m a r yI s tech nol og y a savior, enab l er or destroyer of b ank s and th eir b usiness m odel s? O ne th ing is certain: in th e com ing decade, tech nol og y w il l revol utioniz e th e b ank ing w ork f orce. Th ere w il l b e f ew er b ank ers in traditional rol es, w h il e th e rol es of th ose w h o rem ain w il l b e f undam ental l y dif f erent. As a resul t, transf orm ing tal ent is j ust as im p ortant to reb uil ding a viab l e, successf ul b ank ing f ranch ise as transf orm ing p roducts and p rocesses.

4 7 %

3 4 %

M il l ennial s w il l constitute 7 2%of th e g l ob al w ork f orce b y 2 0 2 5

O rg aniz ations transition f rom sch edul ed w ork and b road- b ased rol es to real - tim e coordination of

task - oriented w ork f orce

C om p anies f acil itate innovation b y em p l oying

a diverse w ork f orce of em p l oyees, contractors and

autom ated m ach ines

C om p anies w il l eng ag e tal ent in a

I nf use p urp ose into th e org aniz ation to eng ag e an increasing l y discretionary

w ork f orce - m eaning is th e new m oney

of occup ations in advanced econom ies

are at “ h ig h risk ” of b eing autom ated in

th e next 2 0 years

of th e Am erican w ork f orce can

“ f reel ancers”

D ig ital and rob otic tech nol og ies aug m ent and rep l ace w ork ers

W ork styl es are b ecom ing m ore ag il e in th e dig ital w orl d

W o r k f r o m h o m e

W o r k o n t h e g o

E m p l o y e e sC o n t r a c t o r s A u t o m a t e dm a c h i n e s

T h e f u t u r e o f t h e b a n k i n g w o r k f o r c e

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

b est outcom es, b ut th ey can al so create som e of th e w orst p rob l em s. Th e current transf orm ation of th e b ank ing industry sh oul d not onl y b e ab out p rocesses and p roducts; it sh oul d al so b e ab out sh if ting m indsets and cul tural val ues. I t sh oul d b e ab out p eop l e.

m ust reth ink th e H R l if e cycl e — f rom recruitm ent to sep aration — to ensure em p l oyees rem ain eng ag ed and m otivated to del iver th e b est outcom es f or al l .

B oth p eop l e and tech nol og y can h ave a transf orm ative ef f ect on b ank ing . Th ey can sup p ort and del iver som e of th e

4 . N u r t u r e a n d e m p o w e r a c o l l a b o r a t i v e w o r k f o r c e Al th oug h diversity of th oug h t can b e a p ositive, f or org aniz ations to f unction ef f ectivel y, em p l oyees m ust coal esce around a com m on set of val ues and col l ab orate, w ith each individual b ring ing h is or h er sk il l s to b ear on a set of task s. B ank s

4 7 %

3 4 %

M il l ennial s w il l constitute 7 2%of th e g l ob al w ork f orce b y 2 0 2 5

O rg aniz ations transition f rom sch edul ed w ork and b road- b ased rol es to real - tim e coordination of

task - oriented w ork f orce

C om p anies f acil itate innovation b y em p l oying

a diverse w ork f orce of em p l oyees, contractors and

autom ated m ach ines

C om p anies w il l eng ag e tal ent in a

I nf use p urp ose into th e org aniz ation to eng ag e an increasing l y discretionary

w ork f orce - m eaning is th e new m oney

of occup ations in advanced econom ies

are at “ h ig h risk ” of b eing autom ated in

th e next 2 0 years

of th e Am erican w ork f orce can

“ f reel ancers”

D ig ital and rob otic tech nol og ies aug m ent and rep l ace w ork ers

W ork styl es are b ecom ing m ore ag il e in th e dig ital w orl d

W o r k f r o m h o m e

W o r k o n t h e g o

E m p l o y e e sC o n t r a c t o r s A u t o m a t e dm a c h i n e s

3 | T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

at th e l arg est E urop ean b ank s g rew as a p ercentag e of th e overal l b ank ing asset b ase. Af ter contracting f or th ree consecutive years, a return to p ositive g row th f or b usiness l oans in E urop e is exp ected f or 2 0 1 5 . 1 Th is sug g ests th at th e p ost- crisis era, w h ere th e f ocus w as on survival and stab il iz ation, is

nally over.

U ndoub tedl y, ch al l eng es rem ain: l ow returns on eq uity ( R O E s) ( see F ig ure 2 ) ; structural l y h ig h er costs; m ore onerous reg ul ation, coup l ed w ith m ore intense reg ul atory oversig h t; w eak control s; and em p l oyee b eh avior th at is unal ig ned w ith del ivering cl ient and sh areh ol der val ue. H ow ever, w e now see institutions step p ing b ack f rom th e raf t of increm ental ch ang e p rog ram s th ey adop ted in th e im m ediate w ak e of th e crisis and attem p ting to tak e a m ore strateg ic ap p roach .

H ow w il l a b ank ’ s custom ers, reg ul ators, investors and em loyees de ne it

ill it merely be de ned by uarterly earning s num b ers and an ab sence of regulatory nes r will it be de ned b y b roader attrib utes, incl uding its eth os, its p urp ose and th e streng th of its connection to custom ers?

W e b el ieve it w il l b e b oth . B ut b ank s w il l b e unab l e to transf orm cul tures, control costs and deliver t for ur ose org aniz ational structures unl ess th ey com p l etel y reap p raise th eir w ork f orce. And yet, to date, th ey h ave b een m ore f ocused on transf orm ing p roducts and p rocesses th an p eop l e.

anking is at a oint of in ection. E ven in E urop e, w h ere th e b ank ing recovery h as l ag g ed th at in th e U S , risk is returning. or the rst time in al m ost a decade, risk - w eig h ted assets

T h i n k a b o u t t h e f u t u r e . o o o efine a

l e a d i n g b a n k ?

e efinin talent

R eturn on averag e eq uity h as im p roved, b ut h as not yet returned to p re- crisis p eak sR eturn on averag e eq uity, b ank ing industry, b y reg ion

1 0 . 3 %7 . 7 %

G l o b a lN o r t hA m e r i c a

1 7 . 5 %

2 0 0 6 2 0 0 8 2 0 1 5 2 0 0 6 2 0 0 8 2 0 1 5

1 2 . 1 %

5 . 0 %

1 9 . 3 %

E u r o p e2 0 0 6 2 0 0 8 2 0 1 5

6 . 8 %

1 6 . 8 %

3 . 8 %

i u e B ank ing return on averag e eq uity ( R O AE ) since 2 0 0 6 in %

1 EY Eurozone forecast: outlook for financial services, S p ring 2 0 1 5 .

S ource: inancial E Y anal ysis

4G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

• Transf orm ing th eir inf rastructure and exp l oring dif f erent service m odel s to drive cost out of th e b usiness and del iver b etter service

S om e institutions — esp ecial l y as th ey try to ch ang e th eir cul tures — are b eg inning to th ink ab out w h om th ey w ant to w ork f or th em and w h at th ey need to do to m otivate th ose individual s. Th is is critical as th ey seek to stem control s l osses, w h ich h ave reduced investm ent b ank ing R O E s b y al m ost 3 % every year f rom 2 0 0 7 to 2 0 1 4 . And it is j ust as im p ortant f or reb uil ding trust. E Y research h as sh ow n th at th e w ay custom ers are treated is critical to th eir trust in th eir b ank , and th at trust is w h at transf orm s custom ers f rom sources of revenue into advocates f or th eir b ank s. 2

As b ank s seek to reb uil d trust, el im inate control f ail ures and resp ond to p ressures to reduce th e siz e of th eir w ork f orce, it is im p erative th ey understand w h ich em p l oyees real l y create val ue — b y disp l aying th e rig h t b eh aviors and del ivering th e rig h t p erf orm ance — in order to increase

M any m aj or b ank s h ave ch ang ed th eir strateg ic direction, w ith draw ing f rom cap ital - intensive b usinesses and investing in cap ital - l ig h t areas ( see F ig ure 3 ) . Th is trend is accom p anied b y ch ang e across th e b usiness, f rom front of ce to back. eading banks are redesigning themselves as more e ible institutions, to b e ab l e to adap t b etter to the changing world and rede ning their core op erations to sup p ort th is ch ang e. I nstitutions are:

• ede ning their strategy focusing on th eir core b usinesses and k ey custom ers and m ark ets

• R ej uvenating distrib ution and sal es b y investing in om ni- ch annel sol utions and using tech nol og y to sup p ort sal es staf f

• R edesig ning p roduct devel op m ent and m anuf acturing and rel easing new p roducts m ore al ig ned to th e needs of em erg ing custom ers, w h il e g iving th ose custom ers m ore control in sh ap ing b esp ok e p roducts

P r o d u c t s , p r o c e s s e s a n d p e o p l e : t h e t h r e e k e y s t o t r a n s f o r m a t i o n

f st uctu e fi ce

F i x e d i n c o m e , c u r r e n c i e s a n d c o m m o d i t i e s

% o f m a j o r g l o b a l b a n k s p l a n n i n g t o e x i t o r s e l e c t i v e l y s h r i n k s e c t i o n s o f t h e b u s i n e s s

% o f b a n k s p l a n n i n g t o e x p a n d o r s u s t a i n t h i s b u s i n e s s

A s s e t m a n a g e m e n t a n d p r i v a t e w e a l t h

7 1%

C h ang ing b usiness m odel s and strateg ic direction

7 3 %

100%

M & A a n d u n d e r w r i t i n g

Eq u i t i e s ( m a r k e t m a k i n g & p r o p r i e t a r y t r a d i n g )

100%

8 0%

Sources: I M F Global F inancial Stability R ep ort, O ctober 2014 , EY analysis

i u e C h ang es in b usiness m odel s and strateg ic direction f or m aj or g l ob al b ank s

2 EY Global Consumer Banking Survey, 2 0 1 4 .

S ource: I M F Global Financial Stability Report, O ctob er 2 0 1 4 , E Y anal ysis

5 | T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

B ut b ank s m ust not onl y h ire th e rig h t p eop l e f or th e rig h t rol es, th ey m ust estab l ish th e rig h t cul ture, targ ets and asp irations f or th eir staf f . Th is is p articul arl y im p ortant in l ig h t of research th at raises concerns ab out th e im p act of a com p l iance cul ture on th e w ork f orce — th at em p l oyees’ h eig h tened f ocus on reg ul atory com p l iance m ay com e at th e exp ense of custom er and oth er stak eh ol der outcom es. 3 W ith th is com p l iance cul ture, em p l oyees are m otivated b y th e f ear of doing som eth ing w rong , rath er th an th e desire to do w h at’ s rig h t.

B ank s m ust do m ore to b ring out th e b est in th eir em p l oyees at a tim e w h en th e g l ob al w ork f orce is ch ang ing .

the roductivity and ro tability of their w ork f orce overal l . B ank s m ust ask : “ W h o are th e b est b ank ers, and w h at m ak es th em b est? ”

That insight should de ne whom banks need to retain, and th e typ es th ey need to h ire. S uccessf ul org aniz ations w il l l ook f or g ood p ractice in th eir current op erations, using avail ab l e data to identif y th e traits of h ig h -p erf orm ing individual s and team s. Th ey w il l contrast and com p are th ese w ith underp erf orm ing units and, b y codif ying th e traits of h ig h p erf orm ers, w il l b e ab l e to drive ch ang e across th e rest of th e org aniz ation ( see F ig ure 4 ) .

W h o are g ood b ank ers? W h at m ak es th em g reat?

Em loyees with e hibit the best conduct behavior don t necessarily deliver the best nancial erformance.

C o n d u c t b e h a v i o r s

F i n a n c i a lp e r f o r m a n c eW h e r e m o s t

e m p l o y e e sa r e t o d a y

O b j e c t i v e f o r b a n k s

Better financial performance

G o o d b e h a v i o r+=

S u s t a i n a b l e p e r f o r m a n c e

i u e read of em loyee erformance demonstrating the right behaviors and delivering the right nancial erformance

u ce E Y anal ysis

3 E Y , The challenges of risk, culture, behaviour and corporate integrity in financial services, Findings from the MoralDNA™ of culture and conduct in global financial services, 2 0 1 5 .

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

D i g i t a l b u s i n e s s . D ig ital innovation continues to transf orm b ank ing , ch ang ing th e custom er exp erience and im roving industry ef ciency. Ap p l ications of new tech nol og ies, such as 3 - D p rinting , w il l enab l e institutions to transf orm p rocesses and drive ef ciency. or banks this m eans th ere m ust b e a reb al ancing b etw een rol es th at are th e p reserve of b ank ers and th ose task s th at are l arg el y undertak en b y m ach ines.

C h a n g i n g w o r k f o r c e . G l ob al w ork ing p atterns are ch ang ing . As com p etition f or l ab or increases, so too w il l th e p rem ium p aid to sk il l ed w ork ers. F urth erm ore, rising entrep reneursh ip in th e w ork f orce is ch ang ing th e typ es of j ob s th at attract em p l oyees and th e asp ects of th ose j ob s th at m otivate th em . Th us, b ank s m ust reth ink em p l oym ent criteria. W ith h ig h l y sk il l ed em p l oyees increasing l y exp ensive to recruit and l ittl e evidence th at p ay correl ates w ith p erf orm ance, b ank s sh oul d consider recruiting and training staf f f rom a b roader tal ent p ool and retaining th em in new w ays.

G l o b a l m a r k e t p l a c e . Th e g ap b etw een devel op ed and em erg ing m ark ets is narrow ing , and a trul y g l ob al m ark etp l ace is devel op ing . F or b ank s, th is increased com p etition m eans l ab or w il l b e m ore exp ensive and in sh ort sup p l y. R ising staf f costs w il l f orce b ank s to exp l ore ch eap er w ays to del iver services w h il e g reater m ob il ity w il l exacerb ate tal ent sh ortag es in som e m ark ets.

D e m o g r a p h i c s h i f t s . W h il e new entrants to th e w ork p l ace sw itch j ob s m ore f req uentl y, averag e j ob tenure is actual l y increasing in k ey devel op ed m ark ets, such as th e U K and th e U S . As retirem ent ag es increase, org aniz ations f ace a ch al l eng e to ensure th eir w ork f orce rem ains eng ag ed and m otivated. Th e needs and sk il l s of ag ing em p l oyees m ust b e b al anced ag ainst th ose of young er em p l oyees j ust entering th e w ork f orce. F urth erm ore, b ank ing l ag s b eh ind a num b er of oth er industries in g ender and eth nic diversity, and th ere is increasing p ressure f rom g overnm ents, investors and b usiness l eaders to sh ap e a w ork f orce that more broadly re ects the outside w orl d.

F o u r g l o b a l m e g a t r e n d s a r e r e s h a p i n g t h e w o r k f o r c e

B ank s are not op erating , or transf orm ing , in a static environm ent. B ef ore th ey can devel op th e tool s and p rocesses to b uil d and integ rate excep tional team s, it is essential f or th em to understand th e im p act of som e of th e w ays th e w orl d is ch ang ing .

$

€ £

3

4

7 | T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

e d l l e t e ds s e ls t i t d t

t e e e ti f e l ees i the l ce

I n order to b est attract and retain th em and m axim iz e th eir p erf orm ance at w ork , b ank s w il l need to m ak e sure th ey understand th is new g eneration. G eneral iz ations are dang erous, of course, b ut som e p articul ar ch aracteristics dif f erentiate m il l ennial s f rom earl ier g enerations. Th ese incl ude:

• G r e a t e r l a b o r m o b i l i t y . E Y research sug g ests m il l ennial s are m ore l ik el y th an p revious g enerations to sw itch j ob s if th ey f eel th ey are not b eing

aid enough there are insuf cient op p ortunities to advance or th eir work is insuf ciently e ible.4 Th ey are al so m ore l ik el y to h ave “ p ortf ol io” careers.

• G r e a t e r t e c h n o l o g i c a l c a p a b i l i t i e s . M il l ennial s w ere al so raised in transf orm ative years f or tech nol og y, p articul arl y th e internet. Th ey

M il l ennial s — or G en Y — are young and g eneral l y tech - savvy p eop l e b orn b etw een 1 9 8 1 and 2 0 0 0 . W e estim ate th ey w il l constitute 7 2 % of th e g l ob al w ork f orce b y 2 0 2 5 ( see F ig ure 5 ) . Th eir career asp irations and attitudes tow ard w ork w il l b e instrum ental in sh ap ing th e w ork p l aces of th e f uture.

Th ere are a num b er of w ays th e industry is adap ting to accom m odate th ese new w ork ers. F or exam p l e, som e b ank s h ave announced “ l if estyl e”

rograms designed s eci cally for th is g roup , p artl y b ecause th ey are concerned th at l eading tal ent is ch oosing oth er industries over b ank ing . B ut it is uncertain w h eth er th ese institutions h ave actual l y estab l ish ed w h at th e g roup real l y w ants and w h at is needed to m otivate th em at w ork .

e efinin talentde st di the e ect ti s

f e e e ti f e s

A new g eneration w ith new exp ectations

198 1- 2000M i l l e n n i a l s :

b o r n b e t w e e n

P e r c e n t a g e o f p o p u l a t i o n v i e w i n g m i l l e n n i a l s a s m o s t t e c h - s a v v y g e n e r a t i o n

sufficie t

L i m i t e d c a r e e r o p p o r t u n i t i e s

c f e i ilit

W h y m i l l e n n i a l ss w i t c h j o b s

7 2%o f t h e g l o b a l

w o r k f o r c e b y 2 0 2 5

$$

7 8 %

Source: EY Global Generations survey, 2013

i u e N ew g eneration, new exp ectations

S ource: EY Global Generations survey, 2 0 1 3 .

4 EY, Global Generations: A global study on work-life challenges across generations, 2015.

8G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

typ ical l y m ak e extensive use of dig ital tool s ( m ob il e and onl ine) to connect w ith th eir f riends and p eers. B l og s and social m edia w eb sites are integ ral to th eir l ives f or social iz ing and sh aring th eir exp eriences and op inions. U nsurp rising l y, a recent E Y survey sh ow ed th at m il l ennial s are view ed as th e g eneration th at is m ost tech nol og ical l y cap ab l e — 7 8 % see m il l ennial s as th e m ost “ tech - savvy” g eneration. 5

• M o r e e n t r e p r e n e u r i a l , m o r e e n t i t l e d . M il l ennial s are al so seen as b eing m ore col l ab orative, adap tab l e and entrep reneurial th an oth er g enerations. Th ey are al so m ore eag er th an earl ier g enerations to b e ask ed f or inp ut, g iven f eedb ack and to earn recog nition and resp ect. H ow ever, w h il e g eneral l y seen as enth usiastic, m em b ers of G en Y aren’ t p erceived as “ team p l ayers” or p articul arl y h ardw ork ing , or even p roductive p arts of th eir org aniz ation. I n addition, th ey are erceived as being dif cult to work w ith , f eel ing a sense of entitl em ent and ( p erh ap s l ess surp rising l y) l ack ing rel evant exp erience.

Th e g enerational dif f erences sp anning th e w ork f orce, th eref ore, of f er a w ide-rang ing sk il l set to b usinesses, b ut b ank s need to m anag e th ose sk il l sets caref ul l y to ensure th ey are used in th e rig h t w ay. W h ere dif f erent g enerations p resent s eci c skill ga s they can be a critical w eak ness f or a b usiness.

U nderstanding th e w ay th e g l ob al w ork f orce is ch ang ing — and th e increasing dep th and b readth of tal ent avail ab l e to b ank s — is im p ortant f or b ank s l ook ing to transf orm th eir w ork f orce.

W h ere dif f erent g enerations p resents eci c skills ga s they can b e a criticalw eak ness f or a b usiness.

5 E Y , Global Generations: A global study on work-life challenges across generations, 2 0 1 5 .

9 | T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

W e b el ieve th at such cl aim s are overb l ow n. N everth el ess, it is certain th at m any j ob s w il l g o. I t is undeniab l e th at an array of tech nol og y, incl uding rob ots, is al ready revol utioniz ing b ank ing and h aving a transf orm ative im p act on th e w ork f orce. As th is trend accel erates, b ank s m ust reth ink w ays of working and balance the bene ts of technology with the bene ts of or req uirem ents f or, h um an val ue- adding intervention.

“ G ive up and g o h om e” is th e m essag e to b ank ers if cl aim s th at rob ots w il l b e running th e C ity w ith in 1 0 years — rendering investm ent b ank ers and anal ysts redundant — are to b e b el ieved. 6

L e s s s c a r e - m o n g e r i n g , m o r e s t r a t e g i z i n g

e efinin talentssessi the i ct f tech l the f ce

6 “ B ank ers b ew are: C ity ‘ w il l soon b e run b y rob ots’ , ” The Telegraph, 2 0 1 4 .

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

S econd, tech nol og y is used as a tool to im p rove p roductivity. Th is h as of ten invol ved rol es in w h ich f ace- to- f ace contact w ith custom ers is stil l im p ortant — such as w h en custom ers are p urch asing investm ent p roducts. F or exam p l e, b y eq uip p ing advisors w ith tab l ets, b ank s h ave b een ab l e to reduce th e risk of p roducts b eing m is-sol d, dim inish th e tim e sp ent b y advisors on p ap erw ork and p rovide custom ers w ith advice on, and access to, a w ider rang e of p roducts th an m ig h t oth erw ise b e avail ab l e.

H ow ever, th e devel op m ent of autonom ics and advances in m ach ine l earning m eans th e l ine b etw een th ese tw o, rel ativel y distinct, ap p l ications of tech nol og y to b ank ing are b l urring . As rob ots devel op h um an- l ik e creative p rob l em - sol ving cap ab il ities and customers become more con dent ab out interacting w ith m ach ines, m ore and m ore com p l ex task s can b e com p l eted b y tech nol og y al one.

F or exam p l e, in w eal th m anag em ent, th e traditional dom ain of p ersonal rel ationsh ip s, rob ots h ave started to m ak e th eir p resence f el t. I n Asia, one bank s mass af uent rivate banking cl ients ( th ose w ith a net w orth cl ose to U S $ 1 m ) are b eing advised b y rob ots. As th ese custom ers are not considered w eal th y enoug h to w arrant a f ul l - tim e rel ationsh ip m anag er, th ey interact w ith th eir b ank th roug h enh anced onl ine p l atf orm s underp inned b y al g orith m s. Th is is j ust one exam p l e of th e increasing trend of b ank s — and

intech rms turning to cognitive com p uter system s th at understand natural l ang uag e, are ab l e to l earn and can serve as ch at advisors.

F irst, m uch investm ent in tech nol og y is f ocused on th e autom ation of m anual

rocesses to drive greater ef ciency l ow er cost and im p rove sp eed and accuracy. Th is use of tech nol og y is ab out reducing sim p l e “ task - b ased” rol es — or, at l east, al l ow ing b ank s to real l ocate staf f to oth er areas of th e b usiness. Th is is h ig h l ig h ted b y th e ever- increasing investm ent in, and p enetration of , onl ine b ank ing . As onl ine tech nol og y h as im p roved in devel op ed countries, b ank s h ave b een ab l e to increase op erational ef ciency im rove customer service and reduce th eir b ranch f ootp rint ( see F ig ure 6 ) . S im il arl y, th e use of m ach ines in b ranch es to p erf orm a rang e of b asic activities — transactions such as dep ositing or w ith draw ing m oney — h as al l ow ed th e num b er of staf f typ ical l y req uired in each b ranch to b e reduced, too.

H o w t e c h n o l o g y h a s a l r e a d y r e v o l u t i o n i z e d t h e w o r k p l a c e

As rob ots devel op h um an- l ik e creativep rob l em - sol ving cap ab il ities, m ore and m ore com p l ex task s can b e com p l eted b y tech nol og y al one.

i u e B ranch b ank ing vs. onl ine b ank ing in E urop e and th e U S

223 192

20112014

8 3 8 2

2011 2014

B r a n c h b a n k i n g O n l i n e b a n k i n gN um b er of b ranch es ( in ' 0 0 0 s) % of individual s using I nternet b ank ing

20142011

3 6 % 4 4 %

2011

6 5%

2014

7 2%

S ource: F D I C , E C B , U S F ederal R eserve, E urostat

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

• Anoth er g l ob al b ank recentl y announced th e use of rob ot tech nol og y to h el p its cl ients w ith b asic task s such as m oney transf ers — custom ers are ab l e to interact w ith and b e w al k ed th roug h

rocesses by an arti cial intelligence ( AI ) system sim il ar to th ose f ound in m ob il e tel ep h ones.

• Tech nol og y is al so reducing th e rol e of h um ans in som e areas of investm ent b ank ing . Th e use of al g orith m s, w h ich are al ready com m onp l ace on trading oors can resolve com le m ath em atical eq uations, draw ing nuanced, l og ical concl usions w ith in seconds. Th is is not new . As f ar b ack as 2 0 0 1 , a team of rob ots w as ab l e to b eat h um ans in a trading sim ul ation, and w e exp ect th e num b er of trading rol es in b ank s to continue to f al l . 8

• B eyond sal es and trading , one l eading g l ob al investm ent b ank is al ready exp l oring th e use of “ autom ated w riting ” to sup p l y its cl ients w ith research rep orts, and anoth er is l ook ing to autom ate as m uch of th e I P O p rocess as p ossib l e.

de tif he e tech l ill ut te les

Th ere is evident scop e f or b ank s to reduce h um an f riction and el im inate m ore task - b ased rol es th roug h autom ation. As il l ustrated in E Y ’ s European Banking Barometer — 2015, th e m aj ority of th ese w il l b e in o erations and other head of ce f unctions, as w el l as in retail b ank ing ( see F ig ure 7 ) .

ithin bank branches arti cial intel l ig ence is th reatening m ost of th e rem aining rol es of th e staf f , and th ere is a h ig h p rob ab il ity th at th e rol es of bank tellers loan of cers and mortgage b rok ers w il l b e autom ated in th e near f uture. 7 N otab l e exam p l es of autom ated rol es incl ude:

• ne rm has introduced a robot w ork er p rog ram m ed to sense custom er em otions and sp eak 1 9 dif f erent l ang uag es, enab l ing it to g reet custom ers and assist th em in dif f erent services of f ered b y th e b ank .

T h r e e s m a r t s t e p s t o b a l a n c e i n v e s t m e n t i n t e c h n o l o g y w i t h t h a t i n p e o p l eTech nol og y is advancing so rap idl y th at b ank s are f aced w ith th e ch al l eng e of p re- em p ting h ow it w il l resh ap e th eir w ork f orce. H ow and w h ere m ust th ey dep l oy and invest in tech nol og y and p eop l e across th e b usiness, and w h ich p rocesses m ust th ey h ave in p l ace to m axim iz e th e p otential of b oth ?

7 C arl B enedik t F rey and M ich ael A. O sb orne, The Future Of Employment: How Susceptible Are Jobs To Computerisation, 2013.

8 BBC, Robots beat humans in trading battle, 2001.

utomation can drive ef ciency and reduce task - b ased rol es

R e t a i l a n d b u s i n e s s b a n k i n g

D e c r e a s e I n c r e a s e

3 2% 10%

7 %

6 %

2%

O p e r a t i o n s a n d I T

I n v e s t m e n t b a n k i n g

the he d ffice fu cti s

17 %

28 %

3 1%

Source: EY’ s Europ ean B ank ing B arom eter ─ 2015

i u e I n w h ich areas do you exp ect b ank ing h eadcount to increase or decrease?

S ource: EY European Banking Barometer — 2 0 1 5

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

• C a l l c e n t e r e m p l o y e e s . W h il e th ere is som e autom ation w ith in b ank cal l centers, and em p l oyees h ave scrip ts to h el p th em sol ve p rob l em s, w h en th ese em p l oyees are onl y ab l e to stick to th e scrip t, th ey can f rustrate custom ers. W h at is req uired to del iver h ig h - q ual ity service in such a rol e is a p rob l em - sol ving cap ab il ity and an eng ag ing m anner w ith custom ers.

• H i g h - n e t - w o r t h p e r s o n a l a d v i s o r s . hile the mass af uent may have

th eir w eal th m anag em ent needs served b y rob o- advisors, h ig h - and ul tra- h ig h - net- w orth individual s ( U H N W I s) are l ik el y to continue to exp ect dedicated p ersonal advisors.

H ow ever, desp ite th e continued em p h asis on interp ersonal sk il l s in th ese rol es, m any p ositions w il l stil l req uire g reater interaction w ith tech nol og y. E ven th ose staf f advising U H N W I w il l b e h eavil y rel iant on an array of tech nol og y.

F urth erm ore, at a b asic l evel , tech nol og y is central to enab l ing th e ch ang es in w ork styl es th at al l ow th e w ork f orce to b ecom e m ore ag il e in th e dig ital w orl d. W e al ready see f ew er staf f

8 ) , b ut w h il e a l arg e num b er of rol es w ith in b ank s are targ ets f or autom ation, not al l of th em are — if onl y f or custom er- service reasons.

O ne b arrier to f ul l autom ation of th e w ork f orce l ies in th e nature of existing j ob s. W h il e m ach ines can in a num b er of instances erform s eci c technical task s b etter th an h um ans, existing j ob s b undl e a rang e of task s, incl uding th ose that re uire e ibility udgment and com m on sense” and rem ain ch al l eng ing to autom ate. 1 0 N otab l e exam p l es of rol es w h ere interp ersonal sk il l s are im p ortant incl ude:

• R e s e a r c h a n a l y s t s . Th e ab il ity of m ach ines to advance cl ients’ th ink ing , rath er th an rep ort on th e f acts, rem ains l im ited. Anal ysts h ave th e advantag e of m aintaining rel ationsh ip s w ith executives at th e com p anies th ey cover, sp eak ing w ith th em directl y and interp reting th e nuances in th eir com m ents. W h il e th e data- crunch ing can b e autom ated, th e rol e itsel f req uires a deg ree of h um an interaction and — critical l y — j udg m ent th at cannot b e as ef f ectivel y m arsh al ed b y m ach ines.

W e b el ieve th at th e next decade w il l see th e increased h ol l ow ing out of rol es and g reater ap p l ication of tech nol og y across b ank s. Th eref ore, b ank s m ust p l an ef f ectivel y f or ch ang e. Th ey sh oul d estab l ish a w ork ing g roup , incl uding H R p ersonnel and tech nol og ists, m ap rol es across th e org aniz ation ag ainst th e step s in each p rocess, and identif y l ik el y targ ets f or f uture autom ation. And as tech nol og y advances, and com p uters are b etter ab l e to l earn f rom exp erience and adap t to new situations, w h at control s need to b e in p l ace to m anag e th at tech nol og y? I t is im p ortant to understand w h ere, even if autom ation is p ossib l e, it m ay not b e desirab l e. Th is w il l enab l e b ank s to real l ocate investm ent across th e b usiness and devel op p l ans to retrain and redep l oy staf f to oth er p arts of th e org aniz ation.

de tif he e tech l ill u e t i di idu ls

Th ere w il l stil l b e interp l ay b etw een tech nical and interp ersonal sk il l s in m any rol es. Th e view th at k ey rol es w il l “ com b ine routine tech nical task s w ith th e set of non- routine task s in w h ich w ork ers h ol d com p arative advantag e — interp ersonal interaction,

e ibility ada tability and roblemsol ving ” — w il l b e central to h ow b ank s structure th eir w ork f orce and recruit, train and rem unerate th eir em p l oyees. 9 W h ere th e em p h asis of a rol e is on interp ersonal sk il l s or on p rob l em -sol ving cap ab il ities and com m unication, it is l ik el y th e rol e w il l attract a sal ary p rem ium .

O ver th e l ast decade, across industries, investm ent in com p uting tech nol og y h as dram atical l y increased ( see F ig ure

rivate ed investment in information rocessing b

$205

$28 1$28 6

$3 26

2004 2008 2011 2014

Source: U S B ureau of Econom ic A nalysis

i u e rivate ed investment in information rocessing b

9 D avid H . Autor, “ P ol anyi’ s P aradox and th e S h ap e of E m p l oym ent G row th , ” M I T, 3 S ep tem b er 2 0 1 4 .1 0 I b id.

u ce u e u f c ic l sis

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

Th e l atter op tion m ay b e th e p ref erred ch oice in areas invol ved w ith eith er l eg acy tech nol og ies or new and innovative tech nol og ies th at are not a com p etitive advantag e b ut are b eyond th e core cap ab il ities of th e b ank s. U l tim atel y, th e b ank ing w ork f orce m ay b e transf orm ed b y outsourcing th e vast m aj ority of its tech nol og y rol es.

I t is cl ear th at tech nol og ical innovation w il l drive a radical transf orm ation of th e b ank ing w ork f orce — el im inating , evol ving and creating rol es across th e b usiness. B ank s th at m erel y react to th ese ch ang es w il l strug g l e, w h il e th e m ost successf ul b ank s w il l b e th ose th at anticip ate th e ch ang es and coup l e l eading tech nol og y w ith an excep tional w ork f orce. To do so, h ow ever, th ey must rst undertake a com rehensive review of existing rol es across th eir org aniz ation and assess h ow innovation is l ik el y to sh ap e th em in th e f uture.

N ext, th ey m ust recog niz e th at th e sk il l sets req uired in th e f uture w il l b e radical l y dif f erent f rom th ose of today. E m p l oyees’ cap ab il ities m ust evol ve as rap idl y as tech nol og y itsel f . B ank s w il l need an adap tab l e, “ intrap reneurial ” w ork f orce, w ith th e diversity of th oug h t th at p rom otes innovation. F ew b ank s h ave such a w ork f orce today — m ost w il l need to b uil d it.

task s. F or exam p l e, a l eading g l ob al b ank recentl y invested in a start- up com p any th at creates al g orith m s to q uick l y anal yz e h ard- to- structure data — a ch eap er op tion f or a traditional rol e. H ow ever, th e use of al g orith m s is not w ith out risk s: it is an area th at is increasing l y scrutiniz ed b y reg ul ators, as h ig h l ig h ted b y recent reg ul atory actions dealing with s oo ng and l ayering . Th ere h ave al so b een concerns as to w h eth er al g orith m s, com b ined w ith h ig h - f req uency trading , w ere a contributory factor in the ash crash . ” 1 1 B ank s w il l need to increase th eir investm ent in:

• I n n o v a t i v e I T s t a f f . As th e w ork of b ank ers is increasing l y autom ated or aug m ented b y tech nol og y, new sk il l s w il l b e req uired. N ot onl y w il l p eop l e b e req uired to devel op and m aintain innovative tech nol og y, b ut th ey w il l need th e sk il l s to m anag e and m onitor new tech nol og y to ensure it is b eing used correctl y and saf el y. B ank s w il l turn to tech nol og ists w h o are develo ing arti cial intelligence rath er th an th ose w ith b asic p rog ram m ing sk il l s. Al ready, one g l ob al investm ent b ank em p l oys m ore sof tw are eng ineers th an a l eading social netw ork .

• L e g a c y I T s t a f f . U nl ess b ank s invest b il l ions in overh aul ing th eir core b ank ing p l atf orm s, th ey w il l stil l need tech nol og ists w h o are com p etent in th e p rog ram m ing l ang uag es of h al f a century ag o. Th e q uestion f or b ank s w il l b e h ow to access th ese diverse sk il l s: th ey w il l h ave to decide w h eth er th ey w ant to em p l oy such individual s directl y or w h eth er th ey w ant to “ b uy in” certain tech nol og y sk il l s.

tied to desks in of ces technological advancem ent w il l m ean m ore p eop l e b etter ab l e to w ork “ on th e g o” or f rom h om e. Aug m enting h um an cap ab il ities w ith tech nol og y is critical to im p rove p roductivity, incl uding in f ront- l ine rol es.

Th e ch al l eng e f or b ank s is to strik e th e rig h t b al ance b etw een autom ation and interaction. Th ey m ust assess each rol e caref ul l y and devel op a view of th e scop e of p ersonal interaction req uired vs. th e scop e f or autom ation. Th ey m ust al so assess h ow tech nol og y can enh ance staf f , enab l ing th em to do th eir j ob s more ef ciently and s end their time on m ore val ue- adding asp ects of th eir rol e.

W h atever b al ance a b ank decides is rig h t f or its staf f , its custom ers and its ro tability the ra id advance of tech nol og y m eans sk il l s g ap s am ong staf f are inevitab l e. B ank s sh oul d act now to identif y h ow tech nol og y w il l ch ang e rol es across th eir b usiness and adap t th eir recruitm ent and training

rograms to re ect the increased em p h asis th at w il l inevitab l y b e p l aced on tech nical sk il l s.

de tif he e e les d s ill sets e e ui ed

Advancem ent in tech nol og y w il l f orce g reater rel iance on tech nol og ists.

anks must nd a way to em loy teams th at are al w ays at th e cutting edg e of innovation — not onl y to im p rove b usiness p erf orm ance, b ut al so to m anag e risk s.

Th is is h ig h l ig h ted b y th e use of al g orith m s in b ank ing and th eir ap p l ication to increasing l y com p l ex

1 1 Tech nical C om m ittee O f Th e I nternational O rg aniz ation O f S ecurities C om m issions, Regulatory Issues Raised by the Impact of Technological Changes on Market Integrity and Efficiency, 2 0 1 1 .

14Global banking outlook 2016 |

Banks will need an adaptable, “intrapreneurial” workforce, with the diversity of thought that promotes innovation. Few banks have such aworkforce today — most will need tobuild it.

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

O ne th ing is cl ear: f or b ank s to successf ul l y reb uil d th eir franchise im rove ef ciency and

re- estab l ish trust, th ey m ust transf orm th eir w ork f orce.

Th is m eans b ank s m ust f ocus on th e em p l oyee l if e cycl e — th at is, ensuring recruiting , onb oarding and existing p rocesses p rom ote th e desired cul tural and b eh avioral traits and are accom p anied b y training p rog ram s to reinf orce th em , as w el l as m onitoring p rocedures to detect p rob l em s. I n essence, b ank s need to g et b etter at attracting , devel op ing and retaining th e rig h t tal ent — b oth cul tural l y and tech nical l y — f or th e rig h t rol es.

Th e tim e h as com e f or b ank s to transf orm tal ent.

T r a n s f o r m i n g t a l e n tAs b ank s continue to reduce costs b y autom ating as m any task s as p ossib l e, w h at w il l th e rol e of a b ank er actual l y b ecom e? And if b ank s are adop ting th e l atest tech nol og ies, w h at are th e sk il l sets th eir staf f w il l need?

i u e O ut- p erf orm ance of b oards w ith a h ig h er- th an- averag e p ercentag e of w om en ( 2 0 0 5 - 1 4 )

u ce E Y , Women. Fast Forward: The time for gender parity is now,

3 6 %

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

to connect w ith custom ers and to drive b usiness. W e b el ieve th at th e k ey to ach ieving th is is encourag ing diversity of th oug h t.

di e sit d i es fi ci l e f ce

The bene ts of diversity are clear across al l l evel s of th e org aniz ation:

• R esearch sh ow s th at th ere is a p ositive correl ation b etw een g reater g ender b al ance on b oards, h ig h er share rice and better nancial p erf orm ance. F rom 2 0 0 5 to 2 0 1 4 , b oards w ith a h ig h er- th an- averag e p ercentag e of w om en outp erf orm ed th ose w ith a l ow er th an averag e p ercentag e b y 3 6 % ( F ig ure 9 ) . C om p anies w ith w om en b oard m em b ers al so outp erf orm th ose w ith out th em on a rang e of

D em and f or sk il l s is ch ang ing . H ow do b ank s connect w ith a new g eneration of custom ers, esp ecial l y w ith th e rise of social m edia? H ow do th ey m ark et p roducts to th em ? H ow do th ey create a cul ture th at b al ances custom er dem and f or innovation w ith com p l iance concerns?

I n m any w ays, th e p resent w ork f orce is not t for ur ose. t is too often com p l iance- l ed, out of touch w ith customers and insuf ciently innovative. C om p l iance sh oul d b e a b y- p roduct of doing th e rig h t th ing , rath er th an f ol l ow ing rul es f or th e sak e of satisf ying reg ul ators. B ank s need to create an internal cul ture of entrep reneurism and innovation. They need to nd new ways

T h e k e y t o a s t r o n g e r , b e t t e r b a n k i n g w o r l d

h i cultu e t e c u e di e sit f th u ht

F l exib l e w ork ing arrang em ents f or m en

W om en’ s netw ork s

M ixed netw ork s ( m al e and f em al e)

F l exib l e w ork ing arrang em ents f or w om en

Active C E O sup p ort f or w om en inside andoutside th e org aniz ation

L eadersh ip p ip el ines th at incl ude w om en

P ay transp arency

Targ ets or q uotas f or rep resentationof w om en in senior p ositions

P rog ram s exp osing w om en to al l com p anyop erations and f unctions

F em al e m entors/ sp onsors to f em al e em p l oyees

D iversity training

M al e m entors/ sp onsors to f em al e em p l oyees

3 3 % 1 6 %1 7 %

3 0 %3 1 % 2 2 %

1 3 %2 8 % 2 2 %

2 1 %2 6 % 2 9 %

9 %2 6 % 1 5 %

7 %2 3 % 1 8 %

1 8 %2 3 % 1 7 %

2 2 %1 8 % 2 4 %

1 5 %1 8 % 1 9 %

1 5 %1 3 % 2 2 %

2 2 %1 3 % 1 8 %

2 5 %1 0 % 2 6 %

H ig h p erf orm ers ( > 2 0 % g row th ) M oderate p erf orm ers ( < 2 0 % g row th ) L ow p erf orm ers ( no ch ang e/ decrease/ don’ t k now )

i u e W h at does your com p any p rovide to activel y sup p ort w om en?

u ce E Y , Women. Fast Forward: The time for gender parity is now,

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

to b ank s and risk h om og eneity in top m anag em ent p ositions. Th ese are not th e attrib utes of l eading org aniz ations.

e nd this illustrated in E research across a num b er of industries sh ow ing th at th e h ig h est- p erf orm ing com p anies invest m ore in th e advancem ent of w om en th an th eir p eers ( see F ig ure 1 0 ) .

h i e i s h e us i dust

Th e b ank ing industry is stil l a l ong way from re ecting the makeu of society in term s of g ender, eth nicity or b ack g round, at l east at th e

sug g esting th at in trading and asset m anag em ent, w om en g eneral l y outp erf orm m en over th e l ong run. 1 4

Al th oug h m uch of th is evidence is correl ation, not causation, it im p l ies th at th e cul ture in m ore eth nical l y and g ender- diverse com p anies p rovides sup p ort f or em p l oyees to p erf orm b etter across th e b oard. I t sug g ests th ey p erm it — or, in f act, encourag e and rew ard — g reater diversity of th oug h t.

D iscrim inatory or narrow sel ection criteria usual l y resul t in inef f ective util iz ation of th e tal ent p ool avail ab l e

m etrics th at incl udes return on eq uity, net incom e g row th and p rice- to- b ook val ue. 1 2

• D iversity is al so critical b eyond senior m anag em ent. E m erg ing research sug g ests trading desk s w ith m ore w om en m ay outp erf orm m al e- dom inated desk s in p eriods of m ark et dow nturn due to p h ysiol og ical dif f erences. 1 3 W h eth er or not th ese dif f erences, such as dif f erent l evel s of testosterone, real l y h ol d th e k ey to out erformance the nding is onl y th e l atest in a series of studies hat banks must do to better re ect society

The banking industry is still a long way from re ecting the makeu of society in terms of gender ethnicity or background.

P e r c e n t a g e o f w o m e n i n s e n i o r b a n k i n g r o l e s , 2013

15%

G e n d e r d i v e r s i t y g a pW e a r e 8 0 y e a r s f r o m

a c h i e v i n g g l o b a l g e n d e r p a r i t y i n t h e w o r k p l a c e

W o m e n i n t h e U K

B l a c k , A s i a n a n d m i n o r i t y e t h n i c i t i e s , E n g l a n d a n d W a l e s

50% o f t h e w o r k f o r c e3 2% o f m a n a g e r s 28 % o f s e n i o r e x e c u t i v e s

20% - 3 0% o f t h e p o p u l a t i o n b y 2 0 5 0 6 . 5% o f l e a d e r s h i p r o l e s i n b a n k i n g a n d fi ce 10. 5% o f l e a d e r s h i p r o l e s a t n a t u r a l r e s o u r c e s c o m p a n i e s , 2 0 1 59. 5% o f l e a d e r s h i p r o l e s a t i n d u s t r i a l fi s

W o m e n i n U K , b a n k i n g :4 8 % a r e i n j u n i o r r o l e s ( v s . 2 1 % o f m e n )11% o f m a n a g e r s a n d s e n i o r e x e c u t i v e s

Sources: EY analysis, B oard ex , W orld Econom ic F orum , I nstitute of L ead ersh ip and M anag em ent, C red it Suisse, Eth nic D im ension, U nited States C ensus B ureau, B ureau of L abor Statistics, A f rican D evelop m ent B ank , EY D iversity d rives d iversity: f rom th e board room to th e C - suite

B l a c k s a n d H i s p a n i c s , U S3 0% o f t o t a l p o p u l a t i o n 20% o f r o l e s i n b a n k i n g

A f r i c a , w o m e n13 . 5% o f b o a r d d i r e c t o r s i n fi ci l se ices

W o m e n a t " b i g 4 " b a n k s , A u s t r a l i a

24 % o f b o a r d d i r e c t o r s 15% o f s e n i o r r o l e s

W o m e n a t 20 l a r g e s t b a n k s , I n d i a 9. 5% o f b o a r d d i r e c t o r s

W o m e n a t 20 l a r g e s t b a n k s , C h i n a

12% o f b o a r d d i r e c t o r s

W o m e n i n t h e U S6 1% o f t h e w o r k f o r c e 2% o f C EO s5% o f c o m p a n i e s w i t h w o m e n i n o n e - t h i r d o f d i r e c t o r p o s i t i o n s

i u e The banking industry is still a long way from re ecting the makeu of society in terms of gender ethnicity or background

S ource: E Y anal ysis, B oardex, W orl d E conom ic F orum , I nstitute of eadershi and anagement C redit S uisse, E th nic D im ension, U nited S tates C ensus B ureau,

ureau of abor tatistics Af rican D evel op m ent B ank , E Y , Diversity drives diversity: From the boardroom to the C-suite

1 2 C redit S uisse, The CS Gender 3000: Women in Senior Management, R esearch I nstitute, 2 0 1 4 .1 3 The Economist, “Th e m ol ecul es of m ayh em : testosterone and tak ing risk s, ” 2 0 1 2 . 1 4 Washington Post, “ B eh avioral econom ics sh ow s th at w om en tend to m ak e b etter investm ents th an m en, ” 2 0 1 3 .

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

M any E urop ean countries h ave issued m andates to b oost th e num b er of w om en in corp orate b oardroom s. I n f act, th e E urop ean C om m ission recentl y adop ted a p rop osal f or l eg isl ation req uiring w om en to m ak e up 4 0 % of b oard director seats b y 2 0 2 0 .

At th e sam e tim e, a num b er of b ank s are al ready w ork ing to im p rove diversity at senior l evel s, introducing p ol icies rang ing f rom targ ets f or th e num b er of senior m anag em ent rol es to b e h el d b y w om en to b anning al l - m al e sh ort l ists f or such rol es. Al th oug h th ese m ay b e p ositive m oves, th ey are tactical sol utions.

I m p roving diversity of th oug h t, as w el l as of p ersonnel , cal l s f or b reak ing th e p atterns and conscious and unconscious b iases th at h ave l ed to th e p rob l em s of th e p ast. I t is not j ust ab out targ ets or retaining staf f — a m ore f undam ental reth ink ing is req uired if th e cul tural ch ang e th at sup p orts diversity and h ig h p erf orm ance is to b e ef f ective and p erm anent.

A p p r o a c h e s t o c h a n g e a r e t o o t a c t i c a l

senior l evel s of its w ork f orce ( see F ig ure 1 1 ) . I t doesn’ t start th is w ay at j unior l evel s, b ut b arriers tend to ap p ear as individual s p rog ress th roug h th eir w ork ing l ives. R ecent E Y research sug g ests th at 6 8 % of w om en and 7 0 % of m en b el ieve th at w om en are l ik el y to exp erience ch al l eng es to accel erating th eir career b ef ore th ey reach senior m anag em ent.

ack of arity is not ust about seniority eith er; it is ab out th e rol es p eop l e h ol d as well. n nancial services there is typ ical l y m ore diversity in non-

ro t and loss roles such as com p l iance, h um an resources, l eg al dep artm ents and m ark eting , w h ich are not typ ical l y seen as contrib uting revenue to th e b usiness. 1 5

E ven b ank s’ standard entry req uirem ents — of ten at l east an up p er- second university deg ree ( eq uival ent to a 3 . 5 g rade p oint averag e in th e U S ) — dram atical l y l im it th e tal ent p ool th at b ank s recruit f rom , exacerb ating th e h om og eneity. N or is p ast academ ic attainm ent necessaril y a g ood p redictor of ap titude and p otential , esp ecial l y f or students f rom m ore ch al l eng ing b ack g rounds.

he u e issi ece tl d ted

s l f le isl ti e ui i e t e

u f d di ect se ts

1 5 omen in com anies atalyst 2 0 1 5 ; “ W om en in F inance, ” London Business School Review, 2 0 1 5 .

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

E Y research sh ow s th at g ood op p ortunities f or p rog ression are critical to ach ieving career advancem ent ( see F ig ure 1 2 ) . O b viousl y, individual s b ear a deg ree of resp onsib il ity f or advocating f or th em sel ves, b ut f or th em to do th is successf ul l y, it is al so critical th at org aniz ations w ork to m ak e th e p ath to l eadersh ip cl ear — h ig h l ig h ting career op p ortunities across th e b readth of th e org aniz ation to m atch individual s’ sk il l s and am b itions ( F ig ure 1 3 ) .

I n E Y ’ s exp erience, internal and external l eadersh ip p rog ram s can h el p p eop l e p ursue top p ositions once th ey see th e p ath f orw ard.

O nce a cl ear route to advancem ent h as b een estab l ish ed — and it is ap p arent th at th ere is no sing l e set of q ual ities or attitudes req uired to reach senior p ositions — com p anies can h el p

de h i s

Traditional l y, th e sil oed career p ath s of b ank ers h ave created tech nical exp erts, b ut not necessaril y th e l eaders th at b ank s need. I t h as al so l ed to certain em p l oyees b eing unab l e to ful ll their otential.

Th is is h ig h l ig h ted b y th e p articip ation of w om en in b ank ing . Th ere are p recious f ew w om en rol e m odel s in th e up p er ech el ons of b ank ing and cap ital m ark ets l eadersh ip . Th e next senior m anag em ent l ayer is b etter, b ut not b y m uch , th e m aj ority of th ose rol es are in sh ared services, such as h um an resources and l eg al . 1 6 Th is m eans th ere are even f ew er women in roles with strategy and resp onsib il ity — i. e. , in th e rol es th at are th e training g round f or top senior l eadersh ip p ositions, incl uding C E O .

T h r e e s m a r t s t e p s t o i n c r e a s e d d i v e r s i t y a n d t r a n s f o r m e d c u l t u r e s

W e b el ieve th at to successf ul l y b uil d a diverse w ork f orce, b ank s need to ch ang e th e w ay th ey enab l e p eop l e to p rog ress th roug h th eir careers.

Ap p rop riate w ork - l if e b al ance

G ood op p ortunities f or p rog ression

F l exib l e w ork ing arrang em ents

L eadersh ip l eading b y exam p l e

S up p ortive org aniz ational cul ture

3 5 % 2 6 %

3 2 % 2 4 %

2 8 % 2 4 %

2 4 % 2 2 %

2 3 % 2 7 %

F i g u r e 1 2 : W h at h ave you p ersonal l y exp erienced or w itnessed as th e m ost im p ortant enab l ers of w om en’ s accel eration in th e w ork p l ace?

W om en M en

1 6 C redit S uisse, “Th e C S G ender 3 0 0 0 : W om en in S enior M anag em ent, ” R esearch I nstitute, 2 0 1 4 .

S ource: E Y , Women. Fast Forward: The time for gender parity is now, 2015.

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

h ouseh ol d resp onsib il ities, as w el l as to oth er interests. Th at can h el p f ree w om en to sp end m ore tim e on th eir careers. And as m ore m en tak e a g reater rol e in f am il y resp onsib il ities, it al so h el p s el im inate som e of th e unconscious b iases of th e w ork p l ace.

n our e erience leading rms are th ose th at sh if t th e f ocus f rom ef f ective w ork - l if e b al ance to ef f ective w ork - l if e integ ration. Th is m eans g oing b eyond formal e ible work arrangements although these may still be bene cial

f or m any em p l oyees) and encourag ing and su orting informal e ibility in w h ere, w h en and h ow m en and w om en w ork — i. e. , of f ering g reater op p ortunity to w ork f rom h om e w h en needed or to w ork nonstandard h ours. Th is sh oul d not b e l im ited j ust to staf f w ith care-p roviding resp onsib il ities b ut sh oul d b e avail ab l e to al l em p l oyees.

Th ere w il l inevitab l y b e som e rol es where working e ibly isn t always viable. owever even in those rms can do m ore to sup p ort th eir staf f b y p roviding concierg e services, if w ork com m itm ents m ean staf f req uire sh ort- term ch il d care arrang em ents, f or exam p l e. C l earl y, such services com e w ith a cost, b ut th is m ust b e view ed in light of the roductivity and ro tability g ains to th e org aniz ation th at such services enab l e.

O ne th ing is certain, h ow ever. E research shows that a e ibility stig m a” — a p ercep tion th at p eop l e with e ible working arrangements are p enal iz ed w ith a l ack of p ay and p rom otion op p ortunities — is a k ey reason f or w ork ers to l eave org aniz ations. 1 8 Th is p resents a

articular challenge in the nancial sector es ecially the front of ces of

abor rgani ation has highlighted th e detrim ental im p act on w om en’ s advancem ent at w ork caused b y interrup tions in careers, of ten as a resul t of th eir m ore of ten tak ing resp onsib il ity f or f am il y com m itm ents, incl uding ch il d rearing , f or exam p l e. 1 7

ack of e ibility stalls careers. t can sl ow th e p rog ress of any em p l oyee w h o m ust b al ance such dem ands as deal ing w ith young ch il dren or ag ing p arents w h il e trying to advance th eir career to a senior l evel . Th is risk s driving p eop l e out of th e industry, th us reducing diversity.

e believe rms should hel em loyees meet these con icting demands head on. They should offer e ible work arrang em ents f or b oth m en and w om en.

hen men have more e ibility they can devote m ore tim e to ch il d care and

individual s navig ate th eir careers in m any dif f erent w ays. F or exam p l e, as a num b er of b ank s are al ready doing , th ey sh oul d f ocus on devel op ing l eadersh ip p ip el ine p rog ram s, introducing m easurab l e targ ets f or l eadersh ip rep resentation, ap p ointing sp onsors to su ort s eci c em loyee grou s and devel op ing em p l oyee netw ork s, to ensure al l em p l oyees are aw are of th e b readth of op p ortunities op en to th em across th e org aniz ation.

ste e i ilit

Th is is p articul arl y im p ortant in p rom oting g ender eq ual ity. O ur research sh ow s th at b etter w ork - l if e b al ance and more e ible work arrangements are k ey enab l ers of p rog ression f or w om en. Th is is not surp rising . Th e I nternational

S et cl ear p ath s to p rom otion f or w om en em p l oyees

u ort e ible working arrangements

W om en M en

Take an active interest in the careers of womenin th eir team s

romote the need for training to overcomeunconscious biases

e o en to men on their teams taking on some of the family res onsibilities that usually fall to women

2 7 % 2 5 %

2 9 % 2 3 %

2 5 % 2 2 %

2 4 % 2 4 %

2 3 % 2 0 %

F i g u r e 1 3 : hat more can men do to su ort the advancement of women in their careers in order to romote gender e uality

1 7 Global Employment Trends for Women, 2 0 1 2 .1 8 E Y , Global generations: A global study on work-life challenges across generations, 2 0 1 5 .

S ource: E Y , Women. Fast Forward: The time for gender parity is now, 2 0 1 5 .

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

Th is m eans tone f rom th e top — th e actions of b usiness l eaders are j ust as im p ortant as training . S enior executives m ust sp read an org aniz ation- w ide m essag e th at b ias is unaccep tab l e and advocate th at everyone tak e resp onsib il ity f or l earning ab out h is or h er ow n b ias and adj usting th eir b eh avior. A f urth er req uirem ent is f or active l eadersh ip th at visib l y sup p orts th e advancem ent of diverse individual s, f or exam p l e, th roug h f orm al and inf orm al sp onsorsh ip p rog ram s. I n our exp erience, th e p resence of a sp onsor can b e vital to h el p a p erson advance h is or h er career.

W ith l eaders dem onstrating th e rig h t b eh aviors, th is ch ang e in attitude can cascade th roug h out th e org aniz ation, esp ecial l y w h en coup l ed w ith a variety of p rog ram s th at sup p ort w om en and m inorities and h el p el im inate th e ef f ect of any unconscious b ias th at p ervades th e w ork p l ace.

E ncourag ing diversity of th oug h t b y creating an environm ent th at w il l attract, retain and advance a diverse g roup of individual s w il l b e crucial to b ank s th at w ant to em p l oy g enuinel y h ig h - p erf orm ing team s w ith th e ap titude and sk il l s to adj ust to a transf orm ed w ork p l ace.

Ach ieving th is g oal w il l not j ust req uire th e rig h t tone f rom th e top and rew ard f or g ood b eh aviors. B ank s m ust al so ensure th ere are conseq uences to f ail ure, p articul arl y w h ere em p l oyees’ actions do not re ect the values of th e org aniz ation.

investm ent b ank s, w h ere th ere is of ten a cul ture of l ong h ours and “ f ace tim e. ” Th is m eans th at w h atever th e w ork ing arrang em ents, it is crucial that e ibility be seen as a bene t for all em loyees not an accom m odation f or som e.

li i te i s

A sup p ortive cul ture th roug h out th e org aniz ation is th e th ird k ey enab l er of diverse individual s’ accel eration th roug h th eir com p anies. Th is is a critical issue f or b ank s, w h ich of ten try to encourag e com p etition rath er th an col l ab oration b etw een staf f to drive

nancial erformance. The challenge of unsup p ortive environm ents is cl earl y h ig h l ig h ted b y — b ut not l im ited to — q uestions of g ender eq ual ity.

M ore m en view a sup p ortive cul ture as a k ey enab l er f or w om en th an any oth er org aniz ational initiative. Th is is p erh ap s b ecause, as E Y research f ound, unconscious b ias w as l isted as th e m ain b arrier m en h ad w itnessed af f ecting th e accel eration of w om en’ s careers. 1 9 And if unconscious b ias is ap p l ied to one g roup of em p l oyees, it is p rob ab l y ap p l ied to oth ers as w el l .

Th e q uestion f or b ank s is h ow th ey can com b at th is sort of b ias to el im inate its im act. rst ste is educating m anag em ent ab out conscious and unconscious b ias and incl usive l eadersh ip th roug h m anag em ent-training p rog ram s. B ut training isn’ t everyth ing — initiatives m ust g o b eyond p ol icies, com m unications and training p rog ram s; th ey m ust ef f ect cul tural ch ang e.

1 9 E Y , Women. Fast Forward: The time for gender parity is now, 2 0 1 5 .

22Global banking outlook 2016 |

Itiscrucialthatflexibilitybeseenasabenefitforallemployees,notanaccommodationforsome.

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

G reater diversity of th oug h t and p ersonal ities in b ank ing is a p ositive devel op m ent tow ard th is g oal , b ut it al so b ring s ch al l eng es. E m p l oyees stil l need to coal esce around com m on visions, val ues and g oal s, and b ank s m ust ensure th at th e rig h t p rocesses are in p l ace to h arness th e sk il l s of th is new w ork f orce.

To successf ul l y b uil d a diverse, col l ab orative w ork f orce, b ank s need to transf orm th e w ay th ey recruit and p rog ress p eop l e th roug h th eir careers ( see F ig ure 1 4 ) .

I f b ank s are to retain l eading tal ent, encourag e a cul ture of “ intrap reneurism ” and enab l e em p l oyees to devel op th e cutting - edg e new ideas and innovative p roj ects req uired to reb uil d a sustainab l e b ank ing industry, th ey m ust nurture a col l ab orative w ork f orce b y transf orm ing th eir em p l oyee p rop ositions.

T r a n s f o r m i n g t a l e n tu tu i d e e i c ll ti e f ce

3 3 %

W h a r t o n g r a d u a t e s t a k i n g b a n k i n g j o b s

A t t r a c t i n g t a l e n t … w i t h p u r p o s eAl ig n com p any val ues w ith th ose of m il l ennial s:onl y tw o b ank s are in th e top - 5 0 m ost attractiveem p l oyers f or I T & eng ineering g raduates.

i u e S tag es of th e H R l if e cycl e in b ank ing . H ow do you m ak e diversity a success?

S ources: E Y anal ysis, com p any rep orts, E Y B eacon I nstitute, C ol l eg eB oard, EY Generations survey, 2 0 1 5 .

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

it p ossib l e to em p l oy m ore p eop l e f rom th e l ocal com m unity — w h o w ere b etter ab l e to connect w ith th e b ank ’ s custom ers — in its b ranch es. Th e trial dem onstrated h ow th e rig h t training sch em es, desirab l e m otivations and ap titude are at l east as im p ortant as h istoric academ ic ach ievem ents.

B ank s sh oul d al so l ook at p artnering w ith universities to desig n and del iver courses th at b uil d a p ip el ine of em loyees for s eci c roles. ut this a roach re uires caution as rms sh oul d stil l recruit f rom a w ide rang e of b ack g rounds to avoid th e dang er of f ostering g roup - th ink .

tt cti t le t ith u se

W h o w ants to w ork in a b ank ? N ot th e h ig h l y sk il l ed I T and eng ineering g raduates b ank s w il l need in th e f uture. Th ey’ re increasing l y l ik el y to j oin tech nol og y com p anies rath er th an

nancial rms. anks have little brand ap p eal to new em p l oyees; th ere is no b ank rank ed b y I T and eng ineering g raduates in th e top 2 5 m ost attractive com p anies to w ork f or, and j ust tw o in th e top 5 0 . 2 1

To attract th e tal ent th ey need, b ank s m ust transf orm th eir em p l oyee val ue p rop osition, esp ecial l y tow ard m il l ennial s w h o are attracted to com p anies w h ose val ues al ig n to th eir ow n. “ P urp ose” m atters to m il l ennial s — and b ank s m ust em p h asiz e th eir p urp ose.

de i the t le t l i ccessi ilit

W ith th e cost of university education in certain countries h ig h and rising — up to U S $ 1 2 5 , 0 0 0 f or som e students in f our- year p rog ram s at U S universities2 0 — b ank s sh oul d f ol l ow th e l ead of oth er industries and sp onsor h ig h - p otential individual s th roug h th eir education, in return f or a com m itm ent to work for the rm for a ed eriod on graduation and rovide bene ts that will hel them manage the signi cant

nancial burden that accom anies ever- increasing student l oans. H ow ever, such sp onsorsh ip p rog ram s sh oul d p l ace g reater em p h asis on ap titude th an p ast academ ic success.

Th is doesn’ t m ean disp ensing w ith academic uali cations entirely b ut it rem oves th em as a b arrier to g etting a f oot in th e door. A g row ing b ody of research sug g ests th at screening students b ased on academ ic p erf orm ance al one is too l im ited and restricts th e ap p l icant p ool .

F or exam p l e, b ank s m ig h t consider targ eting unconventional universities f or ap p l icants or transf orm ing recruitm ent b y rem oving academ ic entry req uirem ents. S uch p rocesses can op en up op p ortunities f or tal ented individual s reg ardl ess of th eir b ack g round and p rovide g reater access to th e p rof ession, as w el l as, critical l y, h el p ing b ank s re- eng ag e w ith society.

I n th e U K , one b ank successf ul l y trial ed a susp ension of its academ ic entry req uirem ents f or cash iers, m ak ing

T e n s t a g e s o f t h e H R l i f e c y c l e i n b a n k i n g — a n d h o w t o d o t h e m b e t t e r

2 0 C ol l eg eB oard, Trends in college pricing, 2 0 1 4 .2 1 U niversum , The World’s Most Attractive Employers — Engineering/IT students, 2 0 1 5 .

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

e f ce e e t e d e

I n m ost b ank s, p erf orm ance m anag em ent is stil l view ed as a m ech anistic p erf orm ance eval uation tool . E m p l oyees are sub j ect to p eriodic f orm al eval uations th at are central to th eir rem uneration. B ut, as il l ustrated b y m is- sel l ing and rate- rig g ing scandal s, th e w ay em p l oyee g oal s are structured and m easured — even w h en b ank s attem p t to em p l oy a b al anced scorecard — h ave a signi cant im act on the behaviors th ey drive. N ot onl y m ust th is ch ang e to ach ieve a cul tural sh if t, b ut al so b ecause traditional m eth ods of p erf orm ance m anag em ent are inef f ective w ith th e up com ing g eneration of em p l oyees.

M il l ennial s p ref er continuous f eedb ack . S tructured p erf orm ance m anag em ent — in th e f orm of th e sem iannual and annual review s typ ical across the nancial sector is seen as constraining . M il l ennial em p l oyees typ ical l y p ref er real - tim e f eedb ack h ig h l ig h ting th eir p ositive contrib utions or th eir p rog ress ag ainst k ey com p etencies.

B ank s m ust radical l y ch ang e th eir ap p roach to p erf orm ance m anag em ent. Th ey sh oul d consider b uil ding

e ibility into the erformance cycl e f or p rom otions and b onuses to h el p m il l ennial s ach ieve a sense of accom p l ish m ent th at’ s m erit-b ased rath er th an tim e- b ased. S om e org aniz ations outside of th e b ank ing sector are al ready m oving aw ay f rom tim e- consum ing , p rocess- l ed p erf orm ance m anag em ent system s and “ f orced- distrib ution” rating s, w h ich are

di ith l

I l l ustrating p urp ose is j ust as im p ortant in onb oarding as in attracting candidates.

E Y research h as h ig h l ig h ted an evol ving view of a corp oration’ s rol e th at increasing l y em p h asiz es th e corp oration as a p artner in societal w el l - b eing . E ig h ty- nine p ercent of survey resp ondents b el ieve th at “ p urp ose-driven” org aniz ations h ave h ig h er l evel s of em p l oyee satisf action. 2 2 And corp orate dial og ue around p urp ose is ch ang ing , w ith org aniz ations’ p urp ose increasing l y incl uding ref erence to th eir core reason f or b eing — rath er th an m erel y th e p roducts and services th ey of f er. Th is l ang uag e is b eing used to eng ag e a rang e of stak eh ol ders w ith shared values including signi cantly em p l oyees. 2 3

N ew em p l oyees need to b e b etter eng ag ed and integ rated into th e org aniz ational cul ture. Th e b est w ay to ach ieve th is is b y ensuring th e al ig nm ent of org aniz ational p urp ose w ith individual p urp ose. Th is can b e accom p l ish ed th roug h earl y m entoring p rog ram s and a f ocus on “ cul tural im m ersion” as p art of th e onb oarding p rocess.

Th is is a ch al l eng e f or an industry th at is seen as traditional and f ocused on risk m anag em ent and com p l iance, rath er than creativity and air. anks need to b etter understand h ow a sense of p urp ose, ch al l eng e and creativity can b e conveyed to p otential recruits.

H ow ever, com p l iance stil l m atters, and b ank s are f aced w ith th e ch al l eng e of attracting m il l ennial em p l oyees w ith out p andering to th eir p erceived sense of entitl em ent. As em p l oyers, th ey m ust ap p eal to th e p ositive traits of th is g roup and not g ive in to th eir neg ative ones.

ec uiti ith e tech l

Th ere’ s l ittl e sense in m ark eting b ank ing as a h ig h - tech , p urp ose- driven industry to new oiners if their rst interaction with a rm is through an outdated recruitm ent p rocess. M il l ennial s use social m edia and m ob il e- f riendl y ap p l ications m ore th an traditional recruiting ch annel s. M any b ank s are exp l oring using th ese ch annel s, b ut of ten, th eir onl ine ap p l ication p rocesses are too “ cl unk y” and p oorl y stream l ined. B ank s sh oul d m ak e b etter use of video ap p l ication f orm s and interview s to g ive ap p l icants a com p el l ing sense of th e com p any cul ture.

2 2 H arvard B usiness R eview Anal ytic S ervices and E Y , The Business Case for Purpose, 2 0 1 4 .2 3 E Y and U niversity of O xf ord S aï d B usiness S ch ool , Analysis of how and why top leaders of global

organizations leverage purpose to transform, 2 0 1 5 .

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

l ose tal ent. B ank s th at of f er em p l oyees various career op tions b y instituting p ol icies to b reak dow n internal b arriers and f acil itate sm ooth internal j ob transf ers w il l al so reduce th e l ik el ih ood of unw anted attrition of h ig h - p erf orm ing staf f f rustrated b y a l ack of career devel op m ent op p ortunities. As an al ternative, b ank s can al so p ut l eading staf f on sp ecial rotational assig nm ents m ore f req uentl y to g ive th em a sense th at th ey are m oving tow ard som eth ing and g aining exp eriences in th e varied asp ects of b ank ing .

W h ere b ank s of f er internal cl assroom or w eb - b ased l earning op p ortunities, th ey sh oul d revam p th ose l earning op p ortunities w ith f resh tech nol og y and gami cation techni ues outdated tech nol og ies, training m eth ods and top ics do not resonate w el l w ith m il l ennial s.

e ds ti i ti ec use it s dese ed

M il l ennial s’ p rim ary m otivation is not necessaril y m oney — th ey’ re m ore l ik el y to resp ond to p raise, p rom otion, resp onsib il ity, nurturing and ch ang e. I n f act, our anal ysis sh ow s th at in investm ent b ank s, p ay can b ear l ittl e correl ation to p erf orm ance.

ut nancial rewards must also change fundamentally to re ect the fact that in th e tech nol og y- driven w orl d of th e f uture, p eop l e m ust b e rew arded f or th eir j ob s — not th eir titl es. F or exam p l e, h ow do you recog niz e h ig h l y sk il l ed tech nical em p l oyees, even w h en j unior?

p sych ol og ical h eal th , h ow em p l oyees f eel th ey are l ed and sup p orted; th eir

nancial well being; their engagement w ith w ork and th eir w ork com m unity and sup p ort netw ork s.

E Y ’ s exp erience of devel op ing detail ed roductivity and well being ro les

il l ustrates h ow th is m ore g ranul ar insig h t into the workforce enables rms to targ et th eir investm ent in p eop l e b etter. M oving an em p l oyee f rom a “ l ow ” to a “ m oderate” w el l - b eing score del ivers on averag e a 1 3 % p roductivity dividend.

e el e t li e u e it

P ersonal devel op m ent can b e as enticing to m il l ennial s as career devel op m ent. A g row ing incl ination tow ard p ortf ol io careers m eans th ey l ook f or reg ul ar op p ortunities to exp and th eir sk il l s and try new th ing s, p ref erring b readth of exp erience to dep th of exp erience.

C om p anies need to b e ab l e to m eet th e ong oing educational exp ectations of new tal ent. O f f ering l earning op p ortunities outside of th e standard career p ath w il l al l ow m il l ennial s to tap into and devel op th eir ow n core p urp ose. B ank s sh oul d exp l ore varied l earning op p ortunities, incl uding continuing education courses and h oriz ontal p rog ression into dif f erent rol es rath er th an vertical p rom otions, g l ob al m ob il ity, al truistic eng ag em ents and exp eriential education th roug h additional j ob resp onsib il ities.

Th is is esp ecial l y im p ortant f or b ank ers in high ressure front of ce roles where “ b urnout” can l ead th e org aniz ation to

of ten seen b y staf f and m anag ers as tick - b ox exercises rath er th an a m eans to m otivate em p l oyees and h el p th em devel op .

reater e ibility will allow management to g ive th e p rop er attention and rew ards to h ig h p erf orm ers w h en earned rath er th an w aiting f or an annual cycl e th at m ay f orce m anag ers to review a l arg e num b er of em p l oyees in a sh ort p eriod of time and give insuf cient attention to th e p erf orm ance m anag em ent p rocess. And as b ank s ch ang e th eir ap p roach to p erf orm ance m anag em ent, th ey’ l l al so need to devel op th e coach ing and m entoring sk il l s of l ine m anag ers in order to adap t ap p rop riatel y to th e new reg im e.

e e t d ell ei t u l c ducti it

Th ere is a cl ear l ink b etw een em p l oyee w el l - b eing and em p l oyee p roductivity. E m p l oyees w ith l ow j ob satisf action, or w h o are im p acted b y p oor h eal th at w ork or are ab sent th roug h sick ness, are l ess p roductive th an th eir p eers. H ow ever, em p l oyee h eal th and w el l -b eing are g eneral l y seen as a l ow p riority f or H R team s. B ank s sh oul d tak e action to understand the risk ro le of th eir w ork f orce — w h ere p oor h eal th or diseng ag em ent is im p airing p roductivity and w h ere th ey need to invest to secure im p roved p erf orm ance.

Th is m eans g oing b eyond traditional em p l oyee satisf action surveys and seek ing to understand em p l oyee eng ag em ent and w el l - b eing in a m ore h ol istic sense in term s of p h ysical and

M il l ennial s’ p rim ary m otivation is not necessaril y m oney — th ey’ re m ore l ik el y to resp ond to p raise, p rom otion, resp onsib il ity, nurturing and ch ang e.

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

or e am le across nancial services ol der, m ore exp erienced staf f are typ ical l y b etter advisors to cl ients. H ow ever, th ey are f req uentl y l ess sk il l ed at adap ting to th e new tech nol og ies and tool s used in th e sal es p rocess. W h il e m il l ennial s m ay b e m ore tech -savvy, th ey m ay l ack th e k now l edg e, exp erience and g ravitas req uired in th e sal es p rocess.

Th e ch al l eng e f or b ank s is h ow to h arness th e ab il ities of m ul tip l e g enerations and g et th em to col l ab orate to m axim iz e everyone’ s p otential .

E Y research sh ow s th at 7 5 % of m anag ers across a rang e of industries see m anag ing m ul ti- g enerational team s as an issue, w ith 7 7 % citing dif f erent w ork exp ectations as a k ey ch al l eng e. B ut m ore th an tw o- th irds ( 6 9 % ) of resp ondents al so said th eir org aniz ation h ad m ade at l east som e ef f ort tow ard alleviating the dif culties in managing a g enerational m ix, b y tak ing a rang e of actions ( see F ig ures 1 4 and 1 5 ) .

Al th oug h th ese actions are im p ortant, th ey w il l onl y b e trul y ef f ective if b ank s m ak e f urth er ef f orts to understand w h at m otivates th e dif f erent g enerations th at constitute th eir w ork f orce ( F ig ure 1 6 ) . Th ose th at do so, and do al l th ey can to retain k ey tal ent, w il l b e b est p l aced to exp l oit th e tal ents of a diverse w ork f orce.

p rob ab il ity of th eir returning , sh oul d th e op p ortunity arise. I t w il l al so im p rove th e p ossib il ity of an em p l oyee b eing a p ositive am b assador f or f uture recruits.

B ank s sh oul d th eref ore m onitor th eir al um ni g roup s f or f eedb ack on w ays to im p rove th e overal l em p l oyee exp erience and reg ul arl y eng ag e al um ni to h el p identif y and connect th e p ool of exp erienced p ersonnel , sh oul d op p ortunities f or recruitm ent m aterial iz e.

ll ti l ci ti ti s

H ow b ank s m anag e th e dif f erences b etw een various typ es of em p l oyees w il l b e crucial to h arnessing th eir com b ined ab il ities. B ank s m ay f ace a ch al l eng e in integ rating th e diverse ideol og ies and th e attitudes of m il l ennial s, G eneration X or b ab y b oom ers, b ut w ork ing out h ow to do th is is critical .

Th is is a radical ch ang e f or m ost b ank s, w h ere h ig h er rew ards h ave of ten b een targ eted p rim aril y at h ig h er rank s. Y et seniority h as not al w ays re ected contribution and in the f uture, m anag ers m ay h ave m ore of a coordinating rol e th an one th at drives actual b usiness p erf orm ance.

B ank s m ust reassess th eir rew ards p rog ram s and rew ard rol es rath er th an titl es, as w el l as exp l ore p rog ram s th at incorp orate exp eriential recog nition or “ sp ot” aw ards instead of f ocusing on reg ul ar cash b onuses. To do th is, b ank s will need to rovide more e ibility to m iddl e m anag em ent to p rovide th ese sp ot rew ards and recog nition.

e ti ith si ce it

W h en em p l oyees l eave a b ank , w h eth er vol untaril y or invol untaril y, it’ s sel f - evident th at if th e exp erience is a p ositive one, it w il l increase th e

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

Th e ch al l eng e f or b ank s is h ow to h arness th e ab il ities of m ul tip l e g enerations and g et th em to col l ab orate to m axim iz e everyone’ s p otential .

i u e Actions b eing tak en to al l eviate th e ch al l eng e of m anag ing a g enerational m ixA c t i o n s t a k e n b y c o m p a n i e s t o a l l e v i a t e t h e c h a l l e n g e o f m a n a g i n g a g e n e r a t i o n a l m i x

M u l t i - g e n e r a t i o n a l c h a l l e n g e s , a c c o r d i n g t o m a n a g e r s

3 7 %

7 5%

W o r k - s t y l e a c c o m m o d a t i o n s

3 6 %T e a m - b u i l d i n g

e x e r c i s e s

3 2%G e n e r a t i o n a l d i f f e r e n c e s

t r a i n i n g

26 %C r o s s - g e n e r a t i o n a l

n e t w o r k i n g

25%T a i l o r e d

c o m m u n i c a t i o n

m a n a g i n g m u l t i - g e n e r a t i o n a l t e a m s i s a n i s s u e

7 7 %d i f f e r e n t w o r k e x p e c t a t i o n s i s a k e y c h a l l e n g e

6 9%o r g a n i z a t i o n s m a k i n g s o m e e f f o r t t o a l l e v i a t e the difficulties

Source: EY Global Generations survey, 2013S ource: EY Generations survey, 2015.

hat s im ortant in a ob3 3 %

4 9%

4 7 %

58 %

7 0%

8 5%

4 5%

57 %

6 2%

7 4 %

7 5%

8 0%

bility to shut off emailw h en needed

O nsite or sub sidiz ed ch il d care

R eceiving p aid p arental l eave

eing able to work e ibly andstill be on track for romotion

om etitive ay and bene ts

M il l ennialB oom erorking from home three to

ve days a week

Source: EY Global Generations survey, 2013

i u e W h at’ s im p ortant in a rol e?

S ource: EY Generations survey, 2015.

| T r a n s f o r m i n g t a l e n t : T h e b a n k e r o f t h e f u t u r e

B uil ding and m anag ing th e w ork f orce of th e f uture w il l b e ab out ensuring th e rig h t p eop l e w ith th e rig h t sk il l s are in th e rig h t p l ace at th e rig h t tim e. H R f unctions in b ank s w il l no l ong er b e seen as sup p orting resource m anag em ent; th ey w il l b e seen as m ob il iz ing intel l ig ence.

Effecting this change will be dif cult for b ank ing l eaders. Th is is not a sh ort- term transf orm ation, and th ose resp onsib l e f or del ivering it today m ay not b e th ose that bene t from it tomorrow. uccess is unl ik el y to b e m easured and rew arded in th e sh ort term ; even w ith a sh if t to measuring non nancial erformance th e true im p act of th ese ch ang es w il l not b e seen im m ediatel y. B ut it is a ch ang e th at ul tim atel y w il l resul t in a more sustainable ro table bank that is b etter connected to th e m ark ets in w h ich it op erates and th e com m unities it serves.

D el ivering th is ch ang e w il l tak e a visionary and resil ient l eader w h o recog niz es th at al th oug h success m ay not b e ach ieved sw if tl y, re- eng ineering th e w ork f orce is p otential l y m ore im p ortant th an th e next q uarter’ s earning s and w il l b e an im p ortant asp ect of h is or h er l eg acy.

Are you th at l eader?

Th e essential task f or b ank s over th e next decade w il l b e adap ting th eir existing p ol icies

and p rocesses to a new g eneration of w ork ers w h il e m anag ing th e exp ectations of th eir existing w ork f orce and redep l oying th em to new rol es.

B usiness l eaders and H R f unctions f ace a siz ab l e ch al l eng e in m anag ing a workforce that is more uid in its w ork ing styl e th an ever b ef ore. Th ey m ust ensure th ey l ook h ol istical l y at total com ensation bene ts and rew ards to account f or th e w ork and l if e needs of al l em p l oyees.

Th ey w il l need to w ork w ith th e b usiness to p revent and el im inate stig m as com m onl y associated w ith p arental leave and e ibility. here a e ible w ork styl e is p erm itted, org aniz ations w il l need to m ak e sure th at resul ts, rath er th an “ p unch ing th e cl ock , ” are rew arded.

H R f unctions and m anag ers w il l al so p l ay a critical rol e in identif ying , recruiting and retaining a tal ent p ool th at is m ore tech nol og y- aw are th an ever. At th e sam e tim e, org aniz ations m ust reassess th eir entire w ork f orce to m ak e sure th ey are m ak ing th e m ost of th e ab il ities of diverse p ersonnel and al so addressing k now l edg e and sk il l s g ap s. Th e dig ital ap titude of th e m il l ennial g eneration is of l ittl e use w ith out th e tacit k now l edg e, exp erience and p eop l e sk il l s of G eneration X .

M o b i l i z i n g i n t e l l i g e n c eThe s saw the ig ang deregulation of nancial markets. t also saw th e traditional im ag e of th e b ank er w ith a b ow l er h at rep l aced b y one in p in strip es and b races. O nce ag ain, th e w ork f orce is underg oing a radical transf orm ation: th e b ank er of th e f uture is m ore l ik el y to b e a young f em al e tech nol og ist.

Evolution of the bankerThe workforce is undergoing a radical transformation; the banker of the future is more likely to be a young female technologist.

$ ¥£ €

1950 2000 2050

G l o b a l b a n k i n g o u t l o o k 2 0 1 6 |

Evolution of the bankerThe workforce is undergoing a radical transformation; the banker of the future is more likely to be a young female technologist.

$ ¥£ €

1950 2000 2050

I f b ank s w ant to reb uil d a viab l e industry, th en transf orm ing th e b ank ing w ork f orce is as im p ortant as transf orm ing p roducts and p rocesses.

e the f u ste s t i ht futu e f t le ted e s e y . c o m / b a n k i n g t a l e n t

31 | Transforming talent: The banker of the future

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Karl MeekingsGlobal Banking & Capital Markets Strategic AnalystLondonkmeekings@uk.ey.com+44 20 7783 0081

32Global banking outlook 2016 |

Regions

Michael OnakBanking & Capital Markets Americas LeaderCharlottemichael.onak@ey.com+1 704 331 1827

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Dai BedfordGlobal Banking & Capital Markets Advisory LeaderLondondbedford@uk.ey.com+44 20 7951 6189

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EY | Assurance | Tax | Transactions | Advisory

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ut s l l i it l ets etI n today’ s g l ob al l y com p etitive and h ig h l y reg ul ated environm ent,m anag ing risk ef f ectivel y w h il e satisf ying an array of diverg entstak eh ol ders is a k ey g oal of b ank s and securities f irm s. E Y ’ s G l ob al

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E imited. Al l R ig h ts R eserved.

E Y G N o. E K 0 4 0 11 5 0 7 - 1 5 7 6 4 1 6 N YE D 1 1 1 6

Th is m aterial h as b een p rep ared f or g eneral inf orm ational p urp oses onl y and is not intended to b e rel ied up on as accounting , tax or oth er p rof essional advice. P l ease ref er to your advisors f or sp ecif ic advice.

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