Recently, a friend of mine who heads a global corporate practice with a tier 1 bank bemoaned the impact regulation and compliance have had on bank culture and human resources. Banks he says, are rapidly turning into “glorified” utilities under the pressure of regulator scrutiny and the ever spiraling costs of compliance. Any and all of his business initiatives need to be vetted by a cadre of in-house compliance officers for whom everything new is an unbearable risk and who gladly scurry back to regulators to ask permission to breathe. Compensation policies and bonus packages have been upended, drastic clawback clauses and vesting periods introduced.
Add to that the lure of other industries – technology, startups – and it becomes much more difficult for banks to attract the best and the brightest, show them a path towards a career, craft adequate compensation plans and ultimately retain them.
Culture clearly has been impacted by regulation. Some will say for the best if a culture of greed was put under stricter control. Some will say for the worst if a culture of systemic risk avoidance and rigidity has been erected.
Technology is also impacting culture, although not as directly and transparently as regulation is. Finserv incumbents, for the first time in their history, have to reinvent themselves by upgrading their work flows and processes, integrating new technologies, acquiring and analyzing data, focusing on customer experience and service (in ways they never did in the past). This is forcing them to contemplate beyond the traditional partnership and business development models towards true platform strategies – i have heard the term “platformification” in the eco-system a few times. This is also forcing them to acquire new skills – read human resources – in order to interact with a proliferation of data, a bevy of new technologies and a multitude of startups and non-finserv competitors. A future banker or insurer may be more data scientist or technologist than corporate financier or marketer.
What I endeavor to convey here is that as the technology/business stack is evolving, so will the skills/human resources stack will have to. New finserv incumbent leaders need to emerge who will not only understand the new competitive paradigms but also be able to manage the right layers of managerial skills throughout their organizations. The battleground is not only over technology, which fintech startups to back and partner with, which fintech startups to compete against, which non-bank competitors to partner or attack. The battleground is also waged on the human resource level: which associates, skilled subject matter experts, managers to attract, how to retain them and how to manufacture attractive career plans. In other words, how to create the C-suite leaders of tomorrow.
Fail reinventing the skills/human resources stack, fail aligning it to the new technology/business stack being shaped up by competitive market forces, and finserv incumbents will truly become utilities.
On the subject of rejuvenating c-level suites I would be interested in seeing incumbents hiring either from outside of their industries or promoting from technology or innovation tracks as a way to shake up the status quo for example. I am sure this is already happening but I am missing data points. As for hiring entry level data scientists, technologists, god knows that will be an uphill battle for finserv incumbents – the lure of technology companies might be difficult to counter. In any case HR is as important as TECH clearly. FinHR anyone?
Does anyone have examples of how finserv incumbents are going about reinventing their human resources stacks?