Financial services executives have many important issues on their minds in 2023. Externally, the economic environment, market volatility and regulatory pressures are ever-present concerns. Customer growth and digital transformation also remain important priorities. The 2023 BAI Banking Outlook survey shows a continuing focus on the customer, particularly in terms of new-customer acquisition and customer digital experience.
Interestingly, for the first time since the survey started tracking executive priorities, the quest to attract and retain top talent was identified as one of the top three business challenges in the year ahead. The war for talent has been a major challenge over the past few years for all industries, including financial services. Many hoped that workforce shortages and salary inflation would be a short-term problem that would work itself out so that we could all go back to normal.
But as the 2023 survey underscores, issues around hiring and retaining top talent won’t be resolved anytime soon. In fact, many financial services executives believe that staffing challenges will become even more pronounced next year. If this is the case, why do so many bank executives resist flexible working models?
Recent research conducted by KPMG found that nearly 70% of U.S. bank CEOs foresee fully in-office working environments in the next three years—nearly twice as many as in other white-collar industries, on average. Only 6% of bank executives envision remote-only work environments. Banking CEOs express concerns about their ability to maintain a strong workplace culture with minimal face-to-face interaction. They worry about potential competitive disadvantages with customers. They fear lower productivity. Some just want to go back to the way it used to be. The problem is that the world has changed and it will never be the way it was.
The preference for an in-office workforce is understandable. Executives who started their careers working diligently in the office experienced the benefits of the interactions and relationships that develop through in-person settings. But now there’s a cross-generational desire for flexibility. Millennials and Gen Zers in particular expect to be able to work in a hybrid model, and many prioritize this factor in seeking opportunities. They think differently, they work differently and they have different expectations. The reality is that they just don’t buy into the expectation that they must be in the office.
Of course, some banking roles must be performed in person. But with technology and hybrid business practices, many roles can be performed effectively in a hybrid model. This calls for a purposeful management structure that has clear objectives and expectations with both qualitative and quantitative measurement criteria. No one would disagree that this is important. But these principles hold true whether employees are in the office together or working remotely.
I have spoken to enough executives to know what they’re facing and how much they’re struggling with this. But resistance to the flexibility that is important to employees—particularly younger generations—will likely only compound the talent problem.
In BAI’s recent special report on today’s talent challenges, Megan Burkhart, Comerica Bank’s chief human resources officer, described Comerica’s successful implementation of a hybrid program called WorkBest. Bank leaders categorized jobs or roles into groups that defined how colleagues could work on site or in various types of remote arrangements. Burkhart explained, “We recently surveyed our managers and colleagues, and 85% of respondents let us know that WorkBest allows them and their teams to work effectively and productively while executing Comerica’s business and enhancing its culture.”
The strategic purpose of Comerica’s hybrid model is to gain a competitive advantage in the relentless battle for top talent. “We are offering colleagues flexibility and, at the same time, enabling them to participate in rich collaborative experiences while building strong working relationships with each other and preserving Comerica’s rich culture,” Burkhart said. “It takes a lot of deliberate planning to make all that come together.”
For most financial services organizations, designing a well-balanced blend of remote and on-site work requires new ways of thinking and iterative experimentation. There is no single way of doing this, and there’s plenty of room for customization. If executed well, this blend could change the game in recruiting and retaining employees as well as in building engagement. And we know that creating a fulfilling and flexible work environment with solid managerial support lays the foundation for a more engaged workforce.
Now is not the time for banking leaders to scale back career pathing or professional development resources that are also important to employees. Many large organizations make significant investments in the development of their teams. Small and midsize financial services companies may not have the same level of resources as the largest ones, but they can provide professional development resources at levels that are right-sized for their organizations. This really matters.
Thinking differently about hybrid models isn’t a one-way street that puts all of the responsibilities on executive leadership. The most successful models are built on collaborative thinking and adjustments. For example, one of the biggest concerns is missed opportunities for mentoring and building valuable relationships. Less experienced employees benefit when they tap into the wisdom of their more experienced colleagues who have accrued a wealth of perspectives over the course of their careers.
Although Gen Zers and millennials may not agree with some of their senior leaders about how hybrid models should work, they still have a lot to learn and can do so by connecting with executives who have more experience and accumulated wisdom about the business and customers. Innovation in mentoring programs (including the always-valuable reverse mentoring) is a powerful way to build relationships that facilitate valuable knowledge-sharing across generations.
I have spent my entire career in banking, and I have lived through substantive changes in our industry including deregulation, the financial crisis, the impact of advancing technology on customer delivery and the evolving competitive landscape. A strong strategic position is largely dependent on having the right people who are passionate about their roles, capable in fulfilling their responsibilities and committed to living the organization’s mission, vision and values. This will not be easy without being more open-minded about new ways of working.
Financial services executives have become more innovative in nearly every part of the business, including technology, customer service models, product packaging, pricing and how they serve their communities. They can capitalize on this experience in innovation to build a hybrid model that enables flexibility for team members and positions the organization to achieve its strategic objectives.
Success may require a fundamental shift in a mindset that has historically equated high performance with face time, and members of the workforce must think innovatively about what flexibility means to them. Together, executive leadership and all segments of the workforce can collaborate creatively to redefine flexibility, achieving powerful strategic competitive advantages.
Debbie Bianucci is president and CEO of BAI.
For more on the trends we see playing out this year, we encourage you to download the latest BAI Executive Report, Addressing banking’s key business challenges in 2023.
