How to Improve Employee Retention in Banking and Financial Services in 2024

The banking and finance industry is seeing an influx of new clients. Yet there hasn’t been a surge in qualified staff. This is forcing businesses to compete for key talent.

One study found that banks are incurring up to £800 million a year in costs replacing people who leave as turnover approaches 14 percent. Here are a few ways to improve employee retention in banking and financial services.

Invest in Your People

Regulators in the United Kingdom are curbing compensation. This is cutting into the bonus pools that were used to reward employees. One alternative is to invest in learning and development paid for by the company.

Chartered Institute for Securities and Investment or CISI qualifications make your employees more valuable to the firm, and it can give them the prestige they desire. For example, someone with a CISI investment operations certificate is highly regarded by investment houses. While it gives them skills that are desirable in the workplace, providing this to them increases the odds they stay with you.

Course search services like findcourses.co.uk, for instance, list a variety of CISI classes. These include courses on everything from international compliance to managing cyber security.

They’ll then be better able to serve your clients, and this is a natural career progression for financial analysts who want to spend more time working with people. Your business gains invaluable skills without having to hunt for the few people with these certifications.

While training costs money, it is a fraction of the cost of losing someone. Forbes estimated that the cost of turnover is half a new hire’s salary. For mid-level employees, it approaches 125 percent of salary.

Another approach is encouraging job rotation programs. This allows people to learn about their career options in the company, and it often results in faster promotions.

Improve Your Reputation

The fifteen biggest banks in the world fell twelve percent between 2011 and 2015. More importantly, the scandals and corruption that made headlines during this time made investment banking an undesirable career.

Just under ten percent of London School of Economics graduates are applying for jobs in investment banking. That is a quarter of the number applying in 2012. On the other hand, consulting is seen as an attractive career path. Millennials are attracted to disruptive startups. They want greater responsibilities, increased flexibility and immediate impact of their work to be seen.

Financial firms are trying to compensate by offering faster promotions, but that isn’t always an option. What they can do is show how their work has a positive impact on society or gives people more responsibility from the start. For example, give them higher value added tasks like finding new clients, getting to know them and then pitching to them when it is the right time instead of spending a year or two creating sales pitches.

Increase Transparency

Financial firms can do a lot more to increase transparency at all levels. Encourage internal communication, something that fosters trust. Be transparent about bonuses and promotions and how one can achieve one themselves. Another tactic is giving staff more frequent, qualitative feedback in place of the annual performance review.

Reconnect

Foster engagement with monthly luncheons and volunteer activities. This is important in every firm, but it is essential when you have a distributed workforce. Create a social calendar that allows everyone to connect with their team members, and ensure that every team, office and shift is included. Allow hot desking so that travelling staff and those who work from home can work in the office once in a while.

The banking and financial sector has to learn how to be more flexible, especially as this new crop of employees is starting to demand it. This will mean experimenting with flexible scheduling, but also being more lenient with employees. This could mean anything from allowing certain employees to leave early, or excusing occasional lateness. According to Londonofficespace.com, many large corporate entities are now looking at more flexible working solutions and desk sharing to give their employees the opportunity to work the hours that best suit them. Apparently 83% of workers globally would turn down a job that didn’t offer flexible working, so employees need to adhere to the trend.

Use Technology

Utilize technology to strip out repetitive manual processes. Use productivity tools to eliminate the low, value added tasks like organizing mailboxes or doing basic reports. Then people are devoting more time to value-added tasks instead of mind-numbingly boring ones. This speaks to the junior bankers who want a more meaningful experience.

A side benefit may be dramatically reducing the long hours people are expected to work in order to be promoted. After all, why would someone want to put in 90 hour workweeks when they could work 40 to 60 somewhere else? This is why more financial firms are giving bankers personal time or specific nights off every week.

Another way that you could use technology is by using AI and advanced analytics to identify patterns. Departures might seem like random events on the surface, but by using artificial intelligence and predictive models, we can start seeing patterns that could lead to attrition.

One institution, in particular, was able to spot an increase in resignations around the third quarter, but they were perplexed as to why as January is often stated as being the biggest month for resignations. Upon closer examination, they found that the third quarter coincided with internal processes, such as bonus payouts, for instance.

They found that employees were more likely to leave after receiving their bonuses. And since many organizations decide to time their pay outs around Christmas time, it’s totally normal to see a rise in resignations around January. This is only one example of how data could help you see the big picture and find out the actual causes behind employee movement. Using data and machine learning will allow you to go beyond conventional wisdom and find real solutions.

Start with the Right Culture

Changing the culture of your company and financial services is another way that you can increase retention and engagement. For one, having a strong and clear company culture will allow you to recruit people who are already in line with your values. Your company’s culture should be a representation of what you’re looking for in an employee, whether you’re looking for a stricter, more structured environment, or a more casual one.

Screening employees better is another thing banking and financial institutions will need to pay special attention to. Identifying signs of job hoppers is the first step to reducing turnover. While there is nothing wrong with employees seeking better positions, you have to identify candidates who are simply trying to use the position as a springboard.

Don’t Punish Competence

It can be hard to imagine that banking institutions might be punishing competent employees, but this is exactly what they’re doing by diverting resources to employees that are constantly struggling. Top performers can then start feeling invisible and unappreciated. It is your job to let them know how valuable they are to the team if you want to keep them engaged.

Investment banks are struggling to retain top talent and attract new people. However, there are steps you can take to become an employer of choice and keep your best people with the firm.