Over the past several years, the financial services and banking industries have faced multiple challenges. From a global pandemic, inflation, war, rising interest rates, supply chain disruptions, and more, the market has seen an unprecedented time of instability. Despite this, the global finance industry still showed strong revenue growth, reaching a 14-year high in profitability in 2022.
New data finds that employee turnover in the banking industry is increasing exponentially - and pay raises and better benefits aren’t holding a flame to employees’ decisions to leave. At the height of the pandemic, bank employees were keen to stay put but 2022 saw a nearly 25% increase in turnover compared to the previous year.
The state of early-career talent in the finance & banking industry
Legacy institutions, such as investment banks, have long been a coveted career landing spot for students, regarded as a pathway to monumental wealth and high social status. However, with the rise of tech and fintech companies, the appeal of Wall Street has diminished as incoming generations opt for a more casual, flexible work environment.
To position themselves as a Gen Z talent magnet, financial organizations must focus on broadening their recruitment strategies and changing (or really, updating) their workforce culture.
A case for sabbaticals
There has been a major power shift in favor of employees in the economy, leading to an increase in job mobility. Banks and credit unions are offering a range of benefits to keep their employees engaged, including higher pay, flexibility, and extended time off. Sabbaticals - an extended period of time away from work for study, travel, or personal growth - have been growing in popularity as the financial services industry has been required to keep up with employee demands.
Bank of America is piloting a sabbatical program for long-time workers in an effort to reflect a post-pandemic shift toward better work-life balance. Ascent Funding, a private loan organization, incentivizes employees to take a sabbatical every three years where they are paid to relax, rest, and recharge. And digital bank Monzo recently implemented a three-month off program for employees who have been with the company for four years or longer.
Although sabbatical leave may not immediately apply to early-talent candidates, it can be an effective way to keep employees - of all ages - motivated to stay. Post-sabbatical, employees may return more engaged and rejuvenated, or may decide they want to quit and try an entirely new career - but the recruitment market is so hot right now, it’s a risk more employers are willing to take. The cost of recruiting and training a new employee can often be higher than offering a sabbatical, making it appealing to financial services job seekers.
However, sabbaticals aren’t the only answer to improving benefits: in comparison to 2021, 2022 was a banner year for financial services employee benefit expansions. The Financial Brand found a 16% increase in organizations that offered performance bonuses, an 11% increase in mental health support, and an 11% increase in parental-level policies. Gen Z is driving benefit changes and it’s not stopping any time soon.
Throw out the rule book on flexibility
It’s equally important for financial institutions and banks to understand and embrace the current workplace and put it into practice, just as it is crucial for them to undergo digital transformation to meet the expectations of today’s modern customer. And we’ve heard it time and time again: Gen Z employees prefer a hybrid work style. Working with flexibility helps Gen Z save money, gives them time back for personal pursuits, allows for more family time, improves work efficiency, and positively supports their mental health. However, the balance of being in-office also allows for colleague connections, finding mentors, connecting to company culture, and more. The ability to offer a flexible work environment is crucial to support this group and the financial services industry has a responsibility to create diverse and inclusive hybrid work environments that cater to different working patterns and preferences.
Skill up for success
Training Gen Z is invaluable in retaining them as employees, making reskilling and upskilling two important (though often overlooked!) strategies in the workforce narrative.
Despite Gen Z’s rise to becoming nearly 30% of the workforce in the next 2 years, it’s reported that 70% of Gen Z don’t have the mastery of skills needed to do their job effectively. The lack of skills affects the performance and productivity of early talent and can lead to high turnover rates.
This is where upskilling comes in. By investing in the training, development, and skills of your early-career candidates, you can attract and retain top talent and see a significant increase in ROI. In the financial services industry, this may mean getting your junior employees client-facing as quickly as possible: equipping them with the soft skills and confidence to handle client meetings and projects. Not only will this improve performance and productivity, but it can ease the load for managers and give junior employees a sense of accomplishment, satisfaction, and contribution. Not to mention, Gen Z’s sense of ownership and autonomy will be unlocked: strict supervision can be off-putting but the right type of investment in their skills development can reduce potential turnover. In fact, a Built In survey found that 75% of Gen Z would rather explore different roles in an organization than switch companies.
Don’t shy away from transparency
The issue of the demanding work culture in the financial services industry, especially on Wall Street, has been a topic of discussion for a long time. Last year, the debate gained renewed attention when a presentation from first-year Goldman Sachs analysts detailing their 100+ hour workweeks went viral. This occurred during the “Great Resignation,” leading to concerns about the banking industry’s ability to attract and retain a new generation of employees who value work-life balance. It was an awakening for the investment banking industry, which eventually raised pay and promised better work-life balance. As we’ve seen, transparency is a massive driver in how Gen Z approaches the job market – and they are willing to abandon ship if the authenticity, trust, and transparency aren’t there.
To retain Gen Z employees in the financial services industry, companies must first make them feel valued. Providing them with responsibility, recognition, and growth opportunities will keep them committed, and supporting their need for a flexible, ethically-minded workplace will keep them engaged.
To create a future-focused and rewarding career pathway for early talent, the financial industry should consider the following:
- Invest in upskilling employees to keep up with technology and industry trends
- Foster a culture of collaboration to enable both upward and lateral career growth
- Use mentoring and training programs to support early-talent growth
- Appeal to Gen Z talent by offering a transparent, flexible, socially responsible, and healthy work environment
For more insights and tips on building an environment that attracts top Gen Z talent and retains them for longer, contact Abode. For more information on Gen Z in the workplace, download our full report, Working for the Future: How Gen Z is Driving Transformation in the Workplace, here.