HR & Business

4 HR and L&D challenges in the finance industry

hr and l&d challenges in the finance industry

The pandemic has affected even the most stable sectors of the economy dramatically. It was no different for the finance industry, where technological and service-related innovations that had been announced for years were accelerated. Internal changes have also been implemented. However, HR and L&D departments still have a lot to do, facing challenges they have never faced before.  

The finance sector is still dealing with the aftermath of the COVID-19 crisis. Decreased profitability, increased risks, or the economic downturn mean uncertainty and treading unstable grounds. Now that we are slowly coming to terms with the new situation, it is time to review the hastily taken decisions and new challenges. The industry isn’t slowing down, which means further hard work for HR and L&D departments. What are they up against? Here are the biggest development challenges for the coming years.

1. New competencies vs a global shortage of talent 

Data published in 2019 by PwC experts in the publication “Banking and Capital Markets Trends“ showed that more than 60% of bank CEOs surveyed were aware of hiring difficulties in their industry. Another study, conducted by the Financial Services Skills Commission and Professional & Business Services Council in the UK, confirms that almost a third of employers in the financial services sector is struggling to recruit due to skills shortages in the market, with thousands of key roles, particularly in data and technology areas, remaining vacant. The research was conducted after the breakout of the pandemic. 

For HR and L&D departments, this means one thing: measures aimed at upskilling and retraining employees in line with market needs as well as development needs of the employees themselves. The authors of the latter report warn that more detailed skills forecasting is needed. This will allow us to understand the nature and scale of needs in a broad, global scope and to plan long-term, strategic actions. Trainers are therefore faced with the need to continue building an organizational culture of lifelong learning, yet on an unprecedented scale.

2. Hybrid work – how to develop and support people remotely 

Discussions are ongoing in most companies about making hybrid work permanent. The model has taken off surprisingly well in the finance industry, where before the pandemic only 29% of employees did their work remotely at least one day a week. CFOs expect 61% of their employees to work remotely at least once a week on a permanent basis. Over 70% of directors rated working from home during the pandemic, forced by circumstances, as successful or very successful. A PwC survey shows that companies in the finance sector are more willing than others to take measures to increase the productivity of remote work. This also applies to the implementation of digital solutions in daily work, including in HR and L&D areas. There are already examples from the market (e.g. Nationale-Nederlanden) that they can be very effective and meet the needs of both parties. 

Find out how Nationale-Nederlanden conducts insurance advisor exams in the remote era.

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However, when implementing any change, dialogue is needed, taking into account the needs of employees and managers alike. It is a good idea to work together in order to develop actions that help maintain employee engagement, wellbeing, and good performance in changing circumstances. Employees and leaders need to learn to be more autonomous and to operate in an environment of limited control. L&D departments will be required to support leaders in their new roles and find alternative ways of learning. New key competencies will be related to, among other things, managing increasing amounts of data and making most decisions based on them.

3. Data management goes to the next level 

The vast amount of information on which companies base their operations is not and will not be solely the result of constant and dynamic socio-economic change. It is true that in the finance industry, data collection and processing are central to most processes, especially in risk management. More and more companies also begin to see the need to process internal data that allow decisions to be made based on up-to-date knowledge about employees. This includes their skills or talents, including competency gaps, but also their moods, emotions, and needs.

For internal processes such as Learning & Development activities, analyzing data requires close inter-departmental collaboration and support from the management, but also new knowledge and expertise. The right AI-based technological resources are also crucial. For many L&D departments in the finance industry, it is an unchartered land, but one they need to start exploring as soon as possible. The use of large-scale data analytics for strategic planning and rapid response to internal and external change will be the key to their success.

The trend of using data to manage organizations is clearly not a pandemic-related effect. For at least a decade, various research has shown that companies using this strategy are more likely to build a competitive advantage. A 2013 McKinsey study, based on interviews with 400 top executives at large multinational companies in a variety of industries, including finance, shows that 50% of companies that use analytics extensively outperform their competitors in sales. Only 22% of companies that do not apply large-scale data analytics achieve similar success.

4. Supporting employee resilience 

The pandemic and its aftermath, including pressures on financial institutions, threats to health, decreased job security and work-life balance, have affected the mental health of finance sector employees. Although consulting and banking services remained in high demand, symptoms of professional burnout were more common than ever, and with them a decline in engagement and effectiveness. In the UK, it has been estimated that mental health problems cost employers up to £54 billion a year. There has been a 16% increase since 2016. The pandemic has made it evident that concern for employee wellbeing must take a different, more comprehensive form.

How do we do it? Maintaining constant contact with the employee and regularly surveying their needs is the key. A quick pulse check used previously to measure engagement, or a simple conversation need to find their way to every leader’s agenda. Here, HR’s role is to support and be attentive, but also to draw the right conclusions and meet the needs of both parties. It’s worth being vigilant, also in terms of shaping the employees’ digital experience – offering friendly, intuitive, and effective solutions and tools which, at the same time, also serve to establish and maintain relationships with other people.

Always know how your employees are feeling. Conduct digital pulse checks.

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The finance industry is facing many challenges, most of which will be dictated by rapidly changing realities. The role of HR departments, and, to a large extent, of L&D, will be to support employees on a difficult journey riddled with uncertainty, the need to adapt, and rising expectations. Rapid upskilling, the ability to navigate the digital world, flexibility, and self-management – these are the future competencies required of the financial sector. One thing is certain, however. Departments dealing with development will have a fair share of challenges, with their role becoming more strategic than ever.  

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