According to the U.S. Bureau of Labor Statistics, hundreds of thousands of voluntary resignations in the “finance and insurance” industry occurred throughout 2022. This high rate follows trends that started in 2020, and over 38 million people quit their jobs nationwide in 2021.

Although the financial services sector hasn’t borne the brunt of national resignations, many financial institutions feel the strain and anticipate more to come. In fact, employee churn topped the list when CSI asked bankers about their strategies, spending initiatives and priorities for 2023 in its eighth annual Banking Priorities Survey.

But as the talent pool becomes increasingly competitive—especially for technical and IT-related roles—there are other options for financial institutions to consider, depending upon their budgets, technological capabilities and appetite for change.

How the Great Resignation Continues to Affect Financial Institutions

Although talk of the Great Resignation has died down, the latest labor statistics illustrate that it is far from over. Meanwhile, layoffs abound, particularly in the technology sector and among industries bracing for a potential economic slowdown.

The loss of qualified people presents a unique challenge for community financial institutions, as they have always set themselves apart as people-first. This is especially true if institutions lose talent well-versed in critical, specialized areas like their own product suites, IT or regulatory compliance.

The causes are multifaceted, but one of the most common is prevalent in various industries. Employees are no longer limited to finding employment at local institutions, and larger companies can hire from anywhere, offering salaries far exceeding living costs in smaller communities. Many compliance professionals and technology experts can now work from their homes in the city of their choice.

As a result, financial institutions must up their game and develop a holistic and forward-looking approach to attract new talent and retain skilled employees that could look elsewhere.

Developing a Forward-Looking Approach to Bank Talent

Some responses to talent and retention challenges are expected. Institutions might be able to present more lucrative job offers, actively poach talent from elsewhere or broaden benefits. For instance, gym membership reimbursements and extended paid time off might tantalize some applicants.

Still, these measures are only sometimes feasible. More importantly, they are only part of the story concerning what employees seek. Employees also look for fulfillment, whether by conducting more impactful tasks or supporting their organization’s mission.

As such, it is critical to create a culture and environment in which employees see themselves as an essential part of something worthwhile. Community banks often play a significant role in their communities, so they should showcase that role by highlighting community service opportunities and allowing applicants to see the ability to make a difference in the job description.

The following approaches represent a wide range of other responses, advancing from the more straightforward strategies that institutions should implement now to the ones they may still need to consider.

Elevate Existing Employees with Skills Development

Investing in existing employees is an essential first step for any long-term approach to talent. By training existing employees to take on new responsibilities, institutions can more effectively leverage the skills, expertise and potential already present in their workforce.

Developing existing employees can improve organizational effectiveness and rewards the most qualified people who already know the institution’s customers, business goals and community. Managers can likely train skills like customer service, fiscal management and product knowledge easier than culture fit.

In addition, internal development can improve morale. Allowing existing employees to take ownership of new responsibilities will often be seen as a vote of confidence. Even beyond the existing employee base, clear potential for upward mobility makes an institution more appealing to applicants seeking a long-term career. So, this effective retention effort also helps recruitment.

However, there is an important caveat. For skills building within your organization to be effective, there must be a proper balance within the department to avoid worker burnout. Once an employee gains new skills, another may need to take on some of their lower-level responsibilities.

Recruit from Inside and Outside the Financial Industry

Market conditions also require banks to aggressively rethink their hiring strategies. By proactively tapping into the talent pool within the financial and technology sectors, banks can bring in experienced professionals who already have skills and knowledge needed to succeed in their roles.

This strategy can be particularly effective for filling specialized roles or positions that require specific expertise. By recruiting from within the industry, banks can ensure that they gain top-quality talent well-equipped to meet the needs of the bank and its customers.

Relevant experience could be broader than working within a bank. As new roles are being created for technology-heavy functions, others are becoming obsolete. Therefore, the outflow of workers from the service and tech industries, paired with growing interest from young applicants, creates an opening to attract customer-oriented and tech-savvy talent.

Automate Where Possible

Automation can also play a role in helping banks to respond to staffing shortages by eliminating previously manual tasks. While concerns grow about automating away entire functions, automation should actually make the employee life more seamless and work more purposeful.

Process automation tools can save time in various fields, including fraud detection, customer service and credit evaluation. For instance, effective online and mobile banking platforms enable effective self-service, allowing customers to conveniently manage their accounts and conduct transactions. A well-integrated core system that eliminates dual data entry can also be a considerable time saver.

It’s also worth remembering that what attracts today’s talent can benefit tomorrow’s digital transformation. Digital automation helps banks respond strategically to reduce headcounts and reallocate staff to more value-added activities, improving their image on the talent market. It also contributes to better customer service in the long run.

Sometimes, talent shortages require greater transformation to automated processes. Community banks can follow the lead of bigger banks that eliminate manual and paper-based processes altogether to streamline operations and bolster their bottom lines.

Deploy Other Technologies Strategically

A growing proportion of employees would switch companies for tech that helps them be more effective at their job. Since technology isn’t limited to automation, the right technology investments for customers and employees can further improve the attractiveness of positions at financial institutions.

CSI’s Banking Priorities Survey reflected efforts to do so, as respondents revealed an increased focus on branch technologies. Other software, like cloud-based collaboration tools and analytics capabilities, optimize employees’ time by helping them communicate more quickly and make informed decisions.

Customer-facing digital banking technologies, from digital account opening to lending, should strive to facilitate customer self-service in the channel of their choice. This reduces the workload on employees in branches or call centers—areas that typically experience the highest staff churn.

On a basic level, innovative banks seeking cutting-edge technologies convey longevity and a forward-thinking mindset that appeals to customers and employees alike. Banks that embody these qualities must ensure this message is carried through the recruitment level, including job postings.

Enable and Secure a Remote Workforce

Although remote work has contributed to massive upheavals in the workplace, it also poses an opportunity to expand recruiters’ reach. It’s estimated that around 55% of bank workers would like to work from home some or all the time moving forward.

While maintaining work culture and customer service is always important, that perfect candidate could lie just outside the typical talent pool. For instance, there may be an IT professional with a wealth of experience in securing sensitive data that only needs to go onsite from time to time. Or there may be a qualified project manager with experience working in a fintech who does not need to come onsite often.

For institutions that enable remote work, the right core processor should facilitate that shift, eliminating technological barriers wherever possible. A cloud-based approach also affords various benefits, including security, redundancy and convenience, as users can log in from anywhere using any device.

Cloud system administration requires a specialized skillset, so organizations must have dedicated staff to make this possible or consider outsourcing, explored in more detail below. Before embracing these tools, it’s also vital to understand regulatory requirements related to public, private or hybrid cloud environments.

Likewise, those institutions that enable remote work should also take measures to appropriately secure employee and customer data. This includes properly configuring access controls, such as virtual private networks and multi-factor authentication. There are also a variety of solutions to empower a remote workforce, including secure productivity tools and virtual desktop infrastructure (VDI).

Partner with Strategic Advisors or Managed Services Providers

When staffing shortages arise, partnering with third-party experts offering consultations and guidance may become necessary or advisable. This can be an effective way to access additional resources and expertise and help ensure the financial institution has the necessary staff to support its customers.

Continuing to manage technology functions in-house when the demand for IT and cybersecurity talent is high could result in vacant positions or high salary expenses. By contrast, strategic partnerships with managed services providers (MSPs) offer one affordable, feasible and effective solution.

Partnering with an MSP that offers around-the-clock assistance in monitoring suspicious activity is one of the best ways to strengthen defenses while filling personnel gaps. Alternatively, institutions can partner with industry professionals for advisory services like IT governance to guide them through strengthening their IT and information security strategies.

IT governance consultants guide how an institution can best leverage technology to achieve goals and develop an IT infrastructure roadmap. The right advisory partner for IT governance will understand how technology, cybersecurity and financial services intersect, helping an institution achieve its specific business objectives.

Outsource Customer Service and More

Outsourcing specific tasks or functions can also be an effective way for banks to respond to staffing shortages. By outsourcing non-core functions, banks can free up staff to focus on more critical duties while maintaining the level of service their customers expect.

For example, banks might consider outsourcing tasks such as data entry or payroll processing. Some technology providers also offer marketing tools or assist in building and maintaining financial institutions’ websites or other critical technical functions. Managed Security Service Providers (MSSPs) can even step in for difficult-to-fill security roles by offering cybersecurity monitoring and incident response services.

To combat staffing shortages, some institutions outsource customer service with a trusted technology partner who understands their operations and product suites. Known by some as “white label” customer service, this can include a call center operating under an institution’s brand, with access to CRM to keep bankers in the loop and able to step in as needed.

Under this model, a knowledgeable representative answers calls on a bank’s behalf, giving customers and prospects attention even when available staff is short. Although these representatives may not be in the same location, they can help an institution meet customer needs while letting its team focus on higher-impact demands or cross-sale opportunities.

Bonus Tip: Mitigate Risk with Cybersecurity Training

Whether an institution aggressively recruits, leverages an MSP or prioritizes backend automation, turnover can lead to a loss of expertise and institutional knowledge. That loss of expertise could create risk from newer, untrained staff.

Financial institutions must therefore have a thorough onboarding process for new talent. New employees require significant cybersecurity training, especially if they lack experience in the financial services industry. Training must include the threats, cybersecurity best practices and the steps to take in the event of an incident.

Cybersecurity training should continue to be reinforced for all employees at regular intervals, not only as a regulatory obligation but to help pass that knowledge throughout the organization. This will also help cultivate a culture of cybersecurity, which is imperative in the fight against cyber threats.

Gain Additional Insight from the 2023 Banking Priorities Report

As the talent market evolves, financial institutions must be proactive and keep their eyes on the pulse of the landscape. It is also critical to prioritize the right technologies to make employees and customers satisfied.

Access the 2023 Banking Priorities Executive Report to learn more about the shifting financial services landscape, where bankers stand on talent, as well as a host of other strategies, spending initiatives and technologies.

DIVE INTO THE REPORT