The financial services workforce of the future

Technology, the labor market and increasing competition from other sectors for talent are among the biggest factors reshaping the landscape of the financial services workforce. In the highly regulated finance space, entry-level financial services positions are getting tougher to fill and higher-level roles are evolving in terms of how they fold in technological tools and capabilities. 

Financial services organizations contend with many challenges when it comes to building a robust workforce for the increasingly digital future. Three areas of critical importance include:

• Adapting to resource shortages
• Improving talent attraction and retention
• Developing a digital talent experience

Adapting to resource shortages

The labor market has cooled but is still expected to remain tight, by historical standards, for the foreseeable future, as noted in the RSM US Middle Market Business Index special workforce report in January 2024. Sixty-six percent of respondents to the Q4 2023 MMBI survey—which aggregated the responses of 403 senior executives across a range of middle market companies—expected their organizations’ overall hiring levels to increase through the ensuing six months. That’s the greatest seasonally adjusted percentage in any quarter since the MMBI survey began in 2015.

Contrast those hiring intentions with the fact that two-thirds of respondents said they anticipated some degree of difficulty staffing open positions over the next 12 months. That is down from 83% in the same period a year earlier but still represents a sizable majority.

In the financial services space, even with headlines of banks cutting positions in 2023, organizations still face challenges in hiring for more tech-focused roles such as those in data analytics and information technology.

The shortage of skilled, value-adding workers is an impetus for organizations to invest in technology that will not only improve their productivity, but also build their resilience. Advanced capabilities that can help protect profitability, especially for smaller and middle market organizations, include:

Talent attraction and retention

Organizations need to assess what actions they can take to make positions more appealing, especially for entry-level roles. Compensation and benefits top the list and remain foundational to companies’ human capital management efforts, according to the MMBI workforce report. Meanwhile, other talent experience components—such as flexibility, workplace culture and professional development—are also shaping the labor market.

Brandon Koeser, RSM US financial services senior analyst, anticipates that more organizations will formalize hybrid work policies and balance their desire to bring people back together in person with employees’ desire for flexibility.

Financial services organizations must also comply with regulatory requirements that other industries don’t face. Compliance requirements are constantly evolving, especially with the prominence of fintech and the rise of digital assets. Attracting and retaining talent against that shifting backdrop can be tough.

“When you are in a compliance role in a heavily regulated industry, you generally have less time to focus on long-term business objectives such as innovation or sustainable practice growth,” says Cohen. “However, these are not objectives that should be put on the back burner by financial services companies.” 

A digital talent experience

Strategic technology investments will be paramount for organizations that want to have a competitive edge. Technology will have to be more embedded in day-to-day aspects of employees’ roles because those technologies are going to have to drive more efficiency with fewer workers.

As generations get more tech savvy, employees will also have higher expectations for organizations’ digital tools, systems and processes. Companies that don’t prioritize these areas will fall behind.

“Some employees today might give up a position that pays $10,000 or $20,000 more at a large bank because the organization doesn’t have great systems in place,” says John Behringer, leader of RSM’s financial institutions sector practice. 

Upskilling or reskilling employees in areas adjacent to their current roles can help organizations do more with less. For instance, some banks are reskilling tellers to become universal bankers, which involves more responsibilities beyond tellers’ predominant focus on taking deposits and cashing checks. By reskilling such roles, the bank enables employees to support more branch operations and overall growth.

Reskilling, especially when it involves advanced technologies, can prevent employees from falling behind the curve when compared to the broader labor market. In turn, this enables financial institutions to have a more future-focused strategy.