Turnover in tech roles has traditionally been high. According to recent data from LinkedIn, the software tech industry has the highest turnover at 13.2% and can be as high as 21.7% for embedded software engineers. In some cases, the average tenure is as short as one year.
With the accelerated dependence on digital-first channels, the competition for talent with digital skills has only intensified. That, coupled with a greater need for innovation as financial institutions scale, makes for an even tighter squeeze on the recruiting and retention front.
Recruiters at financial institutions are often tasked with the following challenges: bank and credit union leadership, often composed of experienced industry veterans, are quickly entering the age of retirement, which leads to a loss of crucial information. There's also a legacy mindset, which in some ways has retained public trust and laid out a very dependable system, but also has stagnated innovation. And last, while a work-from-home arrangement for over the last two years has removed geographical limits in the recruitment process, it can also lead to a lengthy, unstructured, or biased one.
For banks and credit unions to innovate when the talent that led the innovation is leaving, it’s necessary to invest in programs that help attract new talent and create incentives to retain employees flush with options.
Recruiting tech workers who don't come from backgrounds working for financial institutions can be advantageous for several reasons:
The value of a beginner's mind is that one might approach a problem differently and come up with innovative solutions. Oftentimes, tech talent from other industries can come up with new approaches and processes, and rely on a different toolkit to solve problems.
While those with a large financial institution background might have deep experience working within long-established protocols, they also tend to get siloed into a single department. Tech talent plucked from startups might be a bit more rouge in company processes, but have likely had to wear more hats resulting in more cross-departmental experience. In turn, they can offer different insights and new ideas on how to innovate.
If you’re looking to “future-proof” your institution, recruiting talent from industries outside of banking is a great place to start. Consider recruiting talent with backgrounds leading projects in digital experiences and API integrations if you’re launching an ambitious digital transformation. Or if back-office efficiencies are a priority, folks with a background leading the charge in refining customer service processes can help you reach that next level. For instance, if a financial institution has goals of becoming a one-stop payment shop, or offer "banking as a service" solutions, then tech talent with an enterprise SAAS background could offer their expertise to innovate.
Recruiters know full well the challenges that loom large when it comes to fulfilling roles. Since the start of the pandemic, application development roles have seen the greatest surge in demand. In recent months, the tech roles that reported the greatest turnover were user experience and design (23.3%), data analyst (21.7%), and embedded software engineer (21.7%).
"Many engineers I speak with are less interested in particular industries than they are with the technologies they'll have an opportunity to work with."
The good news is that tech talent, such as engineers, seem to prioritize technologies and processes over industry. "Many engineers I speak with are less interested in particular industries than they are with the technologies they'll have an opportunity to work with," says Evan Jones, Narmi's technical recruiter. "They want up-to-date technologies in teams following best practices."
The main takeaway: there's a big opportunity for those with experience in adjacent industries to offer a fresh perspective to existing challenges as well as systems, processes, and workflows that could accelerate and ease the process of innovation.
Since recruiting tech talent can feel like it's rife with scarcity, here are some things credit unions and banks can do to attract the right talent:
For instance, prioritizing efforts to fill roles for project managers, cloud engineers, or API-focused engineers, can help with connectivity around the core. Beyond these pivotal roles, filling important positions, such as user interface engineer, data analyst, and retail banking relationship roles also supports your institution's movement toward innovation.
A data analyst can help you determine which digital features to focus on and provide a road map and shift your institution to being more data-driven. And, user interface engineers and customer support roles can play a part in front-facing elements that build trust and engagement with both potential and existing customers.
Blue-skying will only lead to high turnover. Being upfront with what it’s like to work at your financial institution and the opportunities it provides for employees can lead to long-term satisfaction and growth. For instance, if you're a community bank or credit union, offering high salaries and incentives like employee stock options – as some larger tech companies can – might be out of the question.
However, you can point out other perks, such as workplace flexibility and work-life balance; a company-wide mentorship program with intent and impact; and putting your talent on a compelling, meaningful project that will ultimately help them learn new skills and grow. Look toward what your tech talent would find most useful and valuable. And of course, company culture that is inclusive, collaborative and recognizes the totality of an employer's values and interests – both at work and personally – couldn't hurt.
In 2020 Truist regional bank committed to investing $78 million toward various DEI initiatives, such as funding for social justice grants and black-owned small businesses. Besides a monetary pledge, financial institutions can create a culture that values diversity through not just recruitment, but training and support of local communities. Such is the case with Bank of the West, which intentionally folded these DEI initiatives into their company culture.
As older, veteran workers are leaving and creating a gap in skilled workers, recruiters need to look closely at what can be done to retain institutional knowledge and experience of older workers, while encouraging the younger generations to stick around:
The reality is that more veteran workers are ill-prepared financially to leave the workforce entirely. While younger generations are seen as "digital natives" and might be seen as first in line for these tech roles, beyond institutional knowledge, aging workers usually bring to the table crisis management skills, implicit know-how, and relationship management skills. Research points to the fact that age diversity in the workplace actually spurs greater innovation: age brings a sense of psychological safety and wisdom.
Banks and credit unions can offer part-time or consulting roles to the talent that has been around for some time, or to experienced, longtime employees to gradually phase into retirement. That way, institutional knowledge and protocols won't be lost entirely as boomers retire.
For example, Bank of America has offered "returnships": programs tailored to recruit those who have been out of work for a few years, such as women who took time off to care for young children and older workers. Another example of this comes from Peoples State Bank in Wisconsin. They offer employees the choice to make tweaks to their employment status so they can either enter semi-retirement while still making contributions as a team member, or slowly phase into leaving the workforce and retiring. That minor organizational adjustment means that institutional legacy information can be retained, and employee turnover reduced.
Younger workers seek jobs that are in line with their values and sense of purpose. Instead of "how much money can I make?" or "how much job stability can this job offer me?" it's really more about how a job plays into the life story of its workers. Benefits such as a company assistance program to help with student debt payment. Also, fold in diversity, equity, and inclusion (DEI) initiatives that go beyond fulfilling diversity quotas.
The spirit of attracting and keeping tech talent from industries outside of banking is to create new opportunities for them that can help them expand their skill set, see the impact of their work in the communities they’re supporting, and be in greater alignment with their values. In turn, financial institutions benefit from long-term growth when positions key to digital transformation are filled.
And in doing so, institutions can stand out and be more competitive in the sea of offers vying for qualified, highly sought-out workers. Because it's not about being the largest and dangling the offer with the most dollar signs to entice qualified talent. It's about knowing what your FI, no matter the size or budget, can offer and owning it entirely, and allowing talent to do the same.