Bank clerk crisis—the financial sector's fight for talents

How banks can position themselves in the fight for attractive talents

At one time, vocational training as a bank clerk was regarded as the king of apprenticeship occupations. Successful graduates could go wherever they liked all the way to the board rooms of large banks and corporations. So highly coveted were the apprenticeships that only very good upper secondary school leavers could get a place. In 1994, over 20,000 young people decided to follow this path in Germany. Today, it is only half that amount. When in the past, a free position attracted up to 500 applications, today it is sometimes only 50. Banks, and especially small savings banks and cooperative banks, have problems filling their free positions with suitable candidates at all – there are many reasons for this trend.

 

Reasons for the falling appeal of banks
Firstly, vocational training as a bank clerk simply does not offer the same perspectives as it did in the past. Currently over 60% of school leavers are flowing to the universities – and that is understandable as a university degree has become compulsory for most higher rungs on the career ladder. Those young staff who initially decide on vocational training later leave their companies for this reason and start a university course.

Furthermore, the image of the financial sector has suffered heavily in recent years. In particular the global financial crisis from 2007 and the recent volatility surrounding the sovereign debt crisis have focused the public eye on the “gambling mentality and bankster image”. Gone are the days in which vocational training as a bank clerk promised a certain degree of respect among the population. The new generation of millennials are said to want to live conscientiously and sustainably and that they want their job to allow them to fulfill themselves. It is hard to combine how they see themselves with the current image of the financial sector – instead they are drawn to engineering and the production industry. However, founding or working in a start-up can now also provide an attractive alternative, as can be impressively demonstrated by the rapid development of the fintech market in Germany (with currently almost 50% annual growth).

Finally, it is also the job security – for a long time considered a natural given for bank clerks – that has gone missing. Cost reduction initiatives in the form of cutback programs and reorganizations have dominated the headlines of local media coverage. The workforce figures of private, savings and cooperative banks all show a clear trend. At its peak, almost 800,000 staff were employed; the figure has now fallen below 625,000. Many private banks have significantly reduced their branch network and the consolidation does not stop for savings and cooperative banks.

These developments have been driven by the low interest rate environment, increasing regulatory requirements and also through fintech companies, who are forcing established banks to move outside their comfort zones through new technologies and business models. These developments will continue into the future. (You can find more information about fintech companies on the zeb.Fintech Hub.) A short-term recovery of the business environment is not expected.

All in all, the future of the financial sector looks bleak. Fewer and fewer young people are deciding to pursue vocational training as a bank clerk and many others are leaving the institutions as soon as their apprenticeship finishes. In addition, the need for tech-savvy talents has continually grown in recent years and will continue to do so. While the classic field of activities of a staff member in banking in the past mainly involved direct customer contact, the demand and scope has become much more diverse and complex. The trend is towards services on demand. This means that dealing with technology and software is just as important as a continuous readiness to learn. One thing is for sure: the future of banks will be determined to a large degree by the staff of tomorrow.

 

Recruiting talents from generation Z
The pressing issue is how these attractive talents can be recruited and tied for the long term. In recent years, companies have oriented themselves to the desires of generation Y: Flexible working hours, home office and Facebook at the workplace—a combination of working and private life in favor of self-managed work.

However, the next generation dances to a different tune. Its members (from approx. 1995) are summarized as generation Z and have grown up in a fully digital environment. They are considered to be realistic, informed and individual. They make strong distinctions between work and private life and attribute less importance to a suitable work-life balance than generation Y before them did. Instead, they are motivated by career, homemaking and family planning. They demand clear structures, permanent employment contracts and suitable pay.

This means that for banks to recruit talents from generation Z, they must be capable of offering potential staff long-term perspectives. This is closely interconnected with the issue of security – including mere workplace security, clear specialist and leadership development opportunities, and the options of structured career paths.

With this in mind, contractually binding retention measures in the form of junior or trainee programs – in which banks and employees are bound to each other beyond normal employment contracts – can be attractive for banks. For example, the dual-degree program in Germany, in which talents complete both vocational training and a university degree at the same time, has established itself as a viable starter program – the combination of functional and practical knowledge transfer is regarded by both graduates and banks as equally valuable. The concept generally sees companies both paying talents a salary and covering their study fees. On the other hand, the talent is obliged to remain at the company for a certain period after their program has been completed. This idea serves to illustrate that upon completion of a trainee program, banks need to offer their young staff similar framework conditions for their development.

 

Retaining talent from generation Z
The half-hearted offer of one to two seminars per year, which can be selected from a small pool, is insufficient at this point for retaining freshly recruited talents for the long term. Ideally banks should actively support the individual development of their staff members. This involves challenging and developing staff but without restricting or patronizing them: it amounts to a balancing act in itself.

Institutions of the financial sector should create framework conditions that allow their young staff members to work independently, creatively and based on subjects. In this context, institutionalized development measures with clearly defined aims are one of the most effective ways to motivate, challenge and retain staff for the long term.

Internally organized subject groups based around the idea of think tanks are one option that allows staff members to develop regardless of their hierarchy level and function within the company. This kind of model could work as follows: besides the activities that an employee has to complete according to their job description, the bank provides a certain time frame. Within this time, the employee can freely develop themselves, topics or projects. That way, if an employee develops an interest in a particular topic, they can pursue it either alone or together with colleagues who have similar interests. The selection of topics should be as free as possible – from marginal process enhancements up to the analysis of new technological trends. Because staff members can join in on any topics, those topics that are interesting for many people or have a major impact grow and gain dynamics.

There are many diverse challenges that arise from this kind of partially flexible organizational structure. However, the example of companies such as the US software provider Valve Corporation, which has acted successfully without formal bosses and clear hierarchical, organizational structures for over 20 years, shows that flexibility and structure do not need to be contradictory. However, whether the methods of a software developer from the American west coast can be transferred to traditional German banks has not been proved yet.

Considering the current situation that the financial sector finds itself in, which has become unpopular for innovative and motivated talents, a rethink seems long overdue. Traditional ways to attract and retain potential talents have reached their limits. Now, new paths must be taken to make banks attractive as an employer again.

This article has been published on BankingHub by zeb.