New ways of working in banking and financial markets

At the beginning of the year, I was invited by the IBM Institute for Business Value (IBV) to join 44 IBM global experts—members of the Industry Academy and Academy of Technology—to reflect on key trends driving investments and actions in 2021. We identified the following eight trends that will likely dominate and push banking and financial markets leaders to move toward new cloud-based business architectures:

• Muted financial performance
• Accelerated digital adaptation
• New cloud-based business architectures
• Escalating competition
• Operational resilience challenges
• Increasing open and free data
• Security and fraud risks
• New ways of working

Let’s explore why new sources of talent and collaboration models emerge as financial institutions are shifting from the traditional front-office to back-office segmentation, and guide operational transformation to new business architectures.

 

Banking is one of the oldest industries and has weathered significant transformations from the great depression to the global financial crisis, and still faces challenging business environments. One thing has remained constant, until now, the propensity of financial institutions to work from centralized locations and concentrated financial centers. However, this is changing.

When the pandemic hit in 2020, banks were forced to temporarily close physical branch networks, asking customers to use digital channels. At the same time, most bank employees were required to work from home.

Recently, Business Times estimated that 70% to 90% of banking staff transitioned to remote working within days of government lockdowns, paving the way for accelerated use of virtual communication. Banks quickly realized the possibility to enable a remote workforce, while providing better and consistent client experiences through digital channels.

The extended network of bank vendors and contractors were also forced to adjust their ways of working. Suppliers offering zero-touch digital solutions had a clear competitive advantage.

Internal and external digital collaboration quickly became the option for conducting banking business in the short term. Today, long-term sustainability concerns remain, but they can be addressed by a change in business culture, revisiting risk management frameworks, and leveraging exponential technologies.

The resilience and adaptability of a traditional workforce and operations have been jointly tested, elevating the chief human resources officer (CHRO) role as an important counterpart to the chief information officer (CIO).

Enabling a flexible workforce to collaborate virtually and leverage intelligent workflows

The pandemic put the CHRO in the boardroom spotlight to navigate business uncertainties as   employees’ and clients’ safety and wellness became mission critical. This renewed focus on how people work and collaborate also intensified the HR realization of the need to engage talent and source the skills required to drive through an accelerated digital adaptation.

CHROs are pointing to a new technology stack that enables collaborative models of “working from anywhere.” Access to centralized artificial intelligence (AI) models without duplication of business-critical datasets can be enabled on secured cloud environments that include digital workers (see, Digital Workers and the Hybrid Workforce).

As banks get more comfortable with employees working remotely, the requirement for office space and fixed workstations may be significantly reduced. All the benefits of a remote workforce can be achieved,  provided new collaborative models are implemented with the adoption of technology in a way that complies with a risk-aware design and delivers a secured experience.

Banks are asked to take three strategic actions:

• Enhance value propositions for talent acquisition. Banks are competing with Big Tech firms to source a skilled workforce outside of the mainstream (gig workers, part-time workers) without constraints of geography. They need to enhance their value propositions by implementing flexible work and modular compensation schemes. Remote talent acquisition can be supported by AI to be more personal and efficient that transforms candidate experience overall.

 

• Build virtual venues for talent development. Fast digital adoption of clients’ and employees’ expectations expose banks’ talent gap and calls for rigorous discipline to upskill the workforce and weather business disruption. Flexible learning curriculums ensure that the employees stay engaged and productive.
  
  A digital academy is a way to develop talent remotely and recognize achievements. For example, DBS Bank recently launched a digital training institute to groom tech talent, while HSBC announced the launch of a learning experience platforms and talent marketplace to help transform the digital skills across the organization.
  
  In the IBV 2021 CEO Study, “Find your essential, CEO’s in 61% of outperforming organizations noted empowering the remote workforce as their top concern in a post pandemic environment and emphasized industry specific skills 79% more frequently than underperformers.

 

• Implement new ways of collaborating. A flexible workforce enabled to perform and learn from anywhere is becoming the norm. Some banks anticipate a working from home rate as high as 50%  The key challenge is to transform operating models to fit a hybrid workplace and align with regulatory requirements, employees’ propensities, and client expectations.
  
  Unlocking the value of a hybrid workplace requires focus on a cultural environment that encompasses human development and the transparent enablement of technology. Intelligent workflows make digital workers an automated reality, boosting efficiency and reliability for reusable services within banking ecosystems. Seamless workforce interactions with AI-augment technology will become commonplace as employees shift their focus to higher-value, customer-focused innovation.

A partnership for leading workplace change

Change requires a conscious strategy and business capability to measure progress, while being well aware that the nature of change requires rethinking the way performance data is captured and analyzed. Physical, emotional, and financial well-being for a motivated, engaged, and productive workforce becomes centerpiece. Also, addressing individual staff constraints is vital, such as limited workspace at home and slow connectivity.

Many international banks have taken the first steps to provide employees with the flexibility to work from anywhere with commitment to the delivery of a valued business outcome. For example, HSBC announced its plan to enable a 40% reduction in office footprint globally.

The emerging hybrid workplace requires a partnership between CHRO and CIO to lead change at both the strategic and tactical levels. Financial institutions that think differently about the workplace and workforce talent, skills, and support will accelerate business performance, maximize return on investment, and increase employee engagement through an ecosystem of digital services, AI, and intelligent workflows.

For more insights about new ways of working, I encourage you to download the IBV paper The future of trading floors, and learn how banks can compete on cloud platforms with a remote workforce.