Consumer banking is facing daunting new challenges, but as always, with challenge comes opportunity. Technology—the right technology—can make a huge difference. And the same concepts can be applied across any industry facing disruptive change.
“Financial services have become a flash point for critical business evolution and industry convergence thanks to changing customer expectations, cloud services & computing, AI & big data, blockchain, and digital payments.” So says a new study of the banking industry by Josh Bersin, a globally recognized thought leader and expert on topics related to the future of work, leadership, and human resources.
Indeed, with competition coming from unexpected places, changing consumer preferences, and risks related to regulation, security, and the economy, the challenges are legion. Both talent and technology are vital to tackling these issues, so HR and HRIT have an important part to play. What role, then, can digitization of performance and rewards systems play to keep banks competitive?
Read on for expert opinion and a case study of how one leading global bank created an innovative digital experience for employees to attract and engage talent and drive top performance and efficiency.
Is technology alone the answer for consumer banking?
Consumer banking is an exciting place to be these days, and not always in a good way. The challenges are piling up: tech and telco companies are encroaching on the banking space, consumer demands for user-centric, digital-first, omnichannel experiences are difficult to meet, new technologies like blockchain, crypto, and AI are emerging, cyber security risks pose a constant challenge, and the regulatory climate continues to evolve. Oh, and the economy.
Does technology provide the answer? Yes, there is a technology challenge. But it’s more than that. According to Bersin, “the real issue is a capability gap and building the right internal talent.” Bersin emphasizes that financial institutions need to redesign work and culture to create irresistible employee experiences.
The banks that he calls Trailblazers—like ING, Rabobank, and Scotiabank—are those that are far ahead of their peers in terms of transformation to a new paradigm that makes them “look more like digital platform companies and much less like the ‘IT-driven service companies’ of the past.”
So it’s not only a matter of transforming customer-facing systems. Talent matters too, which makes the employee experience increasingly critical to success.
Automating the back office
According to Bersin’s research, Trailblazer banks “have a vastly different strategy for IT and product management, operations, culture, and skills.” Trailblazers have a notably different workforce composition. While traditional banks have around 15% of their jobs in IT and 30% in middle/back office jobs, says Bersin, Trailblazers have more than 20% of their staff in IT/product operations and only 24% in the middle/back office. To achieve this they have “productized” and automated many of the middle/back office processes.
This aligns with what we see in beqom financial services customers. It’s not just front office, customer-facing systems, and processes they are overhauling, it’s also core business processes—like compensation and performance management—that banks are transforming.
A case in point is one large global bank that was looking to address two challenges.
Using technology to transform performance and meet talent goals
The first challenge for this market-leading bank was to enable its leaders to effectively manage performance. The HR team clearly understood that performance was key to how their people will grow, engage, and deliver results, enabling the company’s wider business vision to drive growth.
The company had the ambition to transform the way performance is understood and managed, and to transform performance management into an everyday, line leader-driven business process, one so embedded that it would feel like a natural part of the way they work.
By implementing beqom Continuous Performance Management (CPM), the bank brought performance and continuous feedback into the flow of work, making performance management a process owned by its line leaders, not HR. At the same time, the new platform served to engage employees throughout the organization to take ownership of their development. The initiative succeeded in elevating the employee experience while making processes more efficient.
The team deployed beqom CPM’s Office 365 integration so that employees and leaders never needed to leave their email to carry out all the key processes of this new performance engagement experience. Within one week, 100,000 goals were created on the platform.
How does the new technology relate to the talent challenge? When employees get continuous feedback and coaching from managers, they are able to improve their performance on a daily basis and stay focused on clients. Meanwhile, the engaging user experience helps the company to retain top performers and thereby drive performance and grow profits.
Leveraging compensation technology to drive growth
The next challenge was in managing compensation, specifically using compensation strategically to attract talent and drive growth, while at the same time controlling costs.
The bank believed that a strategic, people-centered compensation system is one of the most effective ways to retain a company's top performers and grow profits. A balanced compensation plan that rewards and incentivizes performance can also improve recruitment and retention efforts, positioning the company to achieve its business goals.
The company sought a cloud-first compensation management application that could plug seamlessly into its HCM ecosystem and integrate tightly with the beqom CPM solution. This innovative approach—integrating the compensation and performance systems—means that personalized rewards can be aligned to real-time data on employee performance, feedback, skills, behavior, and goals. The result is that rewards can be more meaningful and relevant, giving employees a feeling of purpose and engagement.
The bank deployed beqom Total Compensation Management (TCM) to manage total rewards for more than 50,000 employees globally. Using beqom, the bank was able to consolidate all compensation processes, including salary and promotion increases, short and long-term incentives, and cash awards, across all international offices.
beqom TCM provides a cross-platform rewards solution that works seamlessly across the web, desktop, and mobile. The solution provides contextual, timely, need-to-know information to keep employees informed and engaged. Managers are empowered to make informed pay decisions thanks to the availability of both employee compensation history and continuous performance management feedback, including employee mobility data (international assignees and expats).
The streamlined compensation processes yielded increased productivity while providing pay transparency and equity.
Integrated performance and rewards
By integrating the continuous performance and compensation systems, the bank was able to align personalized rewards with meaningful behaviors, goals, and skills. The tight link between performance and reward incentivizes managers and employees to engage with the performance and feedback process, creating a virtuous cycle of feedback, reward, and improvement.
Win the financial services talent wars
The time to modernize performance and rewards is now. Bersin’s research found that the Trailblazer banks are not only more profitable and financially successful, but they are also accelerating their lead because they have become what he calls “talent magnets.” According to Bersin, “Highly skilled technical, design, and engineering professionals do not want to work at ‘old school’ banks – they quickly leave.”
Now is the time to modernize back office systems and create a user experience that puts the employee at the center to attract the best talent and drive delivery.
To discover how you can be an innovation leader in performance and rewards and win the talent wars, send us a note at beqom and one of our compensation and performance advisors will reach out to show you what’s possible and make sure all your questions are answered. Make it happen!