How the financial services sector can win the war for tech talent
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As financial services continues to ride the digital transformation wave, there is a big problem emerging: recruiting the tech talent required to achieve the scale of change needed.
Quite simply, the tech talent pool is not deep enough to provide the skills – from software engineers and developers, to AI experts – that every business demands. And up against heavyweight competition from tech giants like MAMAA (Meta, Apple, Microsoft, Amazon, and Alphabet) as well as the lucrative rewards on offer from tech startups, the financial services – and fintech – sector has a challenge just staying in the fight without a fundamental shift in their offering to potential recruits.
That means going way beyond parity in pay and benefits – though that must be a given – to focus on areas like building the right culture, promoting diversity and inclusion, changing the mindset of management when it comes to the role of tech, and creating a real sense of providing opportunities where individuals can excel, thrive, and achieve a sense of belonging.
You can’t compete without the basics
For those familiar with Maslow’s Hierarchy of Needs – the idea that people are motivated by five categories of needs from physiological at the most basic, through to safety, love, esteem, and self-actualisation at the top – the foundation of that pyramid in this context is the necessity to get the compensation levels right; the basic physiological needs if you like.
A business will never be able to hire the talent it needs if it does not match the tech sector for pay. There is a significant premium for tech talent, however, and the pay structures within financial services don’t always allow for that premium to be recognised. Banks already heavily differentiate the pay for their infrastructure roles versus their ‘front-office’ revenue-generating roles. In contrast, technology companies place a significant pay premium on their development and product roles as well as eligibility to lucrative equity programmes.
Benefits are also part of that baseline and the offer of long-term incentives can be important, but it’s worth highlighting that if someone wants to join a tech start-up versus a traditional financial services company, it’s likely that the established business will not be able to compete with an employee value proposition which could be offering a huge equity component. There is no point putting in effort to try and attract talent that values that type of reward over everything else.
Other incentives like the flexibility to work from home should also be in the same baseline bracket. If a financial services business expects its tech talent to be in the office every day, it can half its potential pool of recruits.
If parity is achieved at this basic level, financial services businesses must then look further up Maslow’s pyramid for opportunities to differentiate themselves as a potential employer.
One of those opportunities is a reappraisal of the company culture.
Many financial institutions still treat technology as a cost rather than a product.
Change the culture
Many financial institutions still treat technology as a cost rather than a product. For the tech sector it’s very much “tech is our product”.
If you think about how a bank is often structured, their products are their financial instruments and the bank arranges itself around those financial instruments. Whereas for a tech company, the products are the tech platforms.
Financial services businesses must start to think about how they can put their tech talent front and centre. It’s a fundamentally different way of thinking that will excite and attract tech talent.
Implementation of a dual career track consisting of management and professional paths goes a long way towards motivating employees in roles that often shy away from management responsibilities but make up for it with their expert knowledge to progress through the organisation.
The mindset of the management has got to want to bring in change too. We are starting to see more tech positions in the C-suite. And while traditionally it has been for Chief Information Officers focused on the running of the tech infrastructure, there is more of a trend now for Chief Technology Officers who are more involved with the front end of the business; appointing a CTO is a real statement of intent that potential recruits will acknowledge.
Some pockets of financial services are more advanced in this culture development than others and may have deployed agile across their tech business units and functions – some of the consumer-focused banks for example, and the challenger banks – which all serves to make them a much more interesting career proposition for younger tech talent than legacy businesses.
Another key cultural change is how reflective the workplace is of the tech talent it wants to attract. This is where a genuine commitment to diversity, equity, and inclusion is important, as well as a track record on ESG that stands up to real scrutiny.
These are all factors which can help a financial services business stand out in the tech talent war and move up Maslow’s Hierarchy of Needs, but how can it get to the final level of self-actualisation – or helping employees really fulfil their potential?
Some businesses are still running systems that have their roots in the 1990s.
Turn your weakness into a strength
Perhaps financial services’ greatest weakness could also be its greatest strength when it comes to attracting tech talent. There is no shortage of legacy infrastructure in financial services – some businesses are still running systems that have their roots in the 1990s – but this could be a major selling point for new recruits eager to make their mark. If, as a software or programming engineer for example, you’re looking at a big tech company – how much change can you implement versus the massive change that is required in financial services?
There is a real chance to make your mark as a young developer. And a lot of tech roles being hired into financial services are hugely exciting in terms of revolutionising a whole payments system, or building a platform that could be transferring billions of dollars a day in trades. Often financial services has struggled to communicate this message to aspiring new talent.
Our Unfiltered opinion
By building the right culture and environment, and selling the genuinely transformative opportunities they can offer tech talent, financial services businesses can compete.
It’s about a business providing potential employees with the opportunities to thrive, have belonging, purpose, and the chance to deliver on their full potential. These are invaluable recruitment - and retention! - weapons that go far beyond the traditional recruitment incentives of pay and benefits.
Brought to you by Aon
Aon is the headline partner for the upcoming 11:FS Awards and is helping us celebrate the products, brands, and people who have made financial services better for their communities this past year.
As a leading professional services firm specialising in risk and human capital solutions for financial services, Aon believes that the landscape of the industry is evolving at pace, and they take pride in recognising those who are at the forefront of this transformation alongside 11:FS.