Garnet Capital Advisors Blog

Mega banks in the United States did not anticipate seeing some of the highest rates of turnover that they've faced in decades. However, the handful of banks that make up what can be known as "mega banks" lost more than 100 of their top employees over the last couple of years. We will mainly focus on the losses that have been seen in banks in the United States, but banks in other countries are seeing a similar "brain drain" of talent. They are having incredible challenges keeping their best employees in place.

What is Driving People Away From Banking Work? 

Taking a job at one of the nation's largest banks has always been considered a prestigious undertaking. There are plenty of people who would do anything to work for one of the giant names in finance. However, many workers these days are looking for a less regulated environment to do their jobs. 

Though banks are attempting to offer higher wages to attract the talent they need to continue operations, even this may not be enough. 

JP Morgan Chase admits that one of the reasons that its expenses climbed to $77 billion this year was because of higher wages. Even still, they lost 13 of their corporate and commercial bankers in just the last year. They offset this number slightly by bringing on six new executives, but that still resulted in a net loss of seven top bankers at the company. 

Examining several top banks determined that Wells Fargo had the largest issue with turnover. This bank has been plagued by scandals uncovered by regulators in the last few years, and these issues are believed to have contributed to some of their above-normal turnover numbers. 

Wells Fargo suffered a net loss of 19 top bankers, with 27 leaving and only eight being brought on. Some of the newest talent that has come on board with Wells Fargo is now looking to try to rewrite the story of the company, and put it back on a path where customers can once again trust them. 

What Actions Will the Banks Take Now?

The need to fill senior management roles is not going to go away anytime soon for the banks. It is anticipated that the banks will have to turn to their younger employees already working within the company in order to fill some of the roles that would traditionally be taken on by someone of an older generation.

Although these younger candidates may not have as many years of experience as a typical candidate would, the banks are starting to realize that they have little to no choice but to fill their management gaps with internal candidates. There is a chance that those in the millennial generation will find themselves in leadership positions much sooner than they would have in previous years. It is an exciting time to be a younger bank employee, and have the chance to be taken more seriously by your employer, while also be promoted more quickly than in the past.

Not every bank is suffering as much as JP Morgan or Wells Fargo when it comes to talent acquisition. One bank that has done pretty well at retaining its talent is Bank of America. In fact, the company had a net gain of one in its top corporate and commercial banking team. They did lose ten bankers over the course of the last year, but they were able to hire a total of 11 more in order to replace those ten and add one additional member to the team. Bank of America has been credited with using aggressive hiring techniques to find the very best talent and offer them the benefits and pay that they expect from a modern employer.

In fact, the Charlotte-based Bank of America has gone so far as to up its U.S. minimum wage for all of its employees to $22 per hour: 

This is exactly the type of action that proves to be so attractive to candidates who are simply looking for work that will compensate them fairly for their efforts. 

Online Financial Services Threaten Banks' Bottom Line

When was the last time you stepped into a physical bank branch? Some people still regularly attend their local branch in order to conduct their banking business. However, many people - particularly from a younger generation - are simply using online banking services to conduct all of the business that they might otherwise have done in person.

The technology and service that go behind mobile banking apps are improving every single year, and many customers state that they prefer to conduct their business this way. Therefore, there is a direct threat to the bottom line of all banks that do not keep their own online offerings up to date.

Polling firm YouGov performed a survey in which they asked about customers' experiences with online banking and financial services. One of the biggest headlines that they found was that more than 2/3 of people said that they had increased their usage of mobile banking apps since the beginning of the COVID-19 pandemic.

With that kind of dramatic increase in usage, it seems likely that mobile banking apps are here to stay and will continue to grow and take a larger portion of the market share available. Thus, the hiring problem may continue to get worse and worse for large banks and physical banks of any size. These companies need to focus heavily on their mobile banking applications at this time if they intend to survive in the future.

For more information on what is shaping the financial industry today and why it should matter to you, please contact us to get some of the latest news and developments.