When the COVID-19 pandemic struck in early 2020, the global banking industry had already been undergoing massive change. In the previous decade, the branch footprint had shrunk by about 20 percent in the United States and by 60 percent in Nordic countries. Consumer needs were evolving rapidly, as people came to expect more and more from their online banking services. And as banks digitized their front ends in response, they also established next-generation technologies in the middle and back offices to help save costs and provide better services.
All those changes had lifted people issues to the top of banks’ agendas. Our pre-COVID-19 research on the future of work suggests that almost all roles in bank branches will decline over the next decade. The average branch size is projected to shrink from six full-time equivalents to four by 2030.
The global pandemic has accelerated those trends and has added urgency to the discussion. In the first several months of the crisis, banks’ HR leaders successfully adapted their organizations and ways of working; banks and their workforces responded remarkably well. Banks quickly pivoted to a digital-first model for sales and service, scaled up remote advice, and reshaped physical distribution. Accordingly, talent was swiftly redeployed from teams with surpluses to teams with shortages. Now, banks are sifting through the changes brought about by the COVID-19 crisis to understand which ones are temporary and which are permanent.
In late 2020, we spoke with several banks’ chief HR officers (CHROs) about their experiences during the pandemic. Unlike prior crises, banks have had to make more creative use of various levers to deploy talent dynamically and to build future workforces, including reskilling (training an employee for a new job), upskilling (training an employee on additional skills in an existing job), and redeployment (assigning an employee to a new task). Over the past year, banks have been reskilling their workforces rapidly and at scale, taking advantage of the efficiencies available from skill adjacencies (that is, skill sets from previous roles that are complementary to those required by new roles). They are also building infrastructure to support effective upskilling and redeployment (including learning factories and job-matching platforms). In this article, we share some of the insights these banks have learned, and we outline how banks can use them to take advantage of an unexpected opportunity to build the workforce of the future—today.
How banks have adapted during the crisis
The COVID-19 pandemic has had devastating effects on people’s lives and livelihoods, and banks have seen much of this in their work to support customers during the pandemic. As a result, banks’ organizational structures have been affected in three ways. First, the crisis has accelerated the shift from hierarchical structures to agile ones, in which individuals have autonomy, leaders delegate to empowered teams, and relationships are less formal and more flexible. For example, several banks have started to organize their teams into tribes—small groups dedicated to single tasks—trusting them with the resources and approval rights needed to accomplish each task. Agile teams are renowned for creating high-quality customer experience, especially in the omnichannel environment.
Second, banks have redeployed talent from surplus to shortage areas to help save costs and bolster reputations. Some of these redeployments have required only minimal, quick training. But we have also observed massive shifts, from closed branches to customer-service operations. For example, Bank of America redeployed more than 23,000 employees to support new business needs, including implementing the company’s Paycheck Protection Program.1
COVID-19 should not be seen as an opportunity to think about the next phase of banking but rather how we deliver financial products to people—this is an opportunity for digital but also for new products.
Finally, banks have offered training on new skills that people can use in their current jobs (upskilling) or for new jobs (reskilling). For example, banks have upskilled financial advisers to better provide services remotely, reskilled tellers to become “universal” bankers, and reskilled other branch employees to perform back-office roles. Universal bankers have both sales and service responsibilities, serving ably as both personal bankers and tellers, among other functions. Our research projects 20 percent growth per year for universal bankers through 2030.
Lessons learned: How to build the workforce of the future
McKinsey research shows that redeployment with effective reskilling is 20 percent more cost-effective than “hiring and firing,” as it reduces the number of new hires and the number of layoffs needed.2 It also boosts an employer’s brand reputation by building a healthy employee value proposition marked by robust investment in people. However, to many HR leaders, reskilling has always seemed like a complex and lengthy process that requires a lot of preparation and shows impact only in the medium or long term, which has slowed its adoption by large organizations.
Our conversations with bank CHROs who have thrived during this crisis yielded five lessons on how to reskill successfully.
1. Upskill proactively based on strategy needs and industry trends
Before initiating any upskilling or reskilling effort, it’s important to know what the effort is for and what skills are in scope. Based on forecasts of shifts in the role mix, banks have focused on critical skills for specific roles (for example, remote skills for advisers) and for general needs across roles (for instance, adaptability skills). Banks that have achieved productive reskilling have designed the learning objectives in close alignment with their strategy.
As part of a US retail bank’s restructuring, leaders wanted to foster the employee behavior and mindset needed to support a customer-focused strategy. It prioritized a set of critical skills, such as leading yourself (entrepreneurship, self-awareness, and so on) and engaging others (developing relationships, mobilizing organizations, and so on). Ten thousand employees took a self-assessment on the critical skills and received a customized curriculum and delivery plan based on the skill gaps shown in the assessment. As a result, the bank was able to reskill many of the branch employees into universal-banker roles by equipping them with basic general consulting skills, as well as enhanced technical skills.
In another example, ING identified the “big six” distinctive and foundational people and organizational capabilities that the company felt were needed to stay relevant—now and in the future—to retain competitive advantage, and to ensure trust from its customers, regulators, and employees. The six capabilities (customer experience, data fluency, leadership, nonfinancial-risk management, cybersecurity, and operations management) serve as a compass to steer the company’s talent management where it will create more value for the organization and for its customers. ING’s HR business partners play a crucial role in developing the capabilities by facilitating strategic conversations with managers and by introducing the big-six capabilities at key moments of the employee cycle to help improve business performance.
2. Use skill adjacencies for effective reskilling
Another lesson learned is to analyze skill adjacencies before launching any reskilling effort. Finding source roles with the closest skill match to destination roles can minimize reskilling needs and enable quick reskilling that focuses on missing skills. One example of quick reskilling is microskilling, which provides ad hoc training (a maximum of one or two days) for specific skill sets.
During the COVID-19 crisis, we have seen banks train tellers to become customer-service reps and train customer-service reps to become universal bankers, thanks to the skill adjacencies of these roles: high-performing tellers possess the customer-engagement and influencing skills that customer-service reps require; and high-performing customer-service reps have the understanding of bank products and services that is needed from effective universal bankers.
Maarten van Beek, HR director at ING, shared an essential learning: “It is very important to look at what people actually do and not focus only on job descriptions or functions. We moved people from the branches to the know-your-customer [KYC] team because the underlying skills needed were very close, if not identical. However, if you had looked at the job description, you would not have seen this; on paper, these people had nothing in common.”
At every level, we train people on the most relevant of the six capabilities and help them understand what is the impact on their job. This has a lot of implications, as people see the bank is changing. Now, we can build the bridge and help them understand how to stay relevant at the bank, and in the labor market.
With a reduced branch footprint, a midsize European bank needed to restructure its branch workforce of more than 3,000 people by shifting surplus tellers to relationship managers. To identify skill adjacencies, the bank deployed a top-down selection process that used a survey to assess commercial skills. Based on the survey results, bank tellers were divided into three groups, with three types of training. Most were in the first group; they passed the minimum requirement and received basic KYC and interpersonal training to handle maintenance of the customer-relationship-management database, KYC verification, and so on. The second group consisted of people with higher commercial skills; they received training in core over-the-counter products, such as credit, debit, and current accounts, as well as training to promote digital channels. The third group included the top 20 percent of performers on the commercial-skills survey. They received training on the entire customer journey to sell a variety of products, including becoming certified to sell insurance and investment products.
By basing these distinctions on skill adjacency, the bank was able to focus training on the highest-potential employees and employees were provided opportunities to explore various career paths. The program successfully expanded the learning culture across employees, extending the training on over-the-counter products to other tellers.
3. Build a scalable learning infrastructure
When speaking with banks about reskilling, many of them rightly emphasize the need for investing in large infrastructure and systems. This would ideally contain several elements, such as the skill inventory, an internal talent market to encourage mobility and reskilling needs, a central library to offer online and offline training, and a learning factory to build reusable learning content. New tools can help companies build the skill inventory.3
To reskill its 3,000 tellers, the midsize European bank built a new, digital corporate academy, where learning materials were migrated and delivered through digital channels. To make the learning journey easier, it also transformed legacy learning modules (for example, shorter, two- to four-minute instructional videos replaced older, two-hour videos).
The European bank also developed a reskilling tool to help match employees to new roles for when the bank needs to hire internally. The tool allows the bank to select employees by various criteria, including skill, background, education, and experience. Based on the requirements of the new role, managers or HR can use the tool to select targeted trainees and assign them the right training.
The earlier-mentioned US retail bank took another approach and applied a future-skill framework, which we call the DELTA (or distinct elements of talent) survey, to guide individual skill assessment and learning design. The DELTA survey is a self-reported assessment of the future needs for 56 critical skills across four dimensions: cognitive, interpersonal, self-leadership, and digital. This reusable framework creates an infrastructure foundation with skill grids, assessment tools, and learning content. The bank used it to develop a set of decision criteria to prioritize essential skills (saving other skills for a follow-up curriculum) and built a structured approach to evaluate and select training courses.
During 2020, many banks had to move quickly to train employees and had little formal infrastructure in place to do so. For example, at ING, like at many banks, the process for onboarding and training new staff typically took about a month. In 2020, the HR team quickly set up a process to match people to jobs and, by focusing on the most frequent and on-demand abilities, set up a training program that took only two days. Based on the learnings, the bank is now upgrading its “talent fluidity matching” platform—on which both teams and individuals can interact and match—and is continuing to expand other infrastructure.
4. Invest in a learning culture
All of the CHROs we interviewed underlined the critical role that culture plays when implementing quick and efficient reskilling. In their experience, though all the measures presented above are important, none is as crucial as ensuring a homogenous culture. Indeed, given the pressure imposed by the COVID-19 crisis, banks have had to reorganize their workforces quickly. This has left little time for employees to acclimate to a new culture and to new ways of working before they need to be productive.
However, creating a homogenous culture does not often come naturally and usually requires considerable up-front investment. Banks that have done this well typically use a mix of capability building and immersive experience, as well as a consistent, inspiring communication plan that starts with a clear definition of joint purpose and values. One bank that upskilled 30,000 employees within 18 months designed a thorough communication and engagement plan across nine channels, including email, webinars, informational posters, leadership forums, and the company’s intranet. Communications are sent out weekly, biweekly, monthly, or quarterly, and both senior leadership and direct managers provide messages.
Building a homogenous learning culture also requires a consistent, ongoing commitment. The more that a bank conceives of it as a journey rather than a one-time training, the better the results will be. The leaders at the midsize European bank understood that shifting roles would not be a short-term effort and that it would require that employees maintain their passion and energy. To help, the bank deployed two tools. First, it established a buddy program, in which product specialists were assigned to reskilled tellers to help provide knowledge and skill support. Second, it sent barometer surveys every three weeks to gauge employee engagement and their specific learning needs. These tools helped employees feel that they were on a consistent learning journey, which in turn helped improve morale.
Similarly, the US retail bank, which wanted to reinvest in its employees, created a homogenous culture of its own, with the twin goals of helping employees thrive in the future workplace and helping the bank shift to a more customer-focused culture.
5. Start with leadership and ensure sufficient talent developers
These initiatives require committed leadership to succeed. The workforce of the future will need leaders who are similarly advanced—people who create a positive and nurturing growth environment, rather than simply telling people what to do, and people who communicate with employees clearly and transparently about the company’s change programs. One executive at ING explained that leadership “is about letting people see what are the different doors and helping to open them.” He added that it takes courage to start those initial conversations knowing that a team’s best employees might need to move to other areas. While these conversations may not be perfect, he said, they will go a long way toward helping employees both understand their value proposition and think about their future.
The success story at the midsize European bank was also built upon strong leadership champions. During the bank’s annual presentation to shareholders, the CEO spoke about the importance of the learning journey and the need to shift roles, and the chief commercial officer highlighted the learning programs in his business priorities. Both efforts helped signal to employees that this was an enterprise-wide strategic priority and that leaders truly cared about talent development.
In that regard, it is also important to have “talent developers,” people who are able to identify, assess, and train employees as needed. These could be HR business partners, functional leaders, or middle managers. Talent developers help leaders translate the direction of the business into talent requirements. They can also help identify the right people for future needs and, with support from learning and coaching experts, can help them get there.
The financial-services industry has faced dramatic disruption over the past decade, with significant implications for the talent needed in the future. Organizations that move early and decisively in a crisis do best. The COVID-19 pandemic has forced banks to challenge the status quo and to accelerate moves. Talent leaders have been pushing for some of these changes for a long time, such as dynamically redeploying employees to roles with increasing demand, as well as providing employees with diverse career paths and with corresponding upskilling and reskilling support. Equipped with the right mindset and tools, talent leaders can expand on these changes and get ahead of competitors in building the workforce of the future. Doing so can provide banks with the opportunity to think about not only the next phase of banking but also how to deliver financial products to people. It can also provide an opportunity to exploit digital capabilities and to start thinking about new products, services, and ecosystems. Today’s leading banks are already building tomorrow’s leading workforces. Are you ready to join them?