Reuters reports that hiring in financial services has dropped considerably as banks and credit unions continue to struggle to find skilled workers. It’s a growing problem made more complex by our current state of economic uncertainty, rising inflation and a potential recession looming.
According to Cornerstone Advisors, finding qualified talent has become a top concern for most banks and credit unions surveyed, while only 19% ranked it high last year.
The growing shortage of skilled employees delays the digital transformation of the financial services industry and exposes it to increased risk. It also has the potential to squash competitive advantage, leaving behind those who haven’t yet modernized.
Institutions can’t afford that, especially during these troubling times. Let’s look at the escalating staffing challenges and what the financial services industry can do to combat it.
Why is there a pressing labor shortage in financial services?
There are multiple reasons for the talent shortage in financial services, a big one being retirement. It’s an aging industry, according to U.S. News & World Report.
According to outsourcing company Empaxis, “in less than 10 years, over 111,500 of those advisors will retire, accounting for over one-third of the industry workforce.”
Many started leaving the profession after the financial crisis in 2008 and during the recession that followed. A shift to remote work and The Great Resignation kickstarted a new wave of exits, dangling ample opportunities for change.
We’re seeing millennials fed up with the long hours and unfavorable working conditions in banking venture away from banks to work for themselves. Many junior workers have also jumped at the chance to try something new.
Who can blame them? In an internal Goldman Sachs survey, first-year analysts characterized their working conditions “inhumane,” citing 100-hour workweeks, sleep deprivation and abuse from senior colleagues.
Fintech companies and startups offer alternatives. American Banker reports that bankers are increasingly attracted to them because of their innovative capabilities and focus.
Without talented people, financial service firms face serious setbacks in digital transformation
Something’s got to give when there are too few people to handle the work. All too often, strategic initiatives like the digital transformation of banks and credit unions are stalling because of staffing shortages.
There’s heavy pressure on banks and credit unions to update legacy systems and invest in new technologies, especially those that enable them to offer remote access and more personalized services and to increase operational efficiencies. Technology has also become a necessity for securing data, dealing with increased regulations and capturing new opportunities.
But a lack of skilled, tech-savvy talent makes it increasingly hard for financial institutions to hire the help they need to continue their digital transformation.
Research from HR Financial Services also points out that in addition to needing more technology expertise, financial services firms also need to hire skilled managers who can steer and manage the change.
How investing in digital transformation can help solve AP staffing challenges in the financial services industry
To better understand the staffing challenges financial departments are currently facing, AvidXchange and the Institute of Finance & Management (IOFM) conducted an “AP Professional Career Satisfaction Survey.”
We found only 4% of respondents are fully automated with no manual tasks.
However, 61% of respondents believe a lack of tools/technology is somewhat of a barrier or a moderate barrier to their development and career advancement.
By investing in AP automation tools, AP professionals that work in the financial services industry can take on higher-level, more meaningful work, for instance leveraging newfound visibility to better analyze spending and more accurately budget and forecast for the future.
Download our white paper “How to Attract, Retain and Grow Top AP Talent Amid Economic Uncertainty” to learn more about the career satisfaction of AP professionals and how AP automation can help your company with staffing challenges.