By Alexander Jones, International Banker
With branches closing down forever, customers shifting into digital banking in droves and social-distancing measures drastically altering the banker-customer relationship, the major changes the coronavirus pandemic has inflicted on the global industry have been clearly observable. As for the banking workforce, COVID-19 has had seriously profound implications—ones that are set to resonate well beyond the recovery from this pandemic, perhaps even permanently.
Even before the worldwide outbreak of the virus during the first quarter of 2020, remote work as a formal arrangement between employer and employee had been comfortably on the rise. But as has been the case with virtually all industries, the pandemic has made it nearly impossible for banking staff to travel to their branch or office locations for a day of work. The option to work from home (WFH) has become the obvious choice for both employers and employees with social-distancing restrictions mandated across much of the world for more than a year.
While a few employees continue to work in-branch to perform vital tasks, largely on a rotational basis, it has become clear that most employees would rather WFH on a more permanent or semi-permanent basis. According to an article from KPMG published in July 2020 entitled “Workforce transformation holds huge possibilities for banks”, discussions with banking organisations found that only 20 percent of their employees wanted to return to the office full-time, a further 20 percent preferred a hybrid model in which staff have the option of working from the office and remotely, and the remaining 60 percent would rather remain working from home, coming into the office for special meetings or events or when face-to-face collaboration was required. And according to a McKinsey survey, 77 percent of employees—rising to 82 percent for finance-industry workers—have expressed the desire to continue working from home, larger percentages than prior to the crisis.
These trends do raise the pertinent question of whether bank employees will ever return to working arrangements similar to the pre-pandemic office/branch presence. Or is WFH, at least for a few days of the week, now a permanent reality for the banking industry? Certainly, banks don’t appear to be making any long-term decisions regarding the future of work at this stage. Nonetheless, some are still devising approaches to return to work, with some employees already heading back to the office, particularly within the risk-management and trading divisions. But with digital banking drastically on the rise, there still seems to be limited need for branch staff to be physically present, with a gradual safety-first approach continuing to be adopted by most financial institutions, thus ensuring employee wellbeing is prioritised.
In March 2020, Gartner’s survey of 317 chief financial officers and finance leaders found that 74 percent would be moving at least 5 percent of their previously on-site workforce to permanently remote positions post-COVID-19. Gartner followed this up in June with a survey of 127 company leaders—representing human resources (HR), legal and compliance, finance and real estate—that revealed that 82 percent of respondents intended to permit remote working some of the time as employees returned to their workplaces. Furthermore, nearly half (47 percent) said they intended to allow employees to work remotely full-time, while some organizations would implement flex time as the new norm—with 43 percent of survey respondents confirming that they would grant employees flex days and 42 percent flex hours. Gartner also expected that 48 percent of employees would work remotely at least some of the time in the post-pandemic world, compared to 30 percent before.
Such changes also strongly suggest that the very essence of banking leadership and employee management will have to evolve in response to workers’ growing preferences to stay at home in order to ensure productivity does not dip during this transitional period. That said, some observers have found that productivity actually rose in some parts of the world after WFH directives were introduced “This may have been a short-term ‘sugar hit’, with productivity flattening somewhat as the pressures of combining work and home life continued,” KPMG noted, however. Nonetheless, fellow consultancy PwC (PricewaterhouseCoopers) suggested that to unleash the potential of their workforces, banking leaders should implement “good virtual practices that engage their teams daily, model healthy habits and behaviours, encourage adoption of digital tools, focus on outcomes and results (versus inputs), offer clear direction and support, facilitate problem solving and increase visibility of performance.” PwC also predicted that managers would be proactive and creative in their communication methods with employees, such that a sense of connection and community among teams could be maintained.
Gone will be the opportunities for brief chats in passing with team members, and the lack of physical interaction may influence how teams react and respond to the business decisions being taken. “They have to strike the balance between creating autonomy and accountability whilst providing the structure, tools and support necessary to be a leader,” KPMG acknowledged in July 2020. “Equipping leaders with the people and management skills for a changed future will be a key driver of success.” Supporting staff across a wider geographical network will surely present its own challenges, and while tech solutions such as video conferencing and messaging apps can mitigate many of these concerns for leaders, the softer side of management—ensuring employee wellbeing and happiness and being aware of potential mental-health issues—may be a tougher task to perform than it was prior to the pandemic.
Furthermore, it is increasingly apparent that banking leaders need to make the necessary adjustments in good time to ensure that their banks continue to maintain pre-COVID levels of productivity and their employees remain sufficiently engaged and motivated in their work. To their credit, banks seem to have managed the transition quite effectively. “The COVID-19 pandemic brought about a huge experiment in widespread remote working,” said Elisabeth Joyce, vice president of advisory in the Gartner HR practice. “As business leaders plan and execute reopening of their workplaces, they are evaluating more permanent remote working arrangements as a way to meet employee expectations and to build more resilient business operations.”
With such permanent changes on the horizon, fresh solutions will need to emerge to ensure business continuity in a new working environment as well as the safety of banks’ remote workers. For instance, the US human-resources software firm Ceridian HCM introduced its proprietary product Dayforce, a human-capital-management (HCM) solution that “combines payroll, HR, beneﬁts, talent and workforce management in a single cloud application to power the future of work”. One of its most pertinent features is the Dayforce Employee Safety Monitoring, a business-continuity planning technology to help employers maintain critical business operations while supporting the safety of their employees. It does this by understanding where employees are working, their potential for exposure and their health statuses, as well as keeping emergency-contact information updated and accessible.
Many US banks have adopted solutions such as Dayforce to ensure that business continuity can be maintained. “When COVID hit, I really said to myself, ‘This is a time to pivot, to offer options, to be open to how business can be done differently and how we can serve our employees differently,’” Diana C. Derbas, human resources director and senior vice president of New Orleans-based lender Crescent Bank, recently acknowledged. Dayforce helped Crescent by providing an all-in-one solution for staff during this time of uncertainty by “making it easier for them to access wages when they needed them—whether for an unexpected expense, to pay debt down faster, or just to cover day-to-day living costs.”
But whether every bank employee will continue to be employed in a post-pandemic world remains to be seen. Banks across virtually all major economic jurisdictions have announced layoffs, mostly in concert with an expansion in technological capabilities as lenders adjust not only to the restrictive demands forced on them by COVID-19 but also the rapidly changing needs and preferences of consumers, who continue to seek more convenient, accessible digital banking solutions. Five of Canada’s six biggest banks, for instance, have slashed their workforces by 4.4 percent in the 12 months through January 2021 to a combined total of 291,409 full-time equivalent employees. This is also 5.2 percent lower than the third-quarter 2019 peak, just before the global outbreak commenced.
Automation and artificial intelligence (AI) will also radically transform the banking workforce over the next decade, with every area of the bank likely to be affected. Some positions will be made redundant, while others will have to adapt to work in a complementary way with robots and algorithms. “How automation is applied to the organization, and the upskilling required to enable it, should be led and owned by the business in order to drive impact, offer the right support to people and realize anticipated benefits,” according to PwC. “Automation and digitisation have also been pivotal to shifting to remote working and meeting productivity targets, which will continue to be an important focus for banks.”
In the meantime, both banks and bank employees will continue to make the necessary adjustments to abide by the “new normal”, which for many seems to be a major departure from pre-COVID times. As KPMG acknowledged, “The ‘new reality’ workplace will not look and feel the same and won’t be a return to how things used to be.”