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Is Your Human Capital – Your Bank Capital

By Extraco Consulting

Undoubtedly, a lot has changed in the banking industry in the past three to five years. In fact, the rate of change could be the highest rate of change that the banking industry has seen so far. From delivery channel preferences, customers wants and needs, and continual regulatory change, to the ideal banking space, the banking industry is continuing to evolve on a daily basis.

Customer traffic in bank lobbies is continuing to decrease; however, customer touch points are increasing and improving. Since customer traffic is still shifting and customer preferences are constantly adapting to available technology, what are you doing on the personnel side to adapt to omnichannel? As delivery channels change, the type of employee and the connectivity to the customer needs to be revisited. It may take community banks more than just great customer service to be seen as competitive in today’s banking environment.

Banks need to be hiring a new type of employee for open positions. The mindset of hiring for banking experience may no longer be an asset for an applicant. It can actually work against an applicant because they can be set in their traditional banking ways. Most banks hire to fill vacancies, instead of hiring or placing an employee to match the job tasks of the role required for a business need. Hiring just to fill a job is not as important anymore. Banks can function with fewer employees, but more highly skilled generalists that are good negotiators and not just order takers. The key, is to hire skilled employees that can identify a solution for the customer and provide a product to fulfill the customer’s need, no matter what channel a customer is choosing to bank through – in branch, over the phone, on the bank’s website, through mobile chat, via online chat or a combination thereof.

If banks are hiring a new type of employee, then it is safe to assume that traditional recruiting practices will need to be enhanced. Since a bank can operate more efficiently and with an enhanced customer experience with fewer employees through a universal or full-service employee role, then recruiting practices should be expanded to validate the candidate’s true potential to be a highly skilled generalist. Banks need to devise a recruiting program in which its process produces high-level thinkers, a willingness to learn and flexibility. This will build depth in the talent pool when a turnover occurs. For instance, interviewing a candidate once may no longer be sufficient. In fact, banks may want to add a project, presentation or a short case study for the candidate to demonstrate critical thinking skills. It is important that the project does not require banking knowledge, as the most qualified candidates will typically not have a banking background.

Admittedly, fewer employees will result in more valuable employees. Conversely, a turnover will cause more pain than it did in the past. Banks need to do all that they can to minimize turnover, especially in retail banking, which is where most bank turnover occurs. What are you doing to ensure that your human capital is ≥ your bank capital? Banks can’t just hire and turn employees loose; instead a new generation creates new challenges. Banks need to have a formalized training program with supervised internships, mentoring programs and career path conversations. The key to success is to measure mentoring and career advancement, with statistics to support the investment in human capital. If you choose to focus on increasing the value of your human capital, it is important to develop engagement monitors to implement and “inspect what you expect” from your retention plan and strategy.

Undoubtedly, very highly capitalized banks reduce their business risk. It may be time to make a balanced investment in your human capital, just as you would to your working capital. Community banks need to do more with less, which means an investment in human capital is vital to survival and success in today’s banking model. In order to be successful at increasing the value of a bank’s human capital, it takes a unified, robust approach to hiring a new type of employee, enhancing recruiting practices, building career paths for employees and creating engagement monitors to track the bank’s progress.

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