Challenges Facing The Financial Services Industry
Throughout the United States, many financial service firms are struggling to attract and retain workers. Employees are reevaluating their options, and some are no longer satisfied to return to the positions they held or to work in the environment they were in before the COVID-19 pandemic. The COVID-19 pandemic also pushed the industry to accelerate digital transformation. Many financial institutions are thinking strategically about whether the tools they have previously relied on are the right ones to use going forward.
Five Challenges Facing the Financial Services Industry
Based on a series of interviews with subject matter and industry experts from Oasis, a Paychex® Company, we've identified five challenges facing the financial services industry.
Filling Talent Gaps and Retaining Employees
Like most industries, the financial services sector is not immune to the "Great Resignation." The Great Resignation describes the higher-than-normal quit rate of American workers in 2021 as COVID-19 vaccinations help to ease the severity of the COVID-19 pandemic, the unemployment rate decreased, and job openings increased. Many employees are reevaluating their priorities and values, considering how their employers treated them during the pandemic, the vulnerability of the business in which they worked, and their overall satisfaction and purpose in life.
Further, the COVID-19 pandemic irrevocably changed the way people work, and the financial services sector proved it could operate with remote workers. Mobile banking transactions have risen, and call center personnel kept customer support going from their living rooms. Many mainstream consumer facilities, such as banks and accounting firms, have reduced their store hours and in-office headcount and have moved several positions to function remotely. This working style is one that many employees want to hold on to, or they may quit.
In addition, the aging U.S. population has led to increased retirees (particularly for Credit Unions), leaving skills and knowledge gaps at mid-levels of management. Employers need to compete for talent to attract and retain quality and qualified employees, sometimes against much larger firms. Recruiting and retaining talent has never been more challenging in this sector.
Mitigating Cybersecurity Risks
Cyber security involves the practice of defending computers, servers, mobile devices, electronic systems, networks, and data from malicious attacks, unauthorized access, or illegal use. The growing dependence on online technology and cloud computing has significantly increased the risks of cyberattacks. Pandemic-driven growth of the remote workforce has also increased the risks related to cybersecurity and costly data breaches. Maintaining stringent security protocols is a top priority for the finance industry to secure data and reduce cyber threats. Third-party assessments are on the rise to identify gaps in vendor security. Multifactor authentication is becoming mainstream to access and use services.
The first step in defending your business against a cyber security attack is understanding the risks associated with various forms of online activity. The most common cyberattacks you should know about include:
- H4: Phishing or business email compromise.
This email appears to resemble a legitimate request, but if you look a bit closer, you may see something suspicious about the email address or formatting of the request. This is one type of business email compromise that, when successful, enables hackers to gain access to accounts, extract private information, unauthorized process requests, and redirect funds to anonymous accounts.
- H4: Malware (adware, spyware, ransomware).
When opened, this malicious software seizes crucial files and keeps those files "hostage" until the victim pays ransom to decrypt them. Ransomware gets into a business system when unsuspecting users download materials from a compromised website, open a fraudulent email attachment, or employ an unauthorized external media device.
- H4: Social engineering (identity theft).
By impersonating a friend or a trusted institution, the attacker hopes to persuade you to divulge passwords or financial data or otherwise gain access to your computer.
- H4: Distributed denial of service.
Cybercriminals barrage a company's server, overwhelming it so that it slows significantly or even crashes. This is perhaps the most common form of assault on cloud infrastructure and storage.
- H4: Password attacks (or brute force).
This type of cyberattack occurs when a hacker uses software to determine (and then steal) working passwords.
- H4: Data leaks.
A data leak, which is the intentional or unintentional release of secure or confidential information to an untrusted third party, can damage both a business and its employees and customers.
- H4: Viruses.
A virus is a malicious code or harmful program intended to spread from computer to computer (and other connected devices) that can be applied from opening a phishing email or using an infected removable storage device.
Outperforming the Competition with a Differentiated Employer Brand
It's one challenge to attract the best talent to your organization, and it's an entirely different challenge to hold onto them once they are in the door. Intense competition and the ongoing talent war mean that firms need to create a differentiated employer brand to create both a positive customer experience and retention plan and a positive employee experience and retention plan.
An employer brand describes an employer's reputation as a place to work. The brand needs to be supported by how the employer creates value for employees. Examples include:
- Making people an essential part of your business;
- Creating a positive employee experience and work culture;
- Supporting employees and their families with robust health benefits and rewards packages; and,
- Addressing employees' desire for greater flexibility in a way that makes sense for your business.
Many employees are looking to join a company aligned with their purpose and values, one that will help deliver meaning in their work. Employees evaluate employers based on their brand: what they stand for, how they treat their employees, opportunities to learn and grow marketable skills, and competitive compensation and benefits.
Lacking in HR Oversight and Infrastructure
The growth of remote work has led to a lack of human resource (HR) oversight and increased employee lawsuits. Many HR and Payroll contacts at financial service firms have extensive roles and many competing priorities. They are burdened by regulatory compliance demands related to employment laws and health and safety. While many may strive to be a strategic partner with the leadership team, the reality is that most remain buried under HR administration. And in some instances, the HR manager may be promoted into the role with HR responsibilities from another position in the financial service firm, so their HR knowledge and experience may be limited.
Maintaining Regulatory Compliance
Stringent regulatory and security requirements have been expanded by the COVID-19 pandemic. While this might seem somewhat obvious, compliance is critical to the finance industry with the extent of regulations it endures. Add to that the layer of complexity from the COVID-19 pandemic and government funding options, and the financial services sector experiences more compliance risk than most other industries.
How can HR Outsourcing Help?
A Professional Employer Organization (PEO) provides outsourced, integrated HR administration services to support businesses throughout the employee life cycle. Such services include help with attracting and developing talent, payroll processing, employee benefits administration, and support to help you maintain legislative and regulatory compliance.
There are many benefits to working with a PEO. A recent study found that businesses that work with a PEO can expect the following benefits from the relationship:
- $1,775 in savings per employee per year;
- 20 percent lower employee turnover; and,
- Fewer concerns about hiring, retaining, and motivating employees.
As financial service firms work to address the impact of the industry's impending challenges, please know that you do not have to go it alone as a leader. Choosing the right PEO can take your HR administration, payroll, and benefits programs to the next level, resulting in happier employees and more productive leadership. However, securing these benefits requires working with the right PEO.
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