Banks must focus on redeployment and reskilling when restructuring their workforces to improve cost effectiveness, according to a report from McKinsey.
The global management consulting firm said the banking industry was already undergoing massive change before the pandemic hit as it moved more towards online banking services. The impact of Covid-19 only accelerated this trend.
The average branch size could shrink from six full-time employees to four by 2030, McKinsey said, as banks continued to adapt their services.
The firm’s research found that redeployment with reskilling was 20% more cost-effective than ‘hiring and firing’ to adapt workforces. This method served to reduce the number of new hires and layoffs, which both involve expensive processes. It also found that reskilling was more likely to boost an employer’s brand reputation.
As part of the report, McKinsey surveyed human resources leaders at banks that had thrived during the Covid-19 pandemic and found five key lessons for restructuring employment within the banking business.
Upskilling proactively based on strategy needs and industry trends was a key aspect and, according to those questioned, analyzing required and existing skillsets was important before launching any reskilling effort.
Bankers explained that finding existing roles closely matched to new roles could reduce the need for large reskilling efforts and allow instead for “microskilling”, involving one- or two-day training programs.
Respondents also recommended investment in IT infrastructure and systems such as a central library to offer online and offline training, skill academies and inventories, and an internal talent market. The HR leaders said investment in a homogenous learning culture was crucial, with emphasis on communication and engagement.
Finally, those surveyed said that employment strategy should start from boardroom level, with committed leadership and a clear talent development strategy.
- ABA Opposes Legislation to Expand Credit Union Business Lending
- Basel Committee Urges Banks to Up Their Cyber Risk Preparedness
- Banks not pleased with Biden’s Comptroller of the Currency Nominee
- Banking Exchange Leads Discussion on Open Banking Trends
- People’s Bank of China States That All Crypto-related Activities are Illegal