The Power of People in Digital Banking Transformation

The Power of People in Digital Banking Transformation

Title image

The Power of People in Digital Banking Transformation

  • Add To Interests
  • PDF

  • Lesson Three: Transform the Way You Build, Buy, and Borrow Digital Talent

    Companies have been performing strategic workforce planning for some time. What’s new is that the specific skills needed to become a digital organization today differ a great deal from those required in the past. Digital transformation requires skills in areas such as big data and advanced analytics, agile processes, digital content, infrastructure management, mobile interfaces, the digital customer experience, risk and security management, payments, and digital branding and marketing. (See Exhibit 3.)


    The demand for these skills is completely out of alignment with the supply, however. Banks can’t build enough talent fast enough by developing their own people. And there simply are not enough tech-savvy people available for hire by every bank that wants to go digital, even if each one pays well and creates a work environment filled with Foosball tables and never-ending gourmet meals. They also cannot recruit enough people through acquisitions. Smart banks will therefore need to hone their ability to borrow talent, tapping into contingent labor, such as freelance expertise in data privacy, much as they rely on outsourcing today.

    Our experience shows that the biggest organizational effort often comes from building up internal talent by augmenting the skills of front- and back-office staff. Digitally advanced banks, for instance, employ digital retraining programs as part of their strategic workforce planning to bring core staff up to speed quickly and to enable them to work efficiently across channels.

    In the building of talent, new expert-track career paths sometimes need to be created for individual contributors who may have limited interest in managerial roles but who still want to advance in the organization. Tech companies have long had positions, such as fellow, that often come with broad external recognition and include opportunities to publish, patent, and promote the company internally and externally. As companies think about these new paths, they also may need to envision career lattices that allow experts to chart their development among management, coach, and line roles.

    Changes may also be needed in evaluation systems. Some digital companies that banks often compete with for talent have eliminated performance reviews altogether in favor of informal 360-degree reviews or self-management. Adobe Systems, for example, eliminated traditional performance-management reviews in 2012. The company moved from annual performance ratings to frequent, informal check-ins, during which managers have fair but sometimes tough discussions with employees about performance and offer targeted coaching and advice. Since Adobe instituted the program, voluntary and involuntary departures have decreased by 30% to 50%, respectively, and many are now “nonregrettable” departures.

    When buying talent from outside the company to fill skills gaps, leaders must build new engines to source talent, ensure competitive compensation and benefit levels, give employees clear roles, and integrate new hires into the organization with effective on-boarding and support. Often that requires revamping internal processes, upgrading capabilities, and changing the culture. To attract talent, compensation and benefit structures may need to align more closely with the technology companies against which banks now compete. Consider Netflix, where managers assess the market for each employee by asking three questions:

    • What could the employee get elsewhere?
    • What would we pay for a replacement for that person?
    • What would we pay to keep that employee?

    The company pays at the top of the market, and employees decide how much stock versus cash they want to receive.

    Finally, to access freelance talent, leaders can take advantage of new outsourcing platforms, such as Kaggle and Upwork. Many organizations also hire external coaches, including companies such as Pivotal Software, to source agile-development capabilities. At the same time, companies must also develop a flexible organization capable of integrating contingent workers; monitoring, rating, and tracking contingent-worker services around the world; assessing, storing, and using the work produced; and developing new ways of managing intellectual-property ownership.

    To build, buy, and borrow workers for a digital talent ecosystem, smart companies identify the capabilities required for the post-transformation future and assess the gap between those capabilities and the current level of skills. Then they proactively design a talent strategy for each capability required to reach that goal, taking into account the supply of and demand for each skill. Whatever skills companies can neither build nor buy will need to be borrowed by hiring freelance workers and by creating sourcing relationships with other companies.