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Recruiting in financial services in 2023

Lauren Shufran

Content Strategist

Posted on

March 17, 2023

Articles

The talent market has been getting a lot of attention this year, though most stories tend to focus on high-profile layoffs in the tech industry. Yet for all the press they get, tech companies are only one small piece of the talent landscape. And many CEOs are not nearly as pessimistic as the press might lead you to believe—in fact, 84% of CEOs say they’re optimistic about 2023.

In this new series, we’ll be doing a deep dive into several industries to understand how they’re approaching recruiting in 2023. What sets them apart from other industries? What are some of their specific challenges and opportunities? And how can technology support them as they seek to meet their hiring goals?

For this first post on recruiting in financial services in 2023, we spoke with several experienced talent acquisition (TA) pros to identify top trends and themes in this industry. A special thank you to our panel of experts: Paul Lesser (Principal @ PHL Talent Advisory Services; formerly SVP, Human Resources @ Fidelity), Sydney Mbachu (Head of Global Tech Recruiting @ Nasdaq), and Scott Nevins (TA expert, currently Chief Client Success Officer @ PeerTown, with 4 years’ experience in FinServ)—as well as a Head of Recruiting Technology at a leading investment management firm.

Looking for a high-level overview of our findings? Here’s what we discovered:

Finance firms are pursuing digital transformation, which means they’re hiring more tech talent than ever and have to work overtime to demonstrate they’re tech-savvy to successfully compete against tech companies for the same talent.
One major area of focus is building cloud expertise and ensuring a secure transition from legacy technology to the cloud—which means ramping up hiring for infrastructure security, cybersecurity, and cloud engineers.
Financial institutions also rely heavily on high-volume roles like customer service representatives, but the skills needed for these roles are evolving to meet the complexity of the market and customers’ concerns.
The financial industry is very serious about assessing and avoiding business risk, so adopting new technology can be a long, arduous process.

Keep reading for a deep dive on the landscape of recruiting in financial services in 2023.

What is unique about recruiting in financial services?

When it comes to recruiting in the financial services industry, employers have to account for their reputation and employer brand in ways that companies in other industries might not. A lot of talent—particularly those who are early-in-career—grew up after the mortgage crisis of 2008–2009 and remember the banks going under.

Financial services employers now have to work extra hard to overcome the knocks their reputation took at that time and prove to candidates that they’re driven by more than dollar signs.

“A lot of talent believe financial services is an industry that’s just out to make money; which is why companies in the space have to work hard to ensure people understand the commitments they make to things like community service, diversity, and ESG [environmental, social, and governance].”

- Paul Lesser, Principal at PHL Advisory Services after 28 years at a major financial services institution (ultimately SVP of Human Resources)

Financial services can also be considered a sleepy, stuffy industry. Candidates don’t see financial services companies as tech-savvy or cutting-edge. These impressions might not be accurate, but they persist among early-in-career talent, so financial services employers have to be deliberate with their messaging and branding efforts to overcome these outdated beliefs.

In fact, many financial services companies have been at the forefront of digital transformation. Some banks had already begun to digitize their experience several years ago, and COVID simply accelerated those plans. The growing emphasis on digital experiences also places financial services companies in a unique position when it comes to attracting talent. It’s not just about competing with others in the financial services industry—it also involves competing with Silicon Valley.

“In 2023, it’s true of many financial services organizations that they play in both in the financial services space and the technology space.”

- Sydney Mbachu, Head of Global Tech Recruiting @ Nasdaq

Opportunities in recruiting for financial services firms

Financial services firms—especially the ones that operate less like traditional finance firms and more like fintech companies—have quite a few opportunities when it comes to hiring. Their openness to innovation means they’re evolving from transactional recruiting to broader business advisorship and embracing modern recruiting technology—at least to the degree that strict security measures allow. Forward-thinking companies see the value in operational excellence and data-informed recruiting and hiring decisions, and are taking steps to streamline and automate manual tasks so they can focus more on high-impact work.

“Our organization has done a lot of work over the last five years to get our recruiting technology architecture to where it is today. In the past there was a lot of time wasted—copying and pasting, double-clicking, keeping systems that didn’t talk to each other up-to-date. We took a hard look at what we’d need to put in place to streamline and mature operationally so our team could function as stronger business partners. Today, we’re operationally very sound across teams.”

- Head of Recruiting Technology @ a leading investment management firm

“At our company, there was a journey from a transactional recruiting model to a broader talent advisory model—the dialogue and education that talent acquisition can bring to business functions. Now recruiters are asking questions like, ‘How do we bring data, and insights, and guidance to the table to justify our recommendations? What are the mechanisms and tools we can use to do so?’”

- Scott Nevins, TA expert, currently Chief Client Success Officer @ PeerTown, with 4 years’ experience in FinServ

Plus, there are many reasons why working for a financial services firm appeals to today’s talent. These include less volatility than in tech companies, great benefits, strong brand names, and generally profitable businesses (which often translates to fewer layoffs and turnover and more earning potential over the long term).

“Financial services firms are less volatile than many of the tech companies out there. They're not immediately jumping to layoffs, and that stability is a plus for talent. They also tend to be profitable: if you're willing to put the time in, you can earn good money. They tend to have fantastic benefits—retirement plans, medical plans, things of that nature. And they have good brand names.”

- Paul Lesser

Challenges of recruiting in the financial services industry

It’s not all smooth sailing for TA professionals in the financial services industry. There are plenty of challenges in attracting and retaining talent. Some of these challenges arise from the fact that financial services firms are competing directly against tech companies for the same talent, and some are challenges that likely sound familiar to anyone working in TA today—like building a strong employer brand, adapting to a hybrid work setup, and promoting diversity, equity, and inclusion (DE&I).

2023 recruiting trends in financial services

Gem surveyed nearly 100 seasoned talent acquisition professionals in financial services to find out about pain points, priorities, expectations, and initiatives in 2023.

See 2023 trends

Finding qualified tech talent

There are two sides to this challenge; the first is at the top of the funnel. Technical talent often overlooks financial services firms (as we mentioned earlier, these companies are often perceived as stuffy or behind the times), so it can be difficult to find qualified applicants.

“The top of the funnel can be a big challenge for financial services firms, which often don't have enough qualified, specialized talent entering their hiring process—especially on the technology side. Organizations that can solve that top-of-funnel challenge will be setting themselves far ahead of the competition when it comes to hiring speed and quality.”

- Sydney Mbachu

There’s a window of opportunity at the moment with many high-profile layoffs in the tech industry and candidates who are open to switching to a more stable industry. But even if financial services employers are able to hire candidates from tech companies, they face an additional challenge of acclimating them to a different way of approaching innovation.

“It’s important to recognize the difference between how a tech company and how a financial services firm think about technology. At Google, EPD teams prioritize innovation. Not that they don’t at financial services firms; but the innovation is toward solving a customer problem, an employee problem, or a key partnership problem. So you want people who have remarkable technical skills, but you also need people who are going to be happy thinking that way about a product.”

- Paul Lesser

Moving from transactional to relationship-based recruiting

Like many other organizations that are trying to mature their recruiting function, there’s a need to move away from the firefighting of urgently filling roles to engaging in more strategic, future-focused work like building pipelines and nurturing relationships with silver medalist candidates.

“Recruiting is always firefighting, which prohibits proactive pipeline-building. If you could have an infrastructure that allowed for pipeline buildout—that ensured the sourcing function wasn’t sacrificed for today’s urgent fires—you'd get off the hamster wheel and onto a flywheel.”

- Scott Nevins

Adapting to remote and hybrid work

While tech companies have generally been quick to embrace remote or hybrid work setups, this is an area where financial services has lagged. It’s more common for financial services employers to require employees to work onsite or be based in a specific location, even in a post-COVID world. This can present a challenge when competing with the flexibility offered by most Silicon Valley companies.

“Prior to COVID, more than 80% of global tech was 100% in-office. During the pandemic, many of them had to adjust to hybrid-first organizations. Of course, that didn’t dispense entirely with in-person location issues, and candidates are demanding more and more remote work. So firms in New York are essentially competing for talent that’s also being attracted by Silicon Valley on the West Coast.”

- Sydney Mbachu

“Most tech companies have embraced hybrid work, but financial services companies just aren’t there. Many of them want people in the office with regularity. What these companies in particular need to start accounting for is their remarkably multi-generational workforces. Early-in-career talent want to be in-office to build their networks and receive real-time coaching. But talent that’s been in the business long enough to have built their networks, that are maybe caregiving at home, and so on, have different needs. So how do you find a happy medium that speaks to the range of your employees?”

- Paul Lesser

Employer brand

Financial services firms often struggle with employer brand, both in the sense of overcoming negative perceptions and in terms of taking a more sophisticated, proactive approach to building it. It’s not enough to answer candidates’ questions or address their concerns during the interview process. Taking this reactive approach means losing out on many prospective candidates who (mistakenly) believe financial services organizations aren’t aligned with their personal values.

For many firms, there’s a lot of opportunity to proactively shape their narrative and get their story out there, whether it’s on their website, social media channels, or with their recruiters and hiring managers.

“I think financial services organizations need to get better at articulating how people make a difference through the roles they have in the organization. It’s not just about being able to articulate matters like your company mission, but also being more proactive with them.”

- Scott Nevins

“We weren’t being intentionally mysterious; we just didn't see the value in radiating our employer brand in a massive way. We've gotten a lot better on that front in recent years—revamping the website, doing work at the company level to shape a coherent narrative and put it out there so there's more information prospective candidates can find about the organization when they go looking.”

- Head of Recruiting Technology @ a leading investment management firm

Compensation

Compensation is another area where financial services firms have their work cut out for them when competing against tech companies. Talent coming from tech often have high expectations in terms of stock options and salaries—they’re looking to make quick money. In financial services, employers focus more on helping employees make money over time.

“A lot of talent—especially talent coming from the world of tech—is looking for the stock option play; they're looking to make quick money. And for a lot of financial services firms, that's not how they’re structured, and that's not how they pay.”

- Paul Lesser

Because financial services employers can’t compete directly when it comes to compensation, they’ll likely need to lean more heavily on other aspects of their offer, whether it’s the appeal of working for a well-known brand, or the fact that employees tend to be happy—and their tenures are lengthier than in tech companies.

“A lot of financial services firms can’t pay tech-industry wages, which means these companies have to find other ways to attract talent. One compensating factor is often brand name.”

- Sydney Mbachu

Diversity, Equity, & Inclusion (DE&I)

TA professionals in financial services are looking to diversify their talent pipelines and ultimately the makeup of their organizations. This imperative exists at every level of the organization, from the customer service representatives on the phones to senior-level roles like VPs. There’s a growing sense that employees should reflect the diversity of the customer base.

“People would ask: ‘What's the diversity on the phone? I want my associates to be talking to people like them when they call in.’ Diversity became a business imperative.”

- Paul Lesser

Because relying solely on inbound applications can often lead to more homogeneous talent pipelines, financial services recruiters need to do more strategic sourcing to include talent from historically underrepresented groups.

“Any financial services organization that has DE&I initiatives—which I hope is all of them—will have to engage in direct sourcing for many roles. Tech roles, for example, tend to be niche and challenging to fill; there's also a greater need for diversity there. The same is true of senior-level roles—once you get to the VP level, DE&I numbers tend to drop sharply.”

- Sydney Mbachu

Slow processes due to fear of risk

When it comes to the tactical side of recruiting—adopting new tools and processes—TA professionals in financial services firms can’t move nearly as quickly as their peers in other industries. Because data security is such a major concern, the procurement and integration processes move at what feels like a glacial pace.

“Purchasing recruiting tech at financial services organizations can be a remarkably slow process because of things like procurement, cybersecurity risks to ensure the product will be integrated the right way and won’t have any potential risk management from that perspective.”

- Paul Lesser

“The vendor onboarding process for banking can be frustratingly slow—there's no process that's shorter than six months, with multiple tech and vendor management approvals. Once you’re a medium-sized organization, infrastructure requirements become pretty dramatic because the idea of risk is so substantial. At a bank, HR risk is different from organizational risk; and in some ways we have more stringent requirements than the people who deal with customers’ money. In our world, if you have an ATS, you have access to employee information. A lot of that can be personal information. So there are tight controls around that.”

- Scott Nevins

It’s rare to experiment with new technology because no company wants to be the first—they want to know that others have used a tool successfully and it hasn’t posed any security threats. And many potentially time-saving tools can’t even be considered because they don’t meet strict security requirements.

“Because it’s such a highly-regulated industry, security is huge for financial services firms. Companies maintain their SRO [self-regulatory organization] certifications by conducting regular audits and ensuring they don’t adopt anything that might compromise their internal systems. That's why they tend not to experiment with untested technologies. They need to know that other organizations have used a technology successfully, and that it hasn't posed security threats to them.”

- Sydney Mbachu

“Anytime we consider a new solution to purchase or partner with, the question is: Will it pass our security standards? We haven't been able to implement a scheduling tool for this reason. All the scheduling tools out there need you to basically give full calendar permissions—meaning those external partners have full access to your executives’ calendars. That's a problem for us.”

- Head of Recruiting Technology @ a leading investment management firm

And even when there are no hurdles in the form of security risk or approvals, it can still be difficult to introduce change and new processes within TA teams in financial services. People tend to be reluctant to make changes, even if these changes will ultimately make their lives easier. It’s not impossible to change workflows or technology—it just might be a lengthier and more labor-intensive process than in other industries.

“People get attached to their workflows, and bringing technology in to free up some of those interactions and communications created some strife for a while. But once we invited the more reluctant team members into the projects such that they could experience success, we found that the organization moved forward more easily with those changes. So get folks on board to adapt and use technology to do what they need to.” Scott Nevins

Recruiting software requirements for financial services TA teams

As the financial services industry pursues digital transformation, that transformation includes modernized tech stacks across departments so that the entire organization becomes data-driven. Here are some of the top concerns of TA professionals in financial services when it comes to recruiting software.

Recruiting tech stacks

There’s no single tool that will do everything a TA team needs—there are likely a handful of core tools that need to integrate and stack on top of each other. For many recruiting professionals, this includes sourcing tools, a CRM (candidate relationship management), and an ATS (applicant tracking system).

“I rebuilt our recruiting text stack about five years ago. We moved our legacy system into Greenhouse and later brought on Gem as our CRM. That's our core architecture. We have LinkedIn, we have Seekout, we have other ways of finding talent. We use Gem to sequence that talent, hop on the phone and connect with them, bring them into Gem. Then they get converted to candidates in Greenhouse.”

- Head of Recruiting Technology @ a leading investment management firm

Automation

Automation—when it’s aligned with recruiters’ typical workflows—can free up time from administrative tasks. This allows TA professionals to focus more on meaningful work that positively impacts the hiring experience for everyone involved—candidates, hiring managers, and recruiters.

Another benefit of automation is that it allows TA teams to identify inefficiencies and proactively improve processes.

“We’ve seen plenty of examples of how, through automation, organizations have discovered that their work isn’t scalable, their workflows are terrible, or their process includes discriminatory behaviors. So what are the mechanisms you have to identify issues proactively? There's nothing better for TA or HR organizations than to have the data and infrastructure in place to validate and preempt.”

- Scott Nevins

Data and metrics/analytics

Getting access to data and metrics is critical to TA professionals in financial services who want to accurately assess how they’re tracking toward hiring goals and predict future performance. While it’s possible to track these numbers manually through tools like Excel, having software that can make these calculations makes it much faster and more reliable.

“We're very metrics-and-analytics-driven. Seven or eight years ago we created funnel metrics models in Excel that allowed us to do the math. If we wanted to make a hire by February 1st, we knew it took six weeks to hire for that role, and we knew how many candidates we needed at each stage of the funnel to see an offer-accept, we then knew how many candidates we needed at the top of the funnel—and by when—to yield a hire. Gem does that math for us now, and we track it on a week-to-week basis.”

- Head of Recruiting Technology @ a leading investment management firm

Recruiting software with strong analytics capabilities also allows TA teams to examine all aspects of the hiring process, from sourcing channels and interviewer activity to scorecard turnaround and response rates. These numbers can also be compared across roles and teams to further identify areas for improvement.

Candidate relationship management (CRM)

A candidate relationship management (CRM) tool is the pillar of a sophisticated talent strategy. It allows TA teams to build relationships with prospective candidates and nurture them over time, creating a talent pool that’s filled with warm leads and accelerating time to hire when roles open up in the future.

“A CRM allows organizations to house talent in an infrastructure before they become applicants in your process. It lets you feed information about your organization to individuals in a way that’s thoughtfully curated—to keep in touch with talent so if they're not ready for a position today, they might be a year from now. Essentially it allows an organization to manage and maintain their own subset of the world of viable candidates.”

- Scott Nevins

CRMs can also help TA teams stay in touch with “silver medalist” candidates who made it to the final stages of an interview process but ultimately weren’t offered or didn’t accept a job. Since these candidates already applied in the past, they’re familiar with the company and likely to be open to learning about future roles.

“I see CRMs as the mark of a mature, sophisticated recruiting organization. CRMs allow you to create outreach campaigns to prospective candidates—ideally using a multi-channel approach whereby you follow an email with a text message. They also allow you to build talent communities that receive regular engagement from your brand, and to engage in ‘silver-medalist campaigns.’ If your organization has been around for a long time, your database is a treasure trove of candidates who’ve applied to the organization over the years. So why look for candidates externally every time you have a new role? Instead, go into your database and identify talent who’ve applied in the past and got to a certain stage in the interview process or declined an offer. Then re-engage them through a campaign and bring them back into the pipeline.”

- Sydney Mbachu

If you’re recruiting in the financial services industry and want to dig deeper, we surveyed nearly 100 seasoned talent acquisition professionals in financial services for more insights into 2023 recruiting trends. And if you’re curious to hear what other industries are facing when it comes to TA in 2023, stay tuned for the next post in our series!