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Broadening their appeal to a new generation of customers and reacting to the shifting demands of today's bankers are key concerns for the global banking industry, according to a new report from Herbert Smith Freehills.
The sixth annual Global Bank Review, called 'Banking on People', highlights how a rise in employee activism, driven by the cost-of-living crisis and changing societal expectations, is compelling the banking industry to rethink the way it engages with its employees. The report also illustrates how digital acceleration and the role of 'finfluencers' are combining to ensure banks introduce new products and services and market them through innovative channels, to capture and retain customers and market share, in an increasingly competitive marketplace.
"Even before the shift to hybrid working reset the career model of the industry, bankers, particularly at a junior level, were showing some signs of voting with their feet. Until recently, the challenge was how to coax employees back into the office in some major financial centres whilst being sensitive to employee demands for greater flexibility. Now, facing greater economic volatility and geopolitical instability, bank leaders face tough choices as to where, how and in what number to deploy their people," says Simon Clarke, co-chair of Herbert Smith Freehills' global banks sector group.
With the pandemic accelerating digital change and the global economic outlook creating uncertainty, the report features an in-depth interview with three senior legal executives within the banking industry to explore how their teams have responded to disruption and risen to meet new challenges.
The report goes on to address a range of issues facing today's banking executives. It focuses on:
- ghosts in the machine: exploring the rewards, risks and regulations associated with artificially intelligent banking and the removal of human-led emotional intelligence
- non-financial misconduct: identifying the extent to which global regulators are expanding their focus beyond financial behaviour and the risk this presents in terms of creating different standards in different jurisdictions
- short-term risk versus long-term gain: outlining how finance leaders face a trade-off between meeting the demands of today's stakeholders with the desire to be relevant in the future as they respond to issues ranging from the environment to geo-politics
- cyber threats: how directors and senior managers implement strong governance around, and exercise effective oversight over, cyber security risks.
Hannah Cassidy, co-chair of Herbert Smith Freehills' global banks sector group, concludes: "The wider challenge for banks is that policy makers and regulators remain determined to impose ever higher ethical and social standards on the industry; there is an imperative to protect consumers, particularly vulnerable customers. The extent to which that manifests itself in greater scrutiny of banks' behaviour towards their customers, increased interventions to prevent misconduct, or rising pressure from activists, only time will tell. One thing is clear though: bank leaders will need to focus on the culture they set from the top, the policies they adopt, the monitoring they engage in, and the fraud-prevention technologies they invest in, to ensure customers, regulators and colleagues are all comfortable banking on their people."
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