Why HR Software is Critical for the Finance Sector

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As the world continues to recover from the COVID-19 pandemic, businesses of all stripes are feeling the need to prioritise digital transformation. This is especially true in the financial services sector, where even pre-pandemic, the industry was facing unprecedented changes.

In 2019, the surge of digital-only fintech companies were challenging more traditional financial service organisations, while a fresh wave of automation was poised to replace thousands of banking jobs, and emerging technologies from AI to chatbots were set to further disrupt the sector.

Then came the pandemic, which brought with it increasing regulation, security concerns, and safety protocols, coupled with the changing employee expectations that have impacted every sector. Amid all the upheaval and uncertainty, employees in the sector have been hit hard, with a survey last year revealing that 52% of financial services workers are suffering from more burnout that they were pre-COVID.

At the same time, a growing talent shortage has been damaging for financial services, with Mark Hoban, chair of the UK Financial Services Skills Commission (FSSC), calling the problem an “existential skills crisis”.

The need for digital transformation for financial services has become less about disruption and automating away the need for people and more about how to manage and develop the talent of people working in the sector. It has shifted from being the purview of IT managers into a growing concern for HR leaders, feeling greater pressure from mounting challenges.

HR Challenges in the Finance Sector

Skills Shortages

Mark Hoban was discussing the ‘existential skills crisis’ in early 2020. Over two years have passed, and yet the problems remain. In a recent report, the FSSC found that 92% of its member firms had hard-to-fill vacancies. Meanwhile, data from the Office for National Statistics shows the industry had more than five vacancies unfilled for every 100 jobs between April and June 2022 – the highest figure since records began.

A combination of the global pandemic and the decline in international recruitment post-Brexit has left many organisations struggling to hire the right people.

Attracting & Retaining Talent

This talent shortage, coupled with the increased competition from fintech organisations has made it increasingly challenging for firms to both attract and retain the best talent.

Unfortunately, this is not a new issue either – the percentage of MBA graduates entering the financial services sector fell from 43% to 28% in the years between 2007 and 2016. Recent figures from the London Business School have shown that only 26% of the graduating class of 2021 planned on entering the finance sector after graduating.

Just 10% of millennials working in the sector admit to wanting to stay in the sector long-term. A study by KPMG found that 42% of financial services workers were looking to change careers within the next year.

Even within the context of ‘the great resignation’, these statistics make for grim reading for HR leaders in the sector.

High Acquisition Rates

The financial service sector in the UK has seen a 7-year high for mergers and acquisitions in the first half of 2022.

This poses a specific challenge to HR, with many firms engaged in acquisitions ending up with a plethora of disparate HR systems to manage core business functions. This fragmented patchwork of systems frequently leads to unreliable data and a lack of actionable insights. It risks human error, duplicated workloads, and inefficiency.

It also leaves HR teams struggling to use the data available to drive business decisions, creating bottlenecks impacting the speed and agility of critical processes, and eroding the confidence that businesses have in those departments.

Poor workplace technology also significantly impacts talent retention, with 94% of employees across all sectors admitting that frustration with inadequate technology is the main reason why they want to quit their jobs.

A Lack of Diversity & Inclusion

The lack of diversity and inclusivity within these firms has also become a key area of concern for HR teams within the sector. This 2021 report from McKinsey highlighted the fact that women – especially women of colour – are underrepresented at every level above entry level in finance jobs.

This could be having a knock-on effect in the struggle to attract talent, as surveys have found that nearly 80% of workers want to work for organisations that value diversity, equity, and inclusivity.

Firms are trying to address the lack of diversity, with the FCA, PRA and Bank of England publishing their plans to monitor, track and improve diversity and inclusion in regulated firms. Additionally, the FCA has recently finalised rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management.

Yet without robust HR systems and reporting processes to track progress and deliver actual change, it is likely that many firms will struggle to reach these targets.

How HR Software can Help Overcome these Challenges

As we have shown, the problems facing HR teams in the finance sector are interconnected. Mergers and acquisitions can often result in a mishmash of HR systems that are not fit for purpose, producing unreliable data. With unreliable data, firms are often unable to accurately report on issues such as diversity and inclusivity.

The lack of progress against these initiatives can harm retention efforts, compounded by these systems providing poor employee experience. Unengaged employees are unhappy in their jobs, frustrated by the technology they’re forced to use, and lacking trust that HR departments will be able to drive the business forward.

Unhappy employees leave their jobs, leaving those who remain to pick up the slack at the risk of being left feeling burned out.

But it doesn’t have to be this way; switching to a single, consolidated HR system not only streamlines HR operations, but it also increases agility and speeds up decision-making across the business.

So, how can a single system for HR and Payroll make a difference for organisations in the financial services sector?

Boosting Recruitment and D&I Initiatives with Data

With an HR platform that combines intelligent analytics and employee onboarding, HR leaders recruit candidates with the right skills.

Thousands of applications can be collected, stored, and evaluated with ease, while configurable dashboards allow HR teams to easily track recruitment trends. These same trends can be used to identify gaps in diversity hiring strategies.

Armed with these insights, teams can then address any deficiencies, remove unconscious bias from the recruitment process and, crucially, build a more diverse and inclusive workforce.

With talent pipelines shrinking, finance companies can also use these insights to provide a seamless experience for candidates from the application process through to onboarding.

Providing a strong level of candidate experience is necessary to remain competitive as firms vie for the best talent.

Using a centralised HR system allows HR departments to track recruitment trends and identify gaps in their diversity hiring strategies.

Armed with these insights, teams can then address any deficiencies, remove unconscious bias from the recruitment process and, crucially, build a more diverse and inclusive workforce.

Retaining Your Best Employees

Improving employee onboarding with the right HR solution can also make a huge difference when it comes to employee retention. Research from Glassdoor has found that a strong onboarding process can improve retention by as much as 82%.

Beyond that, access to personnel data on a central platform allows businesses to spot patterns across teams and departments. This insight will allow organisations to predict which employees might be most likely to leave and proactively take steps to keep them happy.

The self-service options for employees allows them to access their own data and information, take responsibility for certain actions themselves. This drives higher levels of engagement and performance, removing the painful bottlenecks and slow response times that can weaken trust in HR teams, leading to workers feeling happier and more satisfied in their roles.

Saving Time with Reliable Data

Many organisations can wind up with an array of poorly integrated software solutions – mergers and acquisitions are not the only reason, but they certainly exacerbate the problems. Whatever the reason, having to duplicate data in multiple systems or pull various bits of data from disparate systems can be frustrating and time-consuming.

With a comprehensive, single HR solution, organisations gain a single source of truth, with all information located in a single platform. This means that data can be pulled more quickly and easily, allowing for improved, data-driven decision making and more comprehensive reporting.

Again, the self-service options also make a key difference, reducing time-consuming HR enquiries by up to 70% and freeing HR teams to focus on recruitment strategies and other key business issues.

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