How banking on Gen Z talent will make or break the future of banking

The notion that Gen Z workers would sign up for one career for life, perhaps like their parents did, has been debunked. Instead, they are pursuing “episodic” careers that are rich and varied. Their job preferences and expectations have shifted dramatically since the pandemic – and they are not afraid to buck some norms to get what they want.

Millennials have a reputation for job-hopping,⁹ and it appears that their younger counterparts do too. About 80% of Gen Z workers in the UK are planning to move jobs in 2023,¹⁰ according to a LinkedIn survey, and research predicts that, on average, Gen Z will hold 18 jobs across six careers in their lifetimes.¹¹

The views of Mika, 21, from Hungary, one of many people in this cohort we had conversations with, chimed in with this description: “I don’t want to work in a bank because that kind of work is monotonous to me – kind of boring. Sitting in one place almost all day and looking at a computer screen is not how I imagine myself,” she says.

Meanwhile, Jack, 20, from the US, says, “I would work at a bank to make a lot of money and use the experience to go elsewhere.”

In January 2022, the US Bureau of Labor Statistics¹² painted a similar picture of a restless generation, with the median number of years that employees stay with their company dropping to 2.8 among workers aged 25‒34 and 1.2 for workers aged 20‒24, from 9.8 years among 55-64 year-olds.

Having the ability to provide an episodic career experience for talent is going to be an imperative for Gen Z, but some banks struggle to facilitate this type of mobile career experience outside of the intern ranks.

Questions for banks to consider:

• Can we provide an episodic career experience to our people?
• Do we incorporate career mobility into real-time development conversations?
• Do we have a clear job architecture in our bank?
• Do we know which skills we need to power the bank both today and tomorrow?
• Does our operating model reflect modern features and assumptions?
• Can we offer an exciting range of new-age jobs to Gen Z talent?
• Are we making the most of FinTech acquisitions in our broader talent strategy?

Questions for banks to consider:

• Do we consider our learning experience modern?
• Have we understood the learning styles of Gen Z?
• Have we asked Gen Z how they want to learn?
• Do we integrate multi-modality learning in our environment?

Banks, for many years, have tried to reposition part of their businesses as tech firms as they transform the digital banking experience for customers. But competition for tech and data talent is fierce, and the sector has traditionally struggled to compete. Some Millennials who cut their teeth in the finance sector are being drawn to tech companies by the opportunity to work on groundbreaking and innovative projects, experience a dynamic corporate culture and, in some cases, receive significant equity packages.

Some transformation efforts are already stalling due to a dearth of job-ready digital talent. In a 2021 Gartner survey, IT executives cited talent shortages as the biggest barrier to the adoption of emerging technologies. Availability has tightened further since then, as firms scramble to keep up with evolving digital technologies.¹⁴

Big Tech and FinTech have bitten at the heels of the banks for the talent they have. Although recent labor events like technology sector layoffs provide some opportunity for financial services to pick up the slack, this will soon dissipate as market conditions change, unless the industry acts swiftly.

Furthermore, a significant percentage of workforce cuts in the global technology arena have been in supporting functions such as sales and recruitment, as opposed to core tech talent, where competition is greater. Those working in this space will have their pick of roles, despite the economic headwinds.

But it’s not all bad news. Gen Z, who are digital natives, present an emerging pool of tech talent for banks. The question, however, is: do they want to work at banks? Some of the individuals we spoke with certainly do. “I definitely want to work in a bank when I graduate. It is an appealing career because it is so relevant to current society – it’s constantly changing with the market and new technologies,” says Sarah, a US college senior.

It is impossible to speak for an entire generation without succumbing to stereotypes. However, the mixed responses we receive indicate the appeal of the banking sector to this kind of talent could be in question. There is time to respond, as some Gen Z talent are still in high school and have yet to make their entry-level career decisions. Now is the time to sharpen the banking narrative for this demographic, which has some natural potential to fill the bank technology roles of today and tomorrow, when paired with the right educational and on-the-job experiences.

Questions for banks to consider:

• Are we thinking creatively about how to source tech and data talent?
• Are we exploring a broad range of talent pools to identify candidates? (e.g., community groups, hub locations, diversity platforms)   
• Can we offer innovative technology projects to our Gen Z technologists?
• Have we created a digital-talent experience for our technologists?
• How does our employment experience compare to those of Big Tech or FinTech firms?

Social media is amplifying the issues Gen Z care about and bringing activism into the mainstream and up the corporate agenda. They’re highly engaged and well informed about the issues that matter to them, particularly social justice and sustainability, and they want – and expect – an employer that shares their values. In fact, 93% of Gen Z say their decision to accept a job is affected by the company’s overall impact on society.¹⁶

Trust in the banking system has fallen considerably since the financial crisis of 2008, and recent economic turmoil, bank failures and market consolidation have reinforced public skepticism in the sector among this cohort. Dana, 20, from the US stating, “We are the ‘we’ and not ‘me’ generation — banking does not feel like that.”

Members of Gen Z came of age in the aftermath of this financial crisis and, more than 10 years on, many are still wary of the financial sector. Young people trust FinTech firms with their money more than they trust traditional banks (37% versus 33%)¹⁷ and in Asia-Pacific, more than half of consumers now trust big tech firms to fulfill banking services more than a traditional bank.¹⁸

This battle for trust has created opportunities for FinTech firms, which are formidable competitors for both business and talent. Nevertheless, banks remain a powerful force for good across a range of global issues, such as the climate crisis and social inequality. This narrative could be better understood in the talent market.

Take, for example, the Paycheck Protection Program (PPP) in the US, which helped to provide economic stability to local communities in the most uncertain periods of COVID-19. This is just one example among other important work going on across the sector that is making a meaningful social impact. However, these headlines may attract less attention than the negative ones — the bank failures, the regulatory issues and so on.

Banks play a critical role in helping to improve the wealth of underprivileged communities and increasing economic mobility via financial inclusion programs, for example. This includes providing financing to unbanked countries, communities and individuals, as well as expanding access to financial services to customers who identify as under-represented minorities, such as women and some ethnic groups.

Addressing climate change could be another strong talking point for banks when engaging Gen Z. Banks are creating some positive momentum around this issue via their climate risk and sustainable-financing programs.

Sharpening the narrative around purpose and social impact is particularly important for banks appealing to Gen Z talent, as this cohort typically gravitates toward organizations they view as authentic or trustworthy. Our own research tells us that almost two-thirds (63%) of Gen Z feel it is very or extremely important to work for an employer that shares their values.¹⁹

The world of work has transformed over the last three years and employee flexibility has been one seismic change. Like many workers, Gen Z have enjoyed the time and money saved on commuting, the ability to work more flexible hours, and the health benefits that hybrid work has yielded. They are not returning to pre-pandemic practices in a hurry. 

The Great Resignation — a pattern of people quitting their jobs to find new roles — emerged as the economy improved in 2022, but, a year on, the balance has tipped again. Employees have seen a wave of mass layoffs globally across a variety of sectors²⁰ and multiple recession warnings,²¹ while inflationary pressures are rocking employers’ recruitment and retention strategies. 

That being said, flexible work arrangements are non-negotiable for today’s workers,²² and many would forego pay and other benefits in favor of flexibility. This can include features like hybrid working models, out-of-country work models, flexible hours, leave policies, family and wellness benefits and sabbatical programs. Some banks have reported that they find it hard to get a second interview without offering some commitment to flexibility. 

Although flexible working arrangements have improved work-life balance for many employees, for some it has increased the intensity of their day. Research on home-working patterns²³ describes the rise of a “third productivity peak,” where work hours are extending beyond the pre-pandemic 9-5, and sending emails is the most frequent activity during after-hours work. 

This is reflected in rising anxiety and depression levels, which were 25% higher globally in the first year of the COVID-19 pandemic, according to research by the World Health Organization (WHO).²⁴

Extended working days, health anxieties and economic turmoil have all contributed to the growing trend of “quiet quitting” in 2022 — a term to describe employees putting in the minimal effort possible to get through the working day. 

Although the idea of “coasting” or “checking out” of a job is nothing new, the term has resonated with younger workers such as Gen Z who are (in some cases) prioritizing wellness over their careers. 

This cohort is also considerably more open to discussing their mental health concerns than were prior generations, according to the American Psychological Association.²⁵ This represents an opportunity for banks, which can help employees manage stress through wellness programs across a number of categories. An example is financial wellness; people need to be financially comfortable in order to be productive at work. If they are worried about where their next paycheck will come from or how they're going to pay off their student debt, there’s risk of distraction from their role.

Questions for banks to consider:

• Do we have our own definition of flexibility?
• Do we prioritize wellness across all domains: physical, mental and financial?
• Can we describe our culture – does it need a reboot?
• Can we provide radical transparency to our people about their careers?
• How clear is our job architecture?
• Do we help Gen Z talent connect with the existing workforce?

A defining moment for banking

Banking could be the sector of choice for Gen Z with the right innovations to its talent experience. Tying all the concepts discussed in this report together as part of an integrated strategy with a holistic talent outcome in mind will have a meaningful impact. While many banks are implementing distinct recommendations of this discussion, addressing these concepts in silos will only limit their impact. 

While the discussion in this report highlights key opportunities for boosting the appeal of the banking sector to Gen Z, we must acknowledge that talent is not homogeneous. The global banking workforce comprises millions of unique individuals, all with their own wants and needs from their employers. 

It is true that, in some front-office roles in particular, the prestige of Wall Street will stand the test of time, and bright young business graduates will vie for investment banking jobs, even when bonuses are down and workloads are up. Yet, a bank relies on an entire ecosystem of other workers to operate — many of whom do not work in the glamorous roles of the front office. And the truth is that many of these workers, like technologists, risk managers, customer service staff and more, have skills transferrable into other industries. 

It may also be true that Gen Z talent holds a set of employment expectations today that may be unrealistic — and that will soften once the realities of a pending recession or time in the workforce set in. However, without a robust pipeline of Gen Z talent choosing to take up banking roles at entry or early-career level, the sustainability of the global banking system could be at risk.

The story is not bleak. Exciting disruption abounds across the sector, including the emergence of next-generation jobs and opportunities to make a powerful social impact. By seizing these and other opportunities as an integral element of the banking talent proposition, banking could be a global sector of choice for the next generation of workers.  This is crucial to the ongoing innovation and resilience of banking, and to the prosperity of our local communities and global economy.