By G. Sharmila
The financial services industry is a key sector that is currently facing a dearth of talent and this is affecting business performance, according to a new report. Realising this, employers are taking steps to remedy the situation. But is this enough?
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The financial services industry is one of the key growth areas of the economy and its contribution to nominal gross domestic product (GDP) is expected to grow from 8.6% of nominal GDP in 2010 to between 10% and 12% by 2020, according to Bank Negara Malaysia.
However, the sector is facing a dearth of talent currently, with a recent report by the Asian Institute of Finance (AIF) found that 76% of employers in the domestic financial services industry are facing talent shortages across all sectors.
Titled “Talent Gaps in the Financial Services Industry in Malaysia”, the report surveyed more than 600 employers across the financial services industry in Malaysia including banking, Islamic finance, insurance/takaful, and capital markets.
Hamidah Naziadin
“The problem is felt most acutely in the Islamic banking sector where 82% of employers surveyed said the sector is experiencing a shortage of talent. This is followed by conventional banking (78%), the insurance/takaful sector (72%), and the capital markets (59%),” the report said.
“As highlighted in the recent study by the AIF, the shortage of competent and skilled workers is of concern to the financial services industry. This is especially so in areas such as risk and compliance due to the changes in the regulation environment, both globally and locally,” Hamidah Naziadin, group chief people officer and the head of group corporate resources at CIMB Group Holdings Bhd told KINIBIZ via email.
The root of the matter
What is causing these talent gaps? According to the AIF report, lack of succession planning and leadership was significant as 68% of employers felt this was the main reason for the shortage of talent they are experiencing. (See Figure 1 for more reasons behind the talent gaps.)
The report also noted that 77% of employers reported that it was increasingly difficult to fill job vacancies in their organisations in 2013 compared to the previous three years (53%).
“However, many employers (55%) still believe that this problem will persist in the next three years with 20% expecting open positions in their organisations to become harder or very difficult to fill,” the report said.
“Part of the reason the industry continues to face a shortage of talent is that jobs have changed significantly due to the increasing complexity of banking and greater focus on regulation and compliance post the global financial crisis which have resulted in different set of skills required to perform these jobs,” the report said.
Overall, organisations are having difficulty filling specialist roles (77%), senior management roles (71%), and middle management positions (63%), the report said.
Figure 2 shows that the most difficult positions to fill according to employers are those for chief executive officers and board members (37%), followed by specialists (23%) and senior managers (19%).
According to the report, among the four sectors in the industry, the capital markets are facing the greatest challenge in recruiting middle managers to fill various positions – 90% of employers observed a vacuum within the middle stratum (Figure 3), suggesting that not enough has been done to identify and train candidates earlier in their careers.
“This huge gap in middle management ranks is expected to increase in the coming years due to the rapid growth of the wholesale banking sector,” the report said.
Impact of talent gaps on business performance
The AIF survey also asked employers to rate the degree of impact that talent shortages have on various aspects of their business performance.
“Overall findings show that talent shortages are creating a considerable impact on businesses in several key areas, chief among which is productivity, with the majority of employers surveyed reporting that talent shortages are affecting their productivity to a high or medium degree,” the report said.
The AIF report also noted that the shortage of talent is also taking a toll on competitiveness, with 46% of employers saying it has highly impacted their ability to compete against industry peers.
“Another 39% of employers reported that talent shortages have hurt their profitability significantly. The findings thus clearly show that prioritising talent management simply makes good business sense,” it said.
How the talent gaps can be addressed
“All the stakeholders, be they employers, training institutions, universities, regulators, government, etc, have to collectively identify the shortage/ gaps and come up with a holistic approach to dealing with those gaps,” said Hamidah of CIMB, who was a panelist at the recent AIF International Symposium 2015.
“At CIMB, we ensure that we have our graduate management programmes to bridge the gaps even for high-performing graduates from top schools and universities. We cannot expect a graduate to walk in and be able to perform just like that. Banking is big,” she added.
She explained that CIMB’s The Complete Banker programme, for instance, provides the fundamentals of universal banking.
“We teach them the fundamentals of universal banking, coach them, and mentor them until they become managers. We put these trainees on rotation across businesses to learn new skills and perspectives that cannot be learnt in university,” she said of CIMB’s approach towards talent.
“Talent will always migrate towards opportunities for growth. We will have to continuously create opportunities for these talents. We also need to recognise and address what the ‘push’ factors are that influence talents to go elsewhere,” Hamidah said.
She explained that one of CIMB’s initiatives to address this brain drain, with regards to fresh graduates, is CIMB Fusion, which provides fresh graduates working experience with two employers/ industries at sign up.
“The associates on this programme work (consecutively) with CIMB Group and one of our partners. When we piloted the programme, it was just with PricewaterhouseCoopers (PwC).
“Today, CIMB Fusion is made up of seven different employers of different industries: Accenture, FCB Kuala Lumpur, Hewlett-Packard, PwC, Teach for Malaysia, ZICOlaw, and of course, CIMB Group,” she said, adding that employers can work together to stem the brain drain and that this has happened with CIMB Fusion.
According to the AIF report, organisations are employing a range of strategies to overcome the talent shortage, the most common being promoting talent internally (62%) and providing training for upskilling (61%).
“This signals that organisations are taking a proactive approach to talent management by developing internal talent for future leadership and specialist roles,” the report said.
The report said that many organisations also see the benefits of succession planning in identifying long-term talent needs to support business growth and cultivating a supply of talent to meet those needs.
“Fifty-five percent of employers are building a talent pipeline especially for mid-level managers by developing succession plans to ensure the appropriate talent is in place for their future business requirements,” it said. (For a look at other strategies employed to address talent shortages, see Figure 4.)
While is it heartening to know that employers are taking measures to help address the talent shortage in the financial services industry, these do not adequately address the issue of talent leaving the industry for greener pastures abroad.
Perhaps a more thorough study should be done on why people leave the domestic financial services sector and what would entice them to return.
To some extent, the talent shortage problem is being addressed by the government.
Realising the human capital needs of the country, the government established TalentCorp Malaysia in 2011, which is under the purview of the Prime Minister’s Department.
What has the organisation done to help alleviate the brain drain problem and address talent gaps in Malaysia? Our next article explores its role in greater depth.
Yesterday: A closer look at brain drain in Malaysia
Tomorrow: TalentCorp CEO talks about stemming the brain drain
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