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Keeping pace with evolving expectations

Published on Friday, 06 Jun 2014
Jeffrey Tang

Public perceptions of senior bankers are not overly flattering at present. A typical view might be of a banker making vast sums of money while taking excessive risks and selling dodgy products to unsuspecting investors and customers - and then leaving the taxpayer to pick up the tab for their failures when a crisis strikes.

Bankers may appear to have done little to dispel such views, which mostly emanate from their role in the 2008 global financial crisis. Yet beneath the surface it's clear that much has been going on. There has been significant change in the way bankers work over the past 15 to 20 years - change that has accelerated since the crisis six years ago.

The job function of a senior commercial banker has evolved in response to technological change, along with the new work paradigm created by the opening up and growth of markets hitherto hard to access. But the mix of regulatory change, more vocal board members and public scrutiny has been the key driver of change. For practitioners, the skills base of a senior manager in commercial banking has advanced discernibly in recent years. It is change that's ongoing.

There are four broad and overlapping areas where, for a senior banker, new or enhanced skills are needed: an ability to address the needs of a broadening spectrum of ever-more-vocal stakeholders; managing an increasingly diverse talent workforce spanning four generations; an appreciation of the legality of regulatory and compliance issues; and being more strategic in a rapidly changing environment.

Compliance rules mean that results alone are not enough - it's now about how they are achieved. Financial institutions face huge fines for getting it wrong, for example by mis-selling financial products. Senior bankers must be in tune with whether business is done the right way. Board members need to examine and understand the risks undertaken - they need to know if any employee has taken unnecessary risks. If board members err, there's growing scrutiny by shareholders and the media, which are more vocal on compensation issues and create pressure.

Commenting on good practice in a speech in May, Bank of England governor Mark Carney said many banks have developed codes of ethics or business principles, but queried whether all traders had absorbed their meaning. He rightly noted that a first step to restoring trust in markets may be to rely on traders' intuitive understanding of what a true market is.

Senior bankers must also adapt their people-management skills. Most senior bankers are baby-boomers or Gen X-ers for whom the challenge is to stay in touch with younger, Gen Y and soon Gen Z, staff. It means understanding their lifestyles, financial priorities and use of technology.

The cultural and social differences accompanying globalisation and greater labour mobility are important too. Understanding and aligning them in areas like business ethics, compliance and corporate culture are key parts of the job.

Senior bankers must stay aware of the changing trends among customers and competitors. They must adopt a broader perspective of who their rivals are, along with technology's role in shaping the way they connect and understand customers and talent. The arrival of non-traditional rivals, such as retailers, convenience stores and technology firms, cannot be ruled out. An appreciation and understanding of technology is a vital attribute for a banker, judging by the higher investment in customer and human-capital analytics to give banks a competitive edge.

So, how are senior bankers doing? In truth, it's too early to say. Measures in place or being introduced include new performance rules on the lines of risk, customer and compliance. Deferred variable performance payments enable deferred bonuses to be cut if later performance shows them to be unmerited. Bonuses can be paid in stock rather than cash. This is intended to drive a shift in behaviour towards a new definition of success where performance is measured over a longer time, and to recognise leaders embracing new ways of engaging customers, rivals and staff.

Jeffrey Tang, Asia leader for Towers Watson’s global financial services practice, has over 19 years’ experience in the financial services industry in both a consulting and corporate capacity. Towers Watson is a leading global professional services company.

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