Netflix, Hulu, Amazon Prime and Spotify have played an integral part in the lives of millennials and the generation following them — Generation Z. Millennials barely remember video stores; Gen-Z doesn’t remember a time when they couldn’t access a movie from the comfort of their own homes. Now, the youngest generations are expecting to stream their banks.
It’s no secret millennials want bank products and services instantly available at their fingertips. For many financial institutions, using cloud-based applications is the only way they can affordably and effectively deploy the products younger generations desire.
Millennials and Gen-Z are not just customers of financial institutions, however. Right now, they also are employed by financial institutions as tellers or loan officers or perhaps low-level managers. In another decade or two, some may be the best candidates for CEO of their organizations — if banks can keep them.
Many financial institutions lament their inability to attract and retain qualified young people. It’s not surprising. Millennials are known for their inherent distrust of financial institutions due to the economic environment they grew up in. And although Gen-Z is still receiving its education and deciding on career paths, its opinion of the financial industry may not be much different.
A number of top U.S. business schools are seeing fewer graduates pursue careers in the finance sector, while more choose careers in technology-related fields. According to The Economist, between 2007 and 2016, business school graduates entering the financial industry dropped to 28 percent from approximately 39 percent, while graduates entering the tech industry rose to 21 percent from 10 percent.
What does any of this have to do with cloud banking? Indisputably, technology has changed the financial industry’s landscape, and it will continue to do so for the foreseeable future. Not only will it change financial institutions’ procedures and processes, it also will demand that recruits have certain knowledge about cloud technology coming in, and will remain vigilant when managing cloud technology.
Instead of entrusting the maintenance of in-house applications to a large number of people who may or may not be competent or have duties outside IT, banks can offer a handful of qualified IT professionals a competitive compensation package.
Millennials and the generations following them have embraced technology, but they will not stay long with an employer that clings to traditional practices. They don’t want to meticulously fill out line after line of customer information when they know it already exists somewhere in the organization’s database — or can be scanned from a customer’s identifying documents. And, they don’t want to wait on lengthy updates during inopportune times of the day or deal with system glitches and downtime.
Millennials don’t want to deal with these types of inconveniences as customers and they won’t put up with them as your employees either. So how can financial institutions leverage the new cloud banking trend to attract the talent of younger generations?
Get smarter. Institutions can start by deploying technology that allows employees to spend less time manually entering data or creating reports or developing work-arounds for system bugs, and more time on projects that really matter to them or their customers. The drudgery of fighting uncooperative technology drives young people away; they may decide to steer clear of the financial industry altogether.
Get with the decade. Cloud-based banking may allow financial institutions to let go of traditions such as suits and ties, disturbingly silent bank lobbies, beige walls, dark-colored desks, and nine-to-five workdays.
Technology allows for work days based on productivity rather than hours logged. Employees will be able to work from home. Importantly, there will be more time to develop new ideas, try new things, and collaborate with colleagues.
Financial institutions may feel like they are being forced to move to a cloud banking system. Instead, they should embrace cloud banking as an opportunity to bring the financial industry out of the clutches of an antiquated tradition that is no longer attractive to customers or employees.
Dan M. Fisher is president and CEO of Fargo, N.D.-based financial consulting firm The Copper River Group. He is a former director of the Federal Reserve Bank of Minneapolis and former chair of the American Bankers Association’s Payment Committee. Reach him at [email protected] or (701) 293-6222.