Regional banks are an essential part of the financial system, providing personalized services and supporting local economies. However, they also face many challenges in today’s competitive and dynamic environment, such as regulatory compliance, cybersecurity, digital transformation, and talent acquisition and retention. According to McKinsey, financial institutions can build their future workforce in many ways by upskilling, reskilling, building a scalable learning infrastructure, investing in a learning culture, and ensuring talent developers.
McKinsey fails to also consider leveraging talent resource sharing, which is a collaborative approach to accessing and utilizing human capital across multiple organizations. Talent resource sharing can help regional banks achieve operational efficiency, cost savings, risk mitigation, and innovation by pooling resources and expertise with other banks or external partners where workers share similar skill sets.
However, talent resource sharing also requires careful planning and execution to ensure alignment of goals, expectations, and incentives among the parties involved. Moreover, talent resource sharing may not be sufficient to meet all the talent needs of regional banks, especially in areas where specialized skills or experience are required.
To address concerns to meet rising costs associated with compliance related to the Bank Secrecy Act and anti-money laundering and economic sanctions regulations (BSA/AML), the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) published a joint statement in October 2018. The jist of their statement concluded that banks should consider entering into collaborative arrangements to share resources making their BSA/AML programs more efficient and cost-effective.
According to the interagency guidance, “Collaborative arrangements involve two or more banks with the objective of participating in a common activity or pooling resources to achieve a common goal. Banks use collaborative arrangements to pool human, technology, or other resources to reduce costs, increase operational efficiencies, and leverage specialized expertise.”
Renewed focus on this initiative could significantly reduce BSA/AML compliance costs. According to Stout, “Apart from the obvious cost benefits, resource sharing also allows access to specialized expertise that may be expensive or unnecessary for each bank to develop in-house.”
What is a Talent Community and how does it help?
Talent communities are networks of independent professionals available to place on a temporary assignment with an organization. Communities can be built and maintained through various platforms and channels, such as social media, online forums, events, webinars, newsletters, blogs, podcasts, etc.
Talent communities can offer many benefits to both regional banks and independent workers.
For regional banks, talent communities can help them:
- Reduce recruitment costs and time by having a ready pipeline of qualified candidates who are experienced in working in financial institutions, reducing the time to contribution.
- Attract and engage top talent who may not be actively looking for jobs or who prefer more flexibility and autonomy in their work.
- Access a diverse pool of talent with various skillsets and expertise that can complement or supplement their existing workforce.
- Increase retention and loyalty by providing meaningful opportunities for learning, collaboration, feedback, recognition, and growth.
- Foster innovation and creativity by tapping into the insights, ideas, and perspectives of external talent.
For independent workers, talent communities can help them:
- Find relevant and rewarding projects that match their skills, interests, and availability.
- Build relationships and network with other professionals who share their passion and vision.
- Learn new skills and enhance their knowledge through educational resources and events offered by the organization or the community.
- Receive support and guidance from mentors, coaches, or peers who can help them navigate challenges and achieve their goals.
- Gain exposure and visibility for their work and personal brand.
- Receive incentives for referring other workers to the Community.
Talent resource sharing at regional banks using a dedicated Talent Community is a promising strategy that can help overcome some of the key challenges they face in today’s market.
- Financial institutions have historically used outsourced services in their business mix, such as IT services where a certain level of expertise is required. This type of outsourcing is similar. It will require a level of safeguards and monitoring to work effectively.
- Building talent communities so regional banks have access to a wider pool of talent offers them more flexibility, diversity, innovation, value, and agility to pivot when and where needed. However, a Talent Community alone may not be enough to address all the talent needs at a growing regional bank.
- Highly efficient regional banks may warrant using a Managed Services Provider (MSP) in conjunction with a robust Talent Community. With an MSP, all processes and functions related to temporary workers are managed on behalf of the financial institution including a Talent Community.
To build effective talent communities, regional banks need to adopt a strategic and proactive approach that involves:
- Agreeing on the types of skills that can be shared. Factors should include level of required skill, engagement duration (works best for shorter engagements), work location (works best with remote positions), agreement on market-based rates (to avoid competition), and standard terms and conditions for usage.
- Creating a compelling and authentic employer brand that showcases their mission, vision, values, culture, and impact.
- Developing a robust content strategy that delivers relevant, engaging, and valuable information to the talent community members.
- Establishing clear communication channels that facilitate interaction, feedback, dialogue, and collaboration among the talent community members and the organization.
- Providing incentives and rewards that motivate and recognize the talent community members for their contributions and achievements.