What is the finance industry?
The financial industry is a part of the economy made up of firms and institutions that provide financial services to commercial and retail customers. This sector is made up of a broad range of industries including banks, investment companies, insurance companies, and property companies. The commonality between all these types of enterprises is that the majority of the workforce employed has somewhat the same type of education. Degree holders in accounts, economics, banking, statistics, business management etc make up the majority of the workforce. What distinguishes the financial institutions from others, is the relatively small share of real assets so the direct impact of financial institutions on the economy is relatively small.
The indirect impact of financial institutions on the economy is too important to be ignored. The financial sector mobilises money. It provides not only payment services, but also enables organisations and households to cope with economic uncertainties. They offer many services such as loans, installment services, savings accounts etc. An efficient financial sector reduces the cost and risk of producing and trading goods and services and thus makes an important contribution to raising the standard of living.
The importance of the role of HR in the finance industry
When we realise this significance of the financial industry and its role in the economy and our daily lives, only then can we recognise the importance of HR in this crucial sector. Unlike other industries that have a good balance between the four factors of production. The financial sector is heavily dependent on one of the four, which is labour. Normally there are four factors of production; land, capital, enterprise and labour. Here we are not ruling out the importance of land, capital, and enterprise in the financial market, of course, they are indispensable factors However, if there is one that is the most important, it is labour. The paramount influence of the workforce in this industry calls for paramount consideration of the HR works.
HR forms part of the back office in a financial services firm. But this by no means implies that the professionals that work in this industry are hidden away backstage. HR must sprawl across every area of a bank or financial organisation. As well as communicate effectively with the employees of all levels in each department, senior managers and even the executive board members.
One of the HR trends in the financial sector is increasing diversity. Previously, the finance sector has been male-dominated. Now, the financial industry is focusing on drawing in more bright young females with the potential to reach senior levels in the company. There are more and more initiatives in place now to make this happen. For example, the Big Four firms of the financial sector (PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte) run a number of events to encourage and promote diversity. The bank BNP Paribas has started up its own ‘Diversity Week’. This trend towards diversity implies that HR managers in financial firms are often involved in events, presentations and online discussions. They need to come up with creative ways to reach out to target diverse groups. Then to encourage them to apply for the company, and aspire for more senior roles there. They must then ensure there are the provisions in place to help them to achieve that.
Another trend in this industry is the advancing technology, there’s no escaping this. It influences the sector in so many areas. The internet and social media have had a huge impact on the way many financial firms interact with their customers. The more complex jobs are safe, but it’s common for lower value operations to be replaced by automation.
One big change that has affected this industry in the last few years is increasing threats from the world of the internet. In recent years we have witnessed countless incidents of the online operations of financial firms being exploited at the hands of hackers and phishers. Bank account and credit card details of thousands of customers of some banks have been stolen by hackers,. This has delivered heavy blows to the repute of the banks. The danger of data theft makes way for relatively new entrants to this industry; cybersecurity specialists. Cybersecurity now is of utmost importance to banks and financial firms and requires a new set of skills to be included when HR is looking for employees.
Like the rest of the world, the banking and finance sector is also shifting towards digitalisation. Not only in the affairs of the office, but also the client. Bank interaction is becoming increasingly digital. People tend to pay their bills and transfer funds using mobile banking instead of taking the tedious journey to the bank and then wait in lines. Anticipating this trend, HR teams are now focusing on hiring employees that are going to help develop the mobile banking service rather than those who sit in the banks 9 to 5 and work on paper. Full-time bankers such as receptionists, tellers and managers are still needed because a segment of the population still prefers to make and receive their payments in hard cash.
Jobs at financial firms are notoriously unpopular because of their monotonous and boring work schedule. Often bankers leave their high paying jobs and start working elsewhere. This is just because they found their job boring and unchallenging. This is a challenge faced by HR teams. They have to work to change the way bank workers perceive their jobs. HR teams are focusing on making the offices more fun by introducing Gamification. As well as presenting situations where employees feel more passionate about their work.
Read about the role of HR in the engineering sector here. Alternatively, an overview of the top five sectors here.