| A man walking in London's Canary Wharf, where many global investment bank offices are based. |
Investment banks are increasingly embracing hybrid work to stem the loss of talent from the financial services sector, as many employees stand ready to quit over a lack of flexibility after the COVID-19 pandemic.
The past two years brought on a major reassessment of work and life priorities for staff across industries, with investment banking not immune to that shift. As business boomed and workloads soared, particularly for young bankers, staff departures accelerated, thus heating up the ongoing war for talent.
Quality of life has meanwhile become an important factor for accepting or staying in a banking job, with 56% of financial services employees in a recent survey saying they would consider quitting over a lack of work-life balance. Attractive pay no longer seems to be enough to keep the best and the brightest in the profession, according to people close to the sector.
"Money is important but everybody is paying," said Clare Hart, CEO of Williams Lea, an outsourcing services provider for global investment banks, law firms and consultancies. Offering additional workplace flexibility and making office visits meaningful for staff can make a big difference, she said in an interview.
Jumping ship
Nearly a third, or 31%, of 300 financial services and banking professionals polled by U.K.-based digital accountancy services provider LemonEdge in April said they are poised to quit the financial sector altogether. A further 31% of respondents said they are planning to change jobs within the sector. Among the key reasons for this "exodus of talent" are heavy workloads and long working hours, LemonEdge said.
Despite bonuses hitting record highs in 2021, attrition in investment banking, especially among junior staff, has increased, Logan Naidu, CEO of U.K.-based recruitment agency Dartmouth Partners, said in an interview. While not something new, departures among junior bankers accelerated during the pandemic as workloads mounted due to the boom in activity last year, Naidu said.
In March 2021, an internal survey showed that junior staff at U.S.-based The Goldman Sachs Group Inc. were routinely working 98 hours a week due to soaring business activity and demanding senior staff. Respondents said they were highly likely to leave the bank within the next six months if this workload was not reduced. In April 2022, more Goldman Sachs junior bankers threatened to leave after group CEO David Solomon pushed staff to return to the office, Fortune reported, citing comments posted on anonymous online message board Blind.
Goldman Sachs did not respond to a request for comment.
Calling staff to the office five days a week after the pandemic appears too rigid a requirement, even in financial services. In a YouGov survey in April, 14% of sector employees said they still consider the office as their main place of work, with 86% expecting to work partly or entirely from home. More than half, or 56%, of the over 500 respondents named quality of life as the main reason to consider quitting in the next two years, the survey conducted by the U.K.-based market research company on behalf of Bloomberg found.
Industry reacts
Growing attrition rates in investment banking are fueling the war for talent, Naidu said, while career options outside the sector are on the rise. "Whether that's on the buy side and private equity, or at fast-growing corporates, there are just more exit opportunities," he said.
Banks are increasingly pushed to expand their search for new hires beyond traditional channels, as talent is scarce everywhere. "You've got fewer analysts and associates to pick from other banks, so you're looking at potentially hiring from smaller boutiques, etc ...," Naidu said.
Pay has increased, especially for junior bankers, but this does not change the fact that investment banking is a hard sector in which to build a long-term career. It is also a job where long hours are an industry staple. While banks cannot change the reality of the job, many are thinking of ways to provide their staff with a better work-life balance through hybrid or remote work, Naidu noted.
European vs. US policies
Many of the leading global investment banks have rolled out hybrid work schemes. In Europe, UBS Group AG was among the first to promote flexibility. In as early as August 2021, CEO Ralph Hamers called on banks to embrace hybrid work. In March of this year, the Switzerland-based group said it would offer all U.S.-based employees the option to work entirely remotely.
In April, French group BNP Paribas SA signed a remote work charter with union representatives in Europe, allowing over 132,000 employees across 22 countries to work remotely 50% of the time, a spokesperson said.
Deutsche Bank AG has hybrid work options for all of its employees, including allowances of up to two days, or 40% of the work week, for investment banking staff, a spokesperson said. "Flexibility beyond 40% may also be granted where there are extenuating circumstances, subject to case by case review by Compliance and HR," the spokesperson added.
In May, Credit Suisse Group AG CEO Thomas Gottstein told Bloomberg it was unrealistic to expect staff to return to the office full time. The bank did not provide additional comment on its hybrid work scheme when contacted by S&P Global Market Intelligence.
U.K.-based groups HSBC Holdings PLC and Barclays PLC have both stated they are committed to offering employees work flexibility. The banks were not available for comment at the time of publishing.
In the U.S., the tone from senior bank leadership is more conservative. Three of the top five U.S. investment banks, namely Goldman Sachs, Morgan Stanley
The latter bank's CEO David Solomon told a conference in February that remote work is "an aberration," and Morgan Stanley CEO James Gorman said at a business summit in March that he expects staff to be in the office at least three to four days a week. "If you can go to a restaurant, you can go to the office," Gorman noted.
Bank of America has called all of its U.S. staff to return to the office full time from June 1.
The three banks did not respond to requests for comment.
JPMorgan Chase & Co., which was among the hard-line supporters of the return-to-office movement last year, recently softened its stance. CEO Jamie Dimon told shareholders in April that just half of the bank's staff will work from the office full time. The bank did not respond to a request for comment.
Citigroup Inc. stands out as the most open to remote work among large U.S. banks, with the group's co-head of banking, capital markets and advisory, Manolo Falco, telling media last year that hybrid work could give it a competitive edge over rivals in the war for talent. Citi is committed to offering hybrid work to most of its roughly 240,000 employees, a source familiar with the bank's policies told Market Intelligence.
Hybrid work
The work model of the future is shaping up to be hybrid, and organizations can leverage that to drive staff retention, Hart said. A growing number of firms with which Williams Lea has engaged recently are looking for ways to ensure their hybrid work model is successful and collaboration and communication are happening when staff attend the office.
"When we talk to our clients, one of the big issues is ensuring that people are not jumping ship. A big part of that is making sure they are feeling a purpose of being at their bank and having the opportunity to learn and grow," Hart said.
This is especially important for bringing junior bankers into the environment and the culture of the organization, Hart said. "If the senior banker is at the office but ignoring you, that's not good," Hart said.