Are financial services firms losing talent through poor reward packages?

The financial services sector is one of the jewels in the UK’s economic crown. In 2023, it contributed £208 billion to the UK economy, representing 8.8% of its total economic output.

However, it’s facing a number of challenges, including the risk of a talent drain due to inadequate reward packages.

A sector under increasing pressure

The sector has faced a number of hurdles in recent years, and continues to navigate various uncertainties. There has been a raft of redundancies, with companies restructuring and streamlining operations in response to economic challenges and technological advancements, such as AI-driven automation.

Lloyds Bank, one of the UK’s largest financial institutions, has unveiled plans that will significantly reduce UK headcount, while HSBC and Santander are also likely to cut jobs in a bid to slash company costs.

Despite such difficulties, London remains a leading global financial hub. In the first three quarters of 2024 alone, fintech firms secured £810 million, more than doubling the previous year’s total of £354 million.

To stay ahead of the game and propel growth plans, firms across the sector will need to retain talent – offering effective reward packages is a vital step.

A workforce requiring urgent support

With energy, water, council tax, broadband and mobile bills all shooting up in ‘Awful April’, financial services employees are looking to their employer for additional support.

Good salaries are no longer enough. As household costs continue to rise, the importance of providing an effective means to support employees’ financial situation is more pressing than ever.

Our latest research reveals that over half (52%) of employees say a good benefits package is now the most important thing they look for in employment. And two-thirds (64%) of financial services employees want more financial support in their benefits package.

Financial services firms are well aware of these demands. All (100%) the firms we surveyed say their employees are now asking about benefits packages more. And the sector appears willing to invest in its rewards offerings – despite the recent increase in National Insurance Contributions (NICs), a quarter (24%) of firms will be increasing investment into benefits packages this year.

In theory, this is great news – but we have also identified a potentially damaging disconnect.

Our report has identified a clear gap between what employees working in financial services want, and what their employers are offering. Six in ten (62%) workers told us they don’t use the majority of benefits on offer, while 36% feel their benefits are irrelevant to them. Around a third (31%) don’t think their employer listens to their needs.

Whereas private medical insurance (47% of employees named this as one of their priority benefits) and increased pension contributions (45%) are the most important benefits for employees, financial firms are actually prioritising paid mental health leave and sustainability benefits (34% and 29% of firms offer this respectively). There is currently a glaring mismatch between what is sought and what is offered.

Poor benefits packages are placing the sector at a very real risk of losing talent, with over half of workers (54%) willing to leave their current job if a competing company offers them a better benefits package.

Turning to technology

Luckily, there is an easy way to fix this disconnect.

The latest employee benefits technology has become a key enabler in addressing such workplace challenges. Just as banks and other financial firms are busy adopting technological innovations to unlock new efficiencies across their business, they should adopt them to ensure they can attract and retain talent.

By prioritising two-way communications channels, advanced employee benefits platforms can boost engagement, provide real-time insights into benefits utilisation, and ultimately allow financial firms to adapt their offerings simply and effectively. After all, if you don’t know what your people are looking for, how can you provide it?

Nearly all the employers we surveyed (99%) agree they would see better employee engagement with their benefits packages if they were more personalised. If both parties are to reap the rewards, financial services firms must work harder to create more targeted benefits packages that their employees will truly value.

A well-structured benefits package is crucial to supporting happy, productive employees, which in turn helps to enhance business ROI and drive revenue.

It’s in an organisation’s best interests to get this right.