Banks and Credit Unions are Facing Staffing Shortages. Here’s Why.
It’s no surprise to hear that hiring and staffing shortages have been a significant challenge at financial institutions in 2023. Recent banking research by Rivel Banking show that 80% of community bank and credit unions list staffing as their biggest concern. Here are three staffing shortage challenges financial institutions face and how they might solve them.
Record-High Turnover Rates
In 2022, banks experienced a turnover rate of up to 25%, a nearly 10% increase from 2021. Financial institutions are not only struggling to hire, but they are also struggling to retain the staff they have. These numbers are the residual effect of the COVID-19 pandemic in 2020 and what many in the banking space called the Great Resignation. This also impacts customers, as a recent credit union study showed a 131% dissatisfaction rate increase with staff training levels, due to members frequently being served by new tellers or staff.
2. Shrinking Workforce
The workforce overall also continues to shrink, contributing to staff shortages in the financial sector. To give context, despite logging a 25% turnover rate and a nearly 10% turnover increase from 2021, the “quit rate” among financial institutions is lower compared to other industries. Financial institutions are feeling the pain of a growing problem across all industries. The Bureau of Labor Statistics estimates that the labor participation rate will drop again in 2023, marking the 13th consecutive year the workforce has shrunk, and shrinking more drastically since the pandemic.
3. Increased Competition for Top Talent
While the workforce continues to shrink, top talent is continually drawn to industries like tech and healthcare. The competition for top talent has never been fiercer, making it more difficult for financial institutions to offer competitive opportunities to attract and retain the best candidates.
“With the nationwide staffing shortage, Invo has helped bridged the gap between needing to hire new employees and not being able to find them”
Miranda Proe, Mortgage Support Manager — BluCurrent Credit Union
Three Potential Solutions
The reality is that staffing shortages aren’t going away soon. The workforce continues to shrink, and while that will eventually level out, that workforce still has a higher turnover rate than any workforce in modern history. But there are a few things banks and credit unions can do to compete.
Put community bank and credit union culture at the forefront.
Among the top reasons why employees leave their jobs include uncaring leaders, unsustainable work performance expectations, and lack of meaningful work. Community banks and credit unions are known for their desire to serve. Allowing that ethos to drive your work culture is attractive to this workforce.
Revisit traditional employment expectations, including compensation and benefits.
Among the top reasons why employees stay at their jobs include workplace flexibility, adequate total compensation package, and career advancement potential. As other workplaces continue to work around those factors, community banks and credit unions can be influencers in the workforce.
Deploy digital tools to get the most out of the staff you already have.
As financial institutions continue to look for qualified staff, the right digital tools can help in the meantime. Great River Federal Credit Union was able to staff its mortgage and new accounts departments with just three employees across nine different branches through user-friendly technology.