Attrition in the financial services sector is accelerating as total employee departures are expected to be nearly 25% in the first nine months of 2022, an exclusive HR trend analysis for ET by consultancy firm showed. Ann.
Within the banking, financial services and insurance (BFSI) space, the life insurance segment posted the worst loss at 47% and general insurance at 33%. Domestic banks continued to record high attrition levels at nearly 31%, followed by fintechs at 27%.
“Banks and NBFCs are struggling with attrition and they have lost a lot of people to fintech, start-ups and technology companies,” he said. Rubank ChaudharyPartner at AON Consulting. “Financial services firms face a major challenge in retaining talent because they are highly regulated and have little recourse in providing career paths, remote working flexibility and better compensation.”
Chowdhury added that regulatory approvals are required for key executive hires in the industry.
“We are also seeing the central bank regulating the compensation of top management in banks and NBFCs. It is also closely monitoring variable pay, which discourages senior-level hiring because you can use very little structure to pay CEOs and CXOs,” Chowdhury said.
Banks across the board are seeing high levels of unemployment, especially among junior staff.
Aon analysis shows that between January and September, the banking sector grew by 24.7%, with domestic banks at 30.6% and foreign banks at 16.3%. Fintech players also contributed to high attrition levels of 27.4%. Wealth management players also saw significantly higher attrition at 26.4%, while investment banks saw departures at 21.8%. The lowest exits in the BFSI space were recorded with asset management firms at 16.3%.
“Attrition is less of a problem now than it was six or nine months ago,” he said Jairam SridharanAt Managing Director Piramal Capital and Housing Finance. “Especially coming out of covid, a lot of people have left, but I feel optimistic that the last six months have been very beneficial. In the first year of covid, the attrition rate went up 15 percentage points; in the last six months it came back 7 percentage points.”