According to Oliver Wyman's annual State of the Financial Services Industry report, it was feared that after the collapse of Lehman Brothers in late 2008, the banking and financial services industry would collapse. As such, governments intervened on an unprecedented scale, providing financial institutions with over $1 trillion USD in debt and equity capital. The year 2009 was devoted to recovery, as will the rest of 2010 and 2011. Similar to patients recovering from a medical trauma, there are five stages to recovery:
- Intensive care. Provide continuous monitoring, treatment and life support.
- Convalescence. Provide lighter care and a protected environment to rebuild strength.
- Preparation. Doctors and patients take measures that facilitate a return to independence.
- Rebuilding. Patient sets goals for post-recovery life and starts work toward it.
- New lifestyle. Patient demonstrates a return to health and changed ways.
The intensive care provided by governments and central banks helped most financial institutions survive the crisis of late 2008. US banks are likely to consolidate from 7,000 to 4,300 by 2015. The crisis has dealt a serious blow to the already poor reputation of the financial services industry. Reputation will become a more important competitive lever, and its management an increasing concern for CEOs. Financial institutions will need to take a more customer-centric approach to business, aiming to provide customers with the financial outcomes they seek rather than simply pushing products.
Many who suffer life-threatening health crises survive them. But they do not all go on to enjoy the same quality of life. Some find a new lease on life, while others live out their remaining days as invalids. How the financial institutions that have survived the financial crisis fare will depend on many forces beyond their direct control. But it also will depend on how they choose to respond.
What does all this mean for the outlook on hiring? Many institutions are contracting while a select few are growing, but the industry as a whole is not as attractive as it once was; especially to college graduates entering the workforce. In short, companies in the financial services industry are going to have to do more to retain the talent they have, and even more to attract the talent they need.