The financial services market is an incredibly competitive space. Challenger banks aim to disrupt the traditional banking industry by offering innovative and customer-centric products and services. Working for a challenger bank can be exciting and dynamic, with many challenges and opportunities. As they are smaller and more agile than traditional banks, there is plenty of room for employees to grow and develop as the bank expands.
Challenger banks are making waves, building market share and wooing customers from traditional banks. Asked why they had opened an account with a challenger bank, 36 percent of respondents cited ease of account opening, 39 percent specified ease of use, 28 percent liked the banks’ use of technology, and 20 percent said compatibility with other apps.
However, challenger banks operate in a heavily regulated industry, with demanding compliance and regulatory requirements. Not all challenger banks will succeed, and there may be questions about the long-term viability of some business models or potential market challenges. On the other hand, up-and-coming banks are seen as attractive places for highly motivated, ambitious people to progress their careers.
Start-up culture
Challenger banks are likely to maintain a start-up style culture even after they establish their base; which makes for a dynamic environment; fast-paced and demanding, requiring employees to be adaptive, proactive and efficient. Leadership and HR professionals in challenger banks prioritise agility, enabling employees to experiment, innovate and generate and implement new ideas with faster decision-making and an openness to new approaches and fresh perspectives.
Hence, working for one of the newer banks can be an excellent choice for individuals who thrive in dynamic environments, are passionate about innovation and technology, and are committed to making a positive impact in the financial industry.
As with any financial institution, regulation can constrain operational flexibility, frustrating for leadership and employees alike. Challenger banks compete with larger, well-established banks and fintech companies for top talent, so attracting and retaining skilled professionals is a challenge, especially in the current labour market.
Employing external mentoring expertise
Offering a mentoring programme to employees can be a powerful tool for employee development, contributing to the growth and success of both individuals and the challenger bank.
While mentoring has often been used as an internal initiative that can benefit both mentor and mentee, increasingly mentoring initiatives encourage the use of expert external mentors. Internal senior mentors may not have either the time or objectivity to provide a sounding board for junior colleagues. Given the position of challenger banks in the company life cycle, the use of external mentors could add material value as there may be fewer experienced employees to act as mentors.
Here are some specific ways external mentoring can benefit employees in a challenger bank:
Knowledge sharing: An external mentoring arrangement would allow employees to benefit from a diverse set of outside experiences and expertise. External mentors can keep their mentees updated on the latest trends and innovations in the banking industry. Mentees would learn from the challenges mentors faced when they were developing their careers. This knowledge sharing can help challenger banks stay competitive, adapt to changing market demands, boost cognitive diversity, and avoid “groupthink”.
Skills development: External mentoring affords opportunities for employees to enhance their skills, strengths and competencies. A focus on skills development enables employees to take on more challenging tasks, positions, or projects, contributing to the growth of both the individual and the organisation. This area is particularly important for a challenger bank which may start with a relatively narrow range of products and services which will need to develop as the bank grows.
Career management: The innovative nature of challenger banks means they can offer dynamic career paths, but there may be less of a track record to be used as evidence. External mentors can utilise their own experience to offer valuable career guidance, helping mentees navigate their options and make informed decisions about professional development.
Networking opportunities: External mentors can offer advice on building a strong professional network. They can demonstrate the benefits of having a broader set of contacts within the organisation and the industry.
Building confidence: Mentorship can boost mentees’ confidence and self-esteem by offering constructive feedback and support. This is especially valuable in the high-pressure environment of a challenger bank. External mentors may be in a better position to establish trust with the mentees, to be objective and offer different perspectives.
Retention and engagement: Employees working with a mentor tend to feel more engaged and supported within the organisation. A positive mentoring experience can enhance employee satisfaction and improve retention rates as employees who feel supported and valued are more likely to remain loyal to the organisation, reducing turnover rates. Retaining key staff is particularly important for a fast-growing challenger bank.
Succession planning: Mentorship can play an important role in succession planning within challenger banks. By identifying and nurturing potential leaders, the organisation can be better prepared for future leadership transitions.
Cultural Integration: For new employees, adapting to the bank’s culture can be challenging. Mentoring fosters cultural alignment by reinforcing the organisation’s values, mission, and vision. It helps employees connect with the company’s purpose, driving greater engagement and commitment.
Diversity and inclusion: Mentorship can contribute to a more inclusive work environment. One potential initiative is to pair employees from diverse backgrounds, creating opportunities for mutual learning and understanding. In addition, mentoring can strengthen the culture of an organisation, enabling all employees to feel part of the bank.
Mentoring makes a difference
To stay competitive, challenger banks need to focus on engagement, development, and retention to create a dynamic and inclusive work culture. In a fast-paced and innovative environment, mentoring can be a valuable tool for on-boarding new employees, fostering professional growth, and retaining talent.
In short, mentoring can create a more capable and resilient workforce.
To speak to someone about our mentoring offering, please contact us here.
