Pallab Mukherji, Chief People Officer at Equitas Small Finance Bank, talked to All Things Talent about the bank's evolution in talent management, as the organisation grew from a Microfinance Institution (MFI) to a bank with diverse products having operations across India.
The banking sector is navigating complex challenges in talent management, significantly influenced by the rapid evolution of technology and the changing dynamics of the workforce. According to a KPMG survey, banks are increasingly investing in technology and talent to drive growth; indeed, faced with a severe shortage of digital skills, 60% are investing to develop digital and fintech capabilities. This trend necessitates a strategic approach to talent acquisition and management, aligning closely with the changes Pallab Mukherji, CPO, Equitas Small Finance Bank discusses here:
With your extensive experience in the financial sector, what have you observed in terms of talent both in the sector in general and specifically at Equitas Bank?
Before I delve into talent management, let’s take a moment to understand Equitas. The name Equitas embodies the values of Fairness and Transparency, which serve as the foundation for all our interactions with customers and employees. My observations in terms of talent, both generally in the sector and specifically at Equitas Bank, are influenced by the evolution of the institution and the constituency of its human resources.
Equitas embarked on its journey in 2007 as a microfinance company with a primary focus on Tamil Nadu. Subsequently, in 2012, we achieved a significant milestone through our expansion into vehicle financing. This was followed by the introduction of mortgage services, specifically catering to the needs of microfinance customers who were making strides towards economic progress. By 2015, equipped with our NBFC (Non-Banking Financial Company) license, we were able to serve the underserved and unserved segments of society with a diverse portfolio of products, ranging from microfinance to commercial vehicle loans and loans against property (LAP). This strategic focus was also reflected in our employee base, which predominantly comprised individuals from societal sections.
The significant shift in our talent landscape began in 2016 when we transitioned into a Small Finance Bank. This change was marked by the need to set up a robust network of branches and diversify our talent pool. Equitas set about the ambitious target of setting up around 400 new branches in its first year of operations and attracting talent to fuel the growth. The shift to banking meant garnering deposits from a varied customer base, requiring a different set of skills and experiences. As a result, we started attracting professionals from various private sector banks, a departure from our earlier recruitment, which was primarily from NBFC or microfinance backgrounds.
Our geographical footprint also expanded beyond Tamil Nadu and today, we are present in about 18 states across India. At the time of my joining Equitas our workforce consisted of around 16,000 employees; today, our count stands at more than 22,000 a growth of around 38% in about 3.5 years. This notable increase in our workforce includes both long-tenured employees, some who have been with the Bank since inception as well as fresh talent who have recently joined our Bank. This diversity within our employee base not only enriches our organisation but also reflects our commitment to fostering an evolving and dynamic talent pool.
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The most substantial challenge we face in any Professional Development Program (PDP) or similar initiative is time. Adult learning is a process that doesn't happen overnight; it requires time to bear fruit. This is often at odds with the constant pressure of quarterly targets and efforts, which can act as a major deterrent to investing the necessary time and effort. Organising a programme for twenty leaders at a premier management institute considering the logistics and costs, is a time-intensive endeavour both for the participants as well as the organisation.
With the BFSI sector experiencing a significant increase in hiring and a growing demand for talent in emerging, data-driven technologies, how has Equitas Bank, with its longstanding presence in the industry, adapted to these changes?
When I joined Equitas Bank, I witnessed a significant shift in the talent landscape, both in the broader BFSI sector and within Equitas Bank, largely contributed by the emerging product base and the pandemic. The sector has seen a surge in hiring, with a growing demand for skills in emerging technologies and data-driven approaches. At Equitas Bank, these changes have been particularly notable.
Historically, banking technology has always been at the forefront, with innovations like the Core Banking System (CBS) introduced in many places before the turn of the century. However, the adoption of technology in frontline operations has accelerated, partly as a by-product of the pandemic. For instance, virtual meetings, once a rarity, have become commonplace even for board meetings.
The essence of banking hasn't changed; it's the delivery of the services that have evolved. Today's talent, especially the younger workforce, is more adept with technology, which aligns well with the decreasing reliance on traditional methods like cheque transactions. This shift is not only important for employees but also for customers, as we focus on improving financial literacy.
At Equitas Bank, we pride ourselves on our culture, underpinned by core values Of Customer-First, Fairness and Transparency, Ownership, Respect for People and Pride of Performance. Therefore, ingraining culture into the ethos of the organisation across levels and vintage becomes a core task of the HR team. To this end, we had a dedicated culture team which conducted programs where each value was broken down into observable behaviours to enable easy comprehension. On the other hand, we had Regional Culture Champions propagating the values through town halls and other gatherings.
In our pursuit of leadership development, we strongly emphasise cultivating internal talent and have established a competency framework across levels to develop potential leaders. Through a strategic partnership with a premier institute in India, we have crafted a bespoke program that aligns with our banking style. This program is specifically tailored to cater to the needs of the underserved sector we primarily serve. By adopting this approach, we ensure that our employees grasp and fulfil the distinctive requirements of our customer base, particularly those who are new to credit.
Technology has become a crucial component of banking, not just in IT but across all functions. For example, the approach to fraud risk has shifted from transaction-level to customer profiling, requiring a deeper understanding of data analytics. Finally, we believe in Leadership at All Levels. Our programmes are designed to prepare high performers for roles like branch managers, focusing on three key elements: Ambition, Capability, and Loyalty. We focus on employees who show the potential and desire for growth. Our unique recognition programmes like VALAR & GROW at Junior levels and other initiatives like EMBRACE for mid-management, are part of this comprehensive approach to talent development at Equitas Bank.
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How do you ensure that your programmes remain relevant and effective?
To keep our programmes relevant, it's crucial to understand that leaders, or even their immediate subordinates, don't necessarily need to be experts in technical skills like Python. What's essential is their understanding of what can be achieved through these technologies. For instance, during COVID, we launched the 'selfie account' feature, enabling account opening digitally through Video KYC. This initiative, allowing account opening from anywhere in the country with certain transaction limits, was a huge success, leading to about 50,000 new accounts per month. Being aware of such innovative models and assimilating them into our practices is key to success.
We focus on creating integrated platforms that combine our Loan Origination System (LOS) and Loan Management System (LMS) to offer customers a seamless experience. It's the role of the Technology Team to present these options to business leaders, who then decide whether to adopt or adapt to them. This approach applies to various functions, including HR, where we have taken on board tech solutions tailored to different business modules and leaders. We also offer benefit structures that are adaptable across different levels and functional groups. Flexibility, alongside effectiveness and efficiency, is a significant focus area.
To keep our programmes relevant, we encourage participation in networking sessions and learning platforms at all levels. For example, selected management team members recently attended a programme in INSEAD on strategic banking, which was a significant step for a smaller bank like ours, allowing us to interact with banking leaders from Europe and around the world. Additionally, we have a Professional Development Program (PDP) where employees can choose and participate in areas or programmes they wish to excel in, with the company bearing the costs.
Were there any challenges you've encountered while implementing your development programmes?
The most substantial challenge we face in any Professional Development Program (PDP) or similar initiative is time. Adult learning is a process that doesn't happen overnight; it requires time to bear fruit. This is often at odds with the constant pressure of quarterly targets and efforts, which can act as a major deterrent to investing the necessary time and effort. Organising a programme for twenty leaders at a premier management institute considering the logistics and costs, is a time-intensive endeavour both for the participants as well as the organisation.
Ensuring involvement and buy-in from various levels within the organisation is crucial. We strive to involve business leaders and myself in the designing and delivery of these programmes, which helps in gaining more commitment from the participants. We also explore both formal and informal mentoring opportunities and have structured meetings at relevant times to support this. Admittedly, there are drop-offs. Not everyone who starts with us in these programmes may stay until the end. While this is not indicative of a problem per se, it's a reality we have to accept and manage.
Do you believe that development programmes help insulate the organisation from geopolitical influences?
Our commitment to our five core values has significantly contributed to maintaining a low attrition rate among our top performers, which is in the single digits. This is particularly noteworthy considering that at the organisational level, we experience around a 32% voluntary attrition rate. Such a high rate is not unusual in the current industry climate. The challenge is more pronounced for us compared to larger banks, which often have other partners to handle ground-level operations. We lack that advantage, making our focus on development programmes even more crucial in building talent.
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Considering the leadership succession pipeline you are developing, how does this influence the ongoing discussion about whether to build internal talent or buy external talent?
In our approach to building a leadership pipeline, we balance between developing internal talent and bringing in external expertise. For instance, in areas where specific skills are lacking internally, such as our credit card business, we opted to hire leadership externally. This is because certain skills are not readily available within our existing team, and we need to 'buy' that expertise. However, for other segments of our business, like mortgages or commercial vehicles, which is a significant area for us, we prefer to 'build' from within. We have employees who started as Area Managers or Cluster Heads a decade back currently heading zones or a business division.
The significant shift in our talent landscape began in 2016 when we transitioned into a Small Finance Bank. The shift to banking meant garnering deposits from a varied customer base, requiring a different set of skills and experiences. As a result, we started attracting professionals from various private sector banks, a departure from our earlier recruitment, which was primarily from NBFC or microfinance backgrounds.
Do you have specific goals for your development programme in the next one or two years?
Yes, we do have goals for our development programme, but they are contingent on the growth of the organisation. As we grow our product suite and geographical presence, we expect more and more people to grow into their roles. However, our overarching aim is to fill at least one-third of our positions internally over the next year or two focusing not only on vertical growth but also on creating opportunities for horizontal growth within different departments and functions.
About the expert: Pallab Mukherji is the Chief People Officer of Equitas Small Finance Bank. Before joining Equitas Small Finance Bank, he worked with HDFC Bank, Arvind Mills and the India Infoline Group. He has also worked as a consultant in HR for several banks and financial services companies in India, South Asia and the Oceania regions.