European banks face a looming talent shortage. In the next five years, some large institutions will face difficulties filling positions crucial to the execution of their evolving strategies. While the best talent managers can tap strong internal contenders for such roles, many others will be forced to fill pivotal jobs with second-tier internal talent or with external candidates—a relatively expensive and risky approach for banks. To date, our research finds that European financial institutions have made little progress in managing talent effectively. Those that fail to act soon may have to forgo important growth opportunities.
We interviewed top HR executives at 13 large European universal banks,1 10 of which are among the top 30 in the region by market capitalization, in eight countries. Most bank executives told us that currently they don’t have enough qualified people inside the organization to fill critical positions. Within three years, we estimate, the talent gap will expand, leaving most banks unable to use top internal talent to fill 25 to 40 percent of their senior-executive positions and other roles with economic or strategic significance.
Moreover, we found that in the next three to five years, banks may be desperate for capable people to...