Recent findings from KPMG’s UK Financial Services Sentiment Survey reveal a growing concern regarding the retention of Generation Z employees within the financial services (FS) sector. The data indicates that one in four Gen Z employees left the industry over the past twelve months, with almost half of FS leaders reporting a noticeable increase in turnover among younger staff. This trend, most pronounced within the banking sector, signals a pressing challenge for institutions seeking to secure the next generation of talent.

Despite widespread efforts by firms to enhance flexibility, wellbeing, and professional development, a mismatch appears to persist between what Gen Z employees seek—autonomy, purpose, and entrepreneurial experience—and what the sector currently offers. The following report outlines the key findings, explores the underlying causes, and examines the strategic responses required to ensure a sustainable future talent pipeline for financial services.

Key Findings

Escalating Turnover Among Gen Z Employees

KPMG’s quarterly survey, encompassing the views of over 150 financial services leaders, estimates that 26% of Gen Z employees departed the sector within the past year. Moreover, 49% of FS leaders have observed an increase in attrition among younger employees, with the banking industry being most affected—54% of banking leaders reported heightened departures.

This pattern suggests a systemic retention issue that extends beyond individual organisations. As Gen Z begins to form a significant portion of the workforce, such attrition rates could have long-term implications for innovation, diversity of thinking, and leadership development within the sector.

Declining Ease of Retention

Nearly one-third of respondents (31%) stated that retaining Gen Z talent has become more difficult than five years ago. This shift indicates not merely a cyclical challenge but a structural one—reflecting deeper generational differences in work expectations, values, and attitudes towards traditional career paths in finance.

Reasons for Gen Z Attrition

The survey identifies multiple, interrelated factors contributing to this exodus from financial services roles:

• Preference for start-ups (42%) – Many younger professionals are drawn to smaller, agile organisations offering innovation and rapid progression.

• Attractive opportunities in other sectors (36%) – Technology, creative industries, and sustainability-focused sectors are perceived as more dynamic and purpose-driven.

• Desire for self-employment or freelance careers (35%) – Reflecting a shift towards autonomy and entrepreneurial ambition.

• Demand for greater flexibility and remote working (34%) – A preference that may conflict with regulatory and operational requirements in finance.

• Cost-of-living and relocation pressures (34%) – Particularly acute for employees in major financial centres such as London.

• Perception issues (27%) – Persistent stereotypes of finance as rigid, hierarchical, or ethically detached continue to deter younger talent.

• Lack of purpose or social impact (26%) – Many Gen Z professionals prioritise roles aligned with environmental, social, and governance (ESG) objectives.

• Mental health and wellbeing considerations (24%) – The high-pressure culture traditionally associated with finance remains a deterrent.

• Office attendance policies (22%) – Mandatory in-office requirements conflict with expectations of flexibility.

As Karim Haji, Global and UK Head of Financial Services at KPMG, notes, the data reflects “a real competitive challenge for financial services,” emphasising the need for young talent to bring diversity of skills and thinking. He warns that firms must find ways to deliver an entrepreneurial experience “for a social media generation in a heavily regulated environment.”

Current Organisational Responses

Encouragingly, 96% of FS leaders report taking action to improve Gen Z retention. The most prevalent strategies include:

• Flexible working arrangements (52%), including term-time contracts and staggered hours.

• Enhanced engagement and feedback initiatives (49%) to strengthen communication and inclusion.

• Improved mental health and wellbeing programmes (47%) to address the stresses associated with high-intensity work environments.

• Mentorship schemes (47%) and structured early-career training (46%) to foster professional growth and belonging.

• Purpose-driven initiatives (38%), including stronger integration of ESG priorities.

• Revised office attendance policies (33%) to promote a more balanced hybrid culture.

While these measures demonstrate a sector-wide commitment to improvement, KPMG’s analysis highlights a disconnect between organisational initiatives and Gen Z expectations. The current emphasis on flexibility and wellbeing, though essential, may not fully satisfy the generation’s desire for innovation, empowerment, and purpose-led work.

Strategic Implications for Senior Leaders

To address the widening gap between expectation and experience, senior leaders in financial services must consider the following strategic imperatives:

• Reimagine the Employee Value Proposition (EVP): Firms should articulate a clear purpose that resonates with Gen Z’s values, particularly around sustainability, ethics, and community impact.

• Foster Intrapreneurship: Creating spaces for innovation within corporate structures—such as internal start-up incubators or idea labs—can help replicate the autonomy sought in start-ups.

• Modernise Leadership and Culture: Senior executives must model inclusive, transparent leadership styles that align with younger employees’ expectations for authenticity and collaboration.

• Invest in Digital and Creative Skills: Equipping young professionals with opportunities to work on emerging technologies and data-driven projects can enhance engagement and career satisfaction.

• Balance Regulation with Agility: The sector must explore creative ways to maintain compliance while offering greater flexibility and innovation in job design.

Conclusion

The findings of KPMG’s survey present a stark yet valuable insight into the evolving workforce dynamics within financial services. With one in four Gen Z employees leaving the sector each year, the challenge transcends traditional retention strategies. Firms that wish to attract and retain this new generation must go beyond flexible policies and wellbeing support; they must cultivate environments that foster creativity, purpose, and a sense of ownership.

As Karim Haji emphasises, the future success of financial services depends upon its ability to engage young talent “seeking autonomy, variety and entrepreneurial experiences.” The onus now lies with senior leaders to adapt, innovate, and build a culture where the ambitions of Gen Z and the imperatives of financial services can thrive in harmony.