EY Future of Pay 2026: Financial Services Projects 10% Salary Hike Amid Skill-Based Shift

Corporate India is witnessing a structural transformation in how compensation is planned, evaluated, and distributed. According to the fourth edition of the EY Future of Pay 2026 report, published by EY India and reported by the Economic Times, corporate India’s overall average salary increment for 2026 is projected at 9.1%. This reflects a gradual stabilization from the 9.3% increment delivered in 2025, underpinned by corporate cost discipline, broader market normalization, and an intentional transition toward skills-led total reward frameworks. The comprehensive study gathered compensation, variable pay, and talent attrition data from 178 companies spanning 16 key industry sectors across the country.

For professionals working within the banking, non-banking financial company (NBFC), and insurance domain, the outlook remains notably stronger than the national benchmark. According to EY India, the Financial Services sector is projected to deliver an average salary increment of approximately 10% in 2026. This projection positions Financial Services as the second-highest paying industry sector in the country, trailing only Global Capability Centres (GCCs), which lead corporate projections at 10.4%. The steady compensation growth in financial institutions highlights the ongoing demand for talent capable of navigating digital transformation, complex regulatory frameworks, and expanded credit delivery across urban and semi-urban markets.

The Transition to Skill-Based Pay Structures and Digital Premiums

A central finding highlighted in the Economic Times coverage of the EY India study is the rapid migration away from traditional, title-heavy compensation models. Nearly 45% to 50% of surveyed Indian organizations are actively transitioning from legacy role- or designation-based compensation hierarchies toward skill-based and outcome-driven pay models. Rather than granting uniform, across-the-board annual raises based strictly on job grades, financial institutions are increasingly allocating salary budgets based on individual capability matrices and specialized skill sets.

This strategic shift has created a widening pay differential between baseline functional roles and specialized technical capabilities. According to the Economic Times, specialized capabilities in artificial intelligence (AI), machine learning (ML), cybersecurity, and cloud architecture are commanding skill-based pay premiums ranging from 30% to 40% over standard functional baseline roles. In banking and insurance contexts, where data security, automated underwriting, fraud detection, and cloud-native infrastructure have become core operational mandates, professionals possessing proven expertise in these digital domains are capturing the upper bound of total reward allocations.

Reflecting on this structural transition in compensation strategy, Abhishek Sen, Partner and Leader (Total Rewards, HR Technology and Learning, People Consulting at EY India), observed that corporate reward strategies are becoming far more granular. According to EY India, Sen stated: "The future of pay in India is no longer defined by the size of the annual increment alone. It is increasingly about precision – deciding which skills to invest in, which outcomes to reward, and how to balance competitiveness with sustainability." This emphasis on precision indicates that professionals who continually acquire high-demand capabilities will experience disproportionate income growth compared to peers relying solely on tenure.

Attrition Dynamics and Turnover Across Financial Institutions

Despite steady salary growth, retaining talent remains a persistent operational challenge for financial institutions across India. According to figures cited by the Economic Times from the EY survey, Financial Services recorded the highest sector-specific attrition rate in the country at 24% in 2025. This figure stands significantly above the nationwide corporate average attrition rate of 16.4% across all surveyed industries.

The concentration of talent movement within financial services is particularly acute in customer-facing and digital operation functions. According to the research findings, talent turnover remains concentrated primarily in field sales, relationship management, and digital technology roles. Mid-level relationship managers and frontline sales personnel in retail banking and NBFCs frequently transition between competing institutions seeking higher fixed compensation, improved variable incentive slabs, or faster career progression.

Crucially, the nature of this workforce turnover suggests high candidate mobility and strong demand across the broader market. According to EY India, over 80% of workforce exits across surveyed Indian organizations remain voluntary. This high proportion of voluntary departures indicates that talent movement within banking, financial services, and broader corporate sectors is overwhelmingly opportunity-driven, rather than forced by corporate restructuring, downscaling, or involuntary layoffs. Professionals are actively leveraging market conditions to secure better-aligned roles, advanced designations, and skill-adjusted pay packages.

Variable Pay Calibration and Performance Differentiation

Alongside fixed salary increments, variable pay structures are undergoing refined calibration to reward exceptional performance and direct business impact. According to the Economic Times report on the EY India survey, the average variable payout across corporate India increased to 16.1% of fixed pay in 2025, up from 14.8% recorded in 2024. This expansion reflects a growing corporate strategy to tie a larger proportion of total employee compensation directly to measurable institutional and individual achievements.

Performance differentiation has become notably sharper within annual reward cycles. The EY findings indicate that top and outstanding performers across organizations are commanding salary increments that are 1.5x to 1.6x higher than those awarded to average performers. Within financial institutions, where revenue metrics and risk management outcomes are closely tracked, this multiplier ensures that high-performing individuals receive substantially higher overall compensation packages.

The distribution of variable compensation also varies significantly by organizational seniority. According to the report findings:

• Executive Leadership (CXOs): Variable pay averages 27.5% of total pay, reflecting heavy alignment with institutional profitability, asset quality, and strategic milestones.
• Individual Contributors: Variable pay averages 11% of total compensation, with the primary focus remaining on fixed monthly salaries supplemented by task- or target-linked quarterly and annual bonuses.

Comparative Industry Context: Aon India and Deloitte India Projections

The compensation trends identified by EY India align closely with broader market assessments conducted by other prominent human resource research firms in the region. According to comparative market studies cited by the Economic Times, concurrent studies by Aon India and Deloitte India project identical overall salary growth figures for 2026.

Aon India’s survey projects overall national salary growth at 9.1% for 2026, with sector-level expansion led primarily by Real Estate and Non-Banking Financial Companies (NBFCs). Similarly, Deloitte India’s survey projects an overall national salary hike of 9.1%, with sectoral leadership driven by Life Sciences at 9.9% and Manufacturing at 9.8%. The alignment across these independent studies underscores a consensus that Indian corporate compensation is stabilizing at a durable, single-digit growth baseline of ~9% overall, with specialized sectors like financial services consistently outperforming the broader market average.

BFSI Recruitment Distribution and Geographic Hiring Demand

To understand how these macro compensation trends translate into real-world career opportunities, tracking live market hiring activity provides practical context for job seekers and financial professionals. Data from Finploy's hiring repository illustrates robust demand for talent across Indian financial institutions, with thousands of active listings spanning commercial banking, retail lending, insurance underwriting, and technology operations.

As displayed in the market snapshot above, Mumbai remains the undisputed financial capital of the country, accounting for 11,232 open job listings on Finploy—more than double the combined total of all other major metropolitan hubs. This concentration reflects the concentration of corporate headquarters, credit risk management divisions, treasury desks, and wholesale banking teams in the Mumbai metropolitan region. Meanwhile, technology-heavy locations like Bengaluru, Pune, Chennai, and Hyderabad account for significant hiring volumes driven by digital banking hubs, GCCs, and core technology transformation teams.

Practical Guidance for Financial Services Professionals

The findings of the EY Future of Pay report present several clear strategies for professionals working within or aiming to enter the Indian financial services sector. As institutions shift toward skills-led total rewards, navigating career progression requires a focus on specific, high-value domain capabilities:

1. Target Niche Digital Capabilities: Given that skills in artificial intelligence, machine learning, cloud architecture, and cybersecurity carry pay premiums of 30% to 40%, traditional banking professionals should seek formal cross-skilling in digital tools, financial data analytics, and automated compliance tech.
2. Position for Outcome-Based Roles: With variable payouts rising to 16.1% of fixed pay and top performers earning up to 1.6x higher increments, aligning personal responsibilities with directly trackable business outcomes—such as credit portfolio growth, fee income generation, or digital onboarding efficiency—maximizes earning potential.
3. Evaluate Total Rewards Beyond Base Increments: Compensation evaluation must extend beyond the base salary hike percentage. Evaluating long-term incentive plans, variable pay slabs, performance multipliers, and structured skill bonuses provides a clearer picture of total annual earnings.
4. Capitalize on Regional Market Hubs: With Mumbai leading active employment listings alongside active technology hiring in southern and western hubs, financial professionals should evaluate geographical mobility when seeking career transitions, particularly for senior relationship management, corporate risk, and technology leadership roles.

As Indian institutions continue to refine their compensation frameworks, financial services remains one of the most lucrative and resilient sectors in the national economy. By staying aligned with high-demand technical capabilities and outcome-driven performance metrics, professionals can navigate the transition toward skill-based pay and secure above-average compensation growth in the years ahead.