True transformation in finance needs a reskilling revolution
The financial services industry has always been impacted by legacy technologies and skills gaps. According to a 2020 , 74% of companies are unable to find the right skills in the local labour market, and 43% report skills gaps in their present leadership teams. While top players in the industry like JPMorgan Chase have , the majority of companies are still to take action.
Evolving customer habits, cost-related pressures and shifting regulatory policies are the major drivers of this skills gap in the industry. In 2020, the COVID-19 pandemic has only added to the list. Customer habits are changing, employees are being recognised as stakeholders, and governance, risk and compliance impacts due to the pandemic have added pressure to adapt to new rules of doing business within weeks. In the process, a growing proportion of existing roles are being rendered obsolete. Yet, new skill-sets and rapid digital transformation initiatives offer potential to replace legacy ways of doing work with greater agility, efficiency and resilience – and at lower costs.
New skills for tomorrow’s workforce
The need for digital transformation in financial services is being rightly acknowledged, but one of the biggest challenges in transformation initiatives is skills gaps in the current workforce – gaps that cannot be closed by simply making new hires. It’s therefore vital that transformation happens in sync with organisation-wide upskilling and reskilling initiatives.
- Customer experience: Customer expectations are on the rise, and this is pressuring financial services companies to redesign the customer journey. Omnichannel, 24/7 engagement has become the norm rather than a differentiator, which calls for new value propositions. In the digital era, the cost and effort of switching providers is low, which places greater power in customers’ hands. As a result, user and customer experience designers are in high demand and hold significant value in today’s digital economy.
- Digital expertise: In a world where physical interactions are being replaced by digital interactions, collaborative skills for back-office processes, proficiency with software suites, and the ability to engage with customers digitally with an empathetic approach are becoming indispensable skills.
- Incubation and innovation: Rapid advancements in technology are refining various processes in the financial services industry. For example, consider new ways of judging credit-worthiness through IoT health data or . Bringing these innovations to the market requires teams with diverse yet specialist skills to work alongside rapid ‘build-test-learn’ pathways.
- Agility: To bring innovations to market, leaders are building agile teams, with hires from outside the industry partnering with startups on innovative products. This calls for a shift from a process-oriented approach to a project-based one, where more end-to-end responsibilities are met. This can be achieved if employees possess a wider skill-set encompassing multiple processes, rather than more concentrated, niche skills.
- Application development: Web and mobile apps are essential to increase speed-to-market of new solutions. These digital markets are therefore fuelling the demand for software developers, along with user experience specialists, marketing specialists and risk analysts.
- Automation: Increasing pressure on the bottom-line, especially during a restrained economy in the COVID-19 era, is forcing companies to adopt automation for various workflows. While these can complete mundane tasks, leaving employees to focus on more business-critical processes, ensuring the right data is being used and that security isn’t compromised requires very specific skills.
How to synchronise transformation in practice
The urgency of closing these skills gaps and retraining the existing workforce is obvious. However, rather than hindering it, many financial services companies may not realise of this reskilling revolution. Leaders in the finance industry are partnering with technology leaders to identify the right upskilling, reskilling and micro-skilling initiatives that can efficiently close these skills gaps. The problem should be recognised as one of social responsibility, which can be tackled by joining hands with competitors and investing in avenues that can impart key skills to the right people in the existing workforce – both in the short-term and long-term.
Another method to close the skills gap in financial services is augmenting the skill-sets of the current workforce with bootcamps and extended collaboration with top universities. Within organisations, creating team settings that are conducive to the transferral of skills is another effective measure for introducing new skills in the existing workforce.
Ultimately, then, legacy organisations need to realise that not only is technology changing the number and kinds of people working in banks and financial institutions, but the nature of their roles is also changing. While hiring new expertise will be unavoidable during demand spikes and urgent situations, the true value of digital transformation will emerge only when the workforce can run the ‘new machine’ smoothly. Until then, Finance 4.0 will be an aspiration that many companies fail to realise.