Technology Increases Skills Gap in Financial Services

In a report by PwC examining financial services business leaders’ confidence and outlook in the sector, the findings show the scale of the talent challenge they confront from technology’s acceleration.

Nearly a fifth of Financial Services (FS) CEOs believe that technology has completely reshaped competition in their industry over the past five years, and 28% believe it will do the same again in the next five. As a result, FS leaders anticipate significant changes in the types of people they need, leading to over 72% seeing the limited availability of skills as a threat to growth, up from 70% last year. Concern is highest in the insurance (81%) sector.

Despite this, and wider uncertainty over global economic growth, regulation, and wider geopolitical issues, just over half (51%) expect to increase their headcount in the next 12 months. Although there are low levels of planned job reductions (17%) four out of five of those roles (86%) will be affected as a result of automation and technology account - higher than the global average across all industries in PwC’s CEO survey (80%), underlining technology’s impact on the sector.

Other threats to growth identified across the sector are all linked to sector’s talent concerns including the speed of technological change (73%), changing customer behaviour (69%) and cyber threats (73%). As a result, CEOs now rank adaptability and collaboration on a par with traditional financial services skills such as problem solving and risk management.

Actions to address the skills issues include changing people strategies for recruitment, retention and development (71%), and diversity and inclusion (85%). Almost two thirds of organisations (63%) say they have added digital training to their learning programmes, 49% are exploring the benefits of humans and machines working together and 41% are considering the impact of Automated Intelligence on future skills needs. However despite the commitments, the report warns significant shifts in policy or action are not being reported, and with concern on skills so high, plans need to turn into action.

Behind the headline results, significant sector variations emerged on recruitment, and talent issues. Asset & Wealth Management (AWM) CEOs are much more likely to be increasing headcount (64%) than their counterparts in Insurance (41%) or Banking and Capital Markets (45%). Insurance CEOs have the biggest concerns over skills shortage (81%, up from 70% last year as a threat to growth) and the related pace of technological change (83% up from 69% last year).

Banking and Capital Markets CEOs are marginally less concerned about the availability of key skills (68%) and are the most likely to be using data analytics to find, develop and keep people (52% vs 45% in Insurance and AWM.) 70% say it is harder to gain and retain trust in a digitised world (69% globally). Concern is highest in Banking & Capital Markets (76%) and Insurance (72%). In addition to technical skills, digital skills are rated as more important by the FS sector than the global average for all sectors(83% vs 79%).