According to PwC, financial sector CEOs note that human capital is the second most important factor needed in order to capitalize on growth opportunities, behind technological capabilities. Talent shortages are a cause for concern in the financial industry given that institutions are going through the digital transformation. Although the industry recognizes the need to attract and retain talent, only 5% are confident that they can secure all the types of talent that they need to succeed. Increasing automation, limited availability of key skills and the changing demands of individuals are some of the key talent trends in the financial industry.
- Increasing cooperation between humans and machines
As technology and automation are replacing the basic functions in financial institutions, there will inevitably be greater cooperation between humans and machines. The world’s biggest investment banks have reduced front office headcount by more than 20% since 2011 and this trend is likely to continue. Also, by 2020, the bulk of routine transactional tasks in the area of underwriting, trading and financial advice will have been automated. This certainly requires a rethink about the way humans interact and collaborate with technology in these functions.
- Limited availability of key skills
As the basic skills in financial institutions are being replaced by automation and artificial intelligence, existing talent will lose their functions, resulting in the emphasis on key skills. 70% of chief executives in the financial industry concur that this trend threatens future growth prospects. According to Deloitte, the top skills needed for the changing industry is the understanding of regulation and risk, industry experience and capacity to anticipate change. The limited availability of key skills will mean that financial institutions will have to invest more time and resources in the development of their current talent while generating value to attract the top talent.
- Changing demands and expectations of talent (talent as individuals)
Given the increase in demand for talent with key skills, retaining and attracting such talent will be challenging. Talented individuals who possess the key skills have more opportunity to move to different organizations that have a culture or reputation which aligns with theirs. Moreover, since 2 out of 5 people around the world believe that traditional employment will slowly disappear, such individuals might eventually sell their skills to those who need them.
The shift towards automation and digital transformation will no doubt lead to a range of challenges across stakeholders, clients, regulators and consumers. To combat this challenge, the redesigning of jobs and compensation models becomes particularly pertinent. On the part of training, HR departments can incorporate gamification into their recruitment strategies to test certain targeted attributes of talents. Training and coaching for current employees can be more personalized and transparent, with a focus on how current technological innovations are applicable to daily tasks.
Moving forward, financial institutions need to embrace innovation and ensure that their talent profiles move in tandem with existing developments. An important process for the shift is to develop programmes to support individuals whose roles have become redundant as a result of automation.