Digital Skills and the Financial Services Industry

The financial services industry is undergoing widespread digitisation, rapidly developing its services to meet the mobile-first experience demand from customers and clients. All the while FinTech firms are challenging traditional banks to update their ecosystems to remain competitive.

As the digital native generation is maturing, more customers are now doing their day-to-day banking transactions and data management through digital channels. Currently, 46% of people exclusively use digital channels for their financial needs and this number is expected to grow.

Traditional banks have already made reductions to the number of physical branches with more people favouring the mobile-first experience. The COVID-19 pandemic has accelerated this transition. If current footprint reduction trends continue, brick-and-mortar banks could be extinct by 2034, according to a study commissioned by Self Financial.

The old banking model does not fit the mindset of the present-day consumer or business, instead, mobile-first experiences demand greater flexibility, simplicity, and immediacy.

Skills challenge

For firms to gain a competitive edge, they must ensure staff have the skills and ability to adapt to changing consumer trends. Demand for digital skills has skyrocketed in recent years and the trend is growing exponentially; 12% of all current UK job vacancies are for digital jobs, a +2% increase from 2020. Although, evidence shows that most workers are not sufficiently skilled for a digital economy to thrive.

According to research from Learning & Work Institute, under half of UK employers (48%) believe that young people are leaving full-time education with sufficient advanced digital skills and 76% of businesses believe that a lack of digital skills would hit their profitability.

55% of global financial institutions believe that they are failing to innovate due to a skills shortage. According to The Financial Services Tech Job Report, the most sought-after occupations are software developer, business analyst, application developer, senior software developer, and systems engineer. As this list suggests, financial services firms are hiring digital talent to build better support for remote working, collect and analyse data as well as build next-generation applications.

According to research by analytics company Visier, only 59% of UK financial services workers said they are confident their employer is bringing in the right people to keep pace with clients' expectations for digital services. More than two-thirds believe that the sector’s lack of available candidates is holding back their company’s digital transformation strategy.

Skills solutions

There’s room for growth in the UK’s digital economy in these turbulent times. Indeed UK reports that software developer job postings in the UK have already bounced back above pre-pandemic levels. Post-Brexit digital innovation could also lead to an additional 300,000 high value-added jobs, according to a report from GMEX Group and Greengage.

However traditional career models are failing to close the digital skills gap. This problem is exacerbated by the post-pandemic challenges all organisations are facing – doing more, with less. Job vacancies for graduates and trainees in the UK have been hit hard recently with the number of roles in the first half of 2021 down 66% when compared to the same period in 2019.

The challenges are often simply due to a lack of training resources available and managers without the capacity to manage the training needs of these professionals. One solution involves digital training academies, that specialise in providing resources, developing expertise, and ensuring the quality of candidates through practical certifications. Reskilling is a transition that most firms cannot do alone, training academies can help firms understand the data behind workforce requirements. Critically, firms can gain access to a wider talent pool when they look beyond their traditional, over-subscribed talent pipelines; thus, adding value through increased diversity and inclusion.

Another focus is the example of a large retail bank that has taken measures to improve social mobility, currently ranking among the top 30 employers in the Social Mobility Employer Index 2020. They were commended in several key areas including offering a wide range of apprenticeships, ensuring good outreach through educational workshops, and offering paid work experience and internships to those from lower socio-economic backgrounds.

The FS industry must look towards a modern solution to bridge the digital skills gap whilst keeping a strong focus on diversity and inclusion, especially as national economies recover in the wake of the pandemic.

This blog was originally posted on Scottish Financial Enterprise.