The COVID-19 pandemic has accelerated the speed and scale of digital transformation across every industry, and financial services is no exception. According to Gartner, the pandemic has fast-forwarded digital transformation by five years, resulting in large-scale digitalisation and a massive skill-shift. For financial services organisations, there’s a risk they could be left behind if they do not have access to the right digital skills.

While this unprecedented pace of digital acceleration is bound to define the fate of banking organisations as future leaders or laggards, many of them face a shortage of the in-house expertise they need to keep up. They must therefore solve the puzzle of deploying, aligning and hiring the right talent to address their current skill gaps if they want to drive a post-pandemic recovery. This requires strategic planning and execution across five key areas:

1. Investing in reskilling and upskilling initiatives 

A recent McKinsey survey revealed that 87% of executives are experiencing skill gaps in their workforce while a study by UK Finance saw 30% of financial services workers felt they needed more digital/tech expertise. This rapid digitalisation has further increased the urgency among financial services firms to adapt to the changing conditions and align their workforce to their new roles and responsibilities. Under such circumstances, investing in reskilling and upskilling initiatives could hold the key for both large incumbents and smaller fintechs looking to succeed in the post-pandemic era.

Without a digitally competent workforce, the financial services sector will find it challenging to navigate this digital transformation tide to innovate, differentiate and compete. Those companies upskilling and reskilling their resources can benefit from a workforce that can speed up the adoption of new technology trends and capitalise on differentiating product and service strategies.

For instance, most banks have either partially or fully embraced digitisation and are striving to deliver virtual banking experiences. Given this, they need to enhance the skillsets of their employees to leverage technologies like artificial intelligence (AI), robotic process automation (RPA), and blockchain. This can help them develop customised products, make better financial decisions, and deliver personalised customer experiences across different touchpoints.

Further, hiring externally may cost companies up to six times more than reskilling an existing employee. Apart from the obvious business benefits, reskilling leads to improved engagement, retention and morale, which allows financial services firms to attract new talent and further strengthen their workforce.

2. Transforming the workforce through remote working

While financial services organisations want to transform their workforce to become more agile, the pandemic provided the push to reimagine and reshape the way of working. It triggered a widespread remote working environment and challenged traditional ways of working.

While banks were not entirely sure how this enforced remote working would evolve, a recent study indicated that 85% of businesses experienced an overall increase in productivity after switching to the remote working model. In addition, a recent study found that one in four UK employees at financial services firms would prefer to continue work entirely from home in the future.

3. Leveraging a large, distributed pool of unconstrained talent

The distributed workforce model allows financial services firms to acquire a vast pool of talent from across the globe. The widespread growing skill shortages have further compelled organisations to adopt a global recruitment model. In the UK, new Microsoft research revealed that 78% of leaders believe a large pool of digital talent is essential for driving competitiveness. However, 69% are of the opinion that their financial organisations are facing a digital skills gap. In this situation, identifying and hiring the right talent remotely redresses the recruitment challenges and allows banks to build diverse teams.

Migrating to a skill-based hiring practice offers a wider and diverse talent pool and enables companies to hire based on skills rather than background or titles. For example, approaches like hackathons help businesses evaluate the ability of the individual to effectively work in a team. Additionally, financial organisations must look at recruiting open talents, such as freelancers and gig workers, through digital channels that go beyond geographical constraints.

4. Exploring outsourcing possibilities ‘closer to home’

As financial companies in Europe look to expand and ride the digital acceleration wave, they are diversifying their location strategy by exploring nearshore operations in Central Europe, Eastern Europe and North Africa. Nearshoring to countries that offer cost-effective IT services, without some of the added complexities of offshore operations, is bringing a host of benefits to the financial sector. Geographical proximity and similar time zones also help to ensure communication is maintained with nearshore services vendors with minimal inconvenience.

Nearshoring is opening up new horizons for financial services providers in Europe. It helps them access a rich pool of dedicated, skilled but affordable tech talent while allowing them to establish a reliable and trustworthy relationship with remote yet ‘near’ development teams. 

5. Evaluating workforce competencies to drive Digital at scale

To drive digital at scale, financial organisations need to focus on the ‘people dimension’ to evaluate, identify and train their employees while considering an individual’s merits rather than years of experience. This helps to build a workforce of T-shaped and Pie-shaped engineers who understand the nuances of delivering successful digital programs.

The Dreyfus model helps to objectively define their workforce competencies in order to map them according to different competency levels. This is an important step in evaluating the skillsets of employees and upskilling them accordingly.

A skills-led future

Unfortunately, the digital skills gap will impact every country, industry and community uniquely as adoption of technology varies. Until the financial services sector starts to take workforce development seriously, existing gaps will only widen. Companies must make a conscious effort to give equal access to all employees – both to technology and reskilling opportunities. By providing equal digital opportunities to all existing and prospective employees through the promotion of tech careers and impactful recruitment campaigns that break through racial, educational and gender inequality, banking organisations will be set for digital transformation success.