Technological advances can only get us so far without the equivalent skills – it’s time to close the gap, writes Michael Mainelli
At COP28 this week, business and political leaders from all over the world are discussing the economic transformation required for the shift to net zero carbon emissions. This will cause a transformation in jobs, which will require a transformation in skills.
At the same time, technological advances, especially in artificial intelligence, are also creating a demand for new and different skills. This is especially true in financial and professional services, as one of the sectors which is being changed most rapidly by AI. Just how urgent the need to close our skills gaps was revealed in the latest report from the Financial Services Skills Commission, supported by EY and PwC.
The financial services sector has undergone a revolution in the last twenty years. The ways people
spend money and interact with their bank now would baffle someone who was transported here from the
year 2000. Meanwhile, the way businesses can access and use data to understand their customers has changed how products are built, marketed and priced. This has led to a shift in financial services jobs towards more highly skilled roles. The report found that 73 per cent of the 1m industry job roles are now classified as highly skilled (managerial and professional roles), up from 52 per cent in 2004.
Yet investment in skills across the industry is failing to keep pace with changing skills needs driven by technological advancements, evolving customer and workforce demographics, and ongoing geopolitical challenges. Research by EY found that 16 per cent of the financial services workforce (160,000 workers) across the industry currently require upskilling.
The industry also faces a growing demand for specialist green skills, with insurers needing to calculate climate risks, asset managers needing to understand the ESG landscape and bankers needing to engage with clients on sustainable investments. In addition, 260,000 highly skilled people are expected to leave the sector through retirement and attrition in the next 12 years.
The report found that if the financial services sector was to close its skills gaps, it can contribute an additional £555.6m per year to the UK economy by boosting productivity. Firms can save an estimated £49,916 per re-skilled employee, by avoiding the costs of redundancy, recruitment and on-boarding.
The Commission sets out the steps which businesses need to take in the next few years to achieve this. They say businesses need to put skills at the heart of their strategy, transformation plans and risk registers to build up robust data on existing capabilities and future skills needs, including three-year skills forecasts. They also need to offer deep reskilling to those with proficiency gaps and a skills development plan for every employee.
The scale of the challenge underlines the need for the whole sector to collaborate to push skills to the forefront of the public policy agenda. But the scale of the unity and determination shown by the businesses supporting this report should give us hope that we can achieve our goals.
The author Tony Buzan wrote that “learning how to learn is life’s most important skill”. With the changes in technology and environment which we face, we will all need to learn how to learn new skills. The success of the Square Mile depends on it.