The importance of skills for workers has been at the centre of economic debate since Adam Smith, the founding father of modern economics, defines people’s “acquired and useful abilities” as one of four types of capital in his 1776 book An inquiry into the nature and causes of the wealth of nations (p.217).

Almost 250 years later, the digital industrial revolution has led to the creation of many new tasks that Smith could not have foreseen, yet skills remain a vital component of human capital as they shift from analog to digital.

At least 133 million new roles, as a result of the new division of labour between humans, machines and algorithms, may emerge globally by 2022, according to the World Economic Forum’s (WEF) Future of jobs report 2018 (p.8).

And the UK government, in its digital strategy, estimates that at least 90% of jobs in the next 20 years will require digital skills. Young people leaving school, college and university will need skills unheard of a generation earlier.

New agenda

But what are digital skills? Most office workers have basic digital skills required to do their jobs, such as knowledge of Microsoft Excel and PowerPoint, so we are now focusing on the more advanced skills when we think about how best to future-proof our skillset.

According to the Institute of Chartered Accountants in England and Wales, skills required in the next three to five years will include data intuition (identifying and understanding importance of data output), programming knowledge (from Excel and SQL to languages like Python and SAS), the ability to communicate and visualise data to clients, and data wrangling – or cleaning, blending and transforming data. Moreover, the growth of financial technology (fintech) has created a need for current and potential employees to understand digital banking, blockchain and cryptocurrencies.

The Digital Marketing Institute, which provides sector certifications, has identified a number of skills it says will future-proof workers (although it does not say how long these skills will be secure for). These include:

• Expert data analysis: extracting, analysing and translating useful information in a dataset. For example, predictive analytics would apply the findings of descriptive and diagnostic data analytics to predict future trends, such as changes in how bank customers use their accounts.
• Advanced social selling using social media: building meaningful relationships with customers.
• Multi-platform user experience design: giving users a consistent feel across different devices. According to research from FIS, digital channels are now the preferred way for people in the UK to check their bank balances and make payments and deposits, with "mobile apps increasingly operating as the digital face of many banks".
• Network and information security, ensuring watertight cyber security. High-profile cases, such as the October 2018 hack of HSBC’s US customers’ bank accounts, have resulted in the security of business data emerging as a top priority.

However, although digital skills are considered to be paramount for both businesses and policymakers, not all digital skills will guarantee a future-proof occupation, according to the thinktank NESTA. Its analysis of 41 million job adverts collected between 2012 and 2017 reveals that some digital skills will be more valuable than others in the future.

It concludes that the most future-proof roles will involve creativity: animation; multimedia production; design in engineering; building and maintaining IT systems; and quantitative data analysis. The least promising digital skills for a future workforce include occupations such as invoice processing, data input and clerical duties.

Artificial intelligence, the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings, and automation threaten “large swathes” of existing jobs, the Bank of England’s chief economist has said. According to a survey report by KPMG and Harvey Nash published in June 2019, around 10% of respondents believe their company’s workforce will be replaced within five years by AI/automation, but for a third of respondents, that figure goes up to 20%. And a report by McKinsey Global Institute estimates that nearly all occupations will be affected by automation but only about 5% of occupations could be fully automated by current technologies by 2030. “Most workers – from welders to mortgage brokers to CEOs – will work alongside rapidly evolving machines. The nature of these occupations will likely change as a result,” write the authors, James Manyika and Kevin Sneader.

In financial services, automation is being increasingly applied in back-office tasks, risk management, and big data analytics. Figures from the European Banking Federation show a year-on-year fall in employee numbers between 2008 and 2016. The figures show sign of a slight acceleration: in the five years to 2012 the number of employees in credit institutions in the European Union fell from 3.26 million to 3.03 million, or 7%. In the five years to 2016 it fell 8%, from 3.03 million to 2.8 million, due to the number of bank branches slowly decreasing as customers increasingly choose to use virtual channels.

Evolution of the retail banking workforce

In 2018, HSBC published a report titled Human advantage: the power of people, which gives insight into the future of careers in banking, and how the workforce will evolve. It identifies six emerging roles in financial services that it believes will provide opportunities in the future:

• Mixed reality experience designers: designing three-dimensional intuitive interfaces requires skills in aesthetic design, branding, user experience and 3D mechanics
• Algorithm mechanics: ensuring algorithms optimise banking customer experience requires skills in risk management, service design and financial literacy
• Conversational interface designer: making effective voice and text chatbots requires creative, linguistic, and anthropological skills
• Universal service advisers: enabling customers to switch seamlessly between virtual and physical environments requires product and domain knowledge, with excellent customer communication and empathy
• Digital process engineers: balancing security and regulatory requirements with the desire for a slick customer experience requires discovery and creative skills to help them to prototype and test solutions
• Partnership gateway enablers: ensuring performance and regulatory compliance requires technical knowledge of the digital interfaces and an understanding of security and risk management.

Skills deficit?

A 2018 report by Accenture warns that over the next decade the 14 G20 countries could miss out on as much as US$11.5tn of growth promised by intelligent technologies unless they meet the future skills demand. The UK alone could forfeit £141.5bn.

The British government launched its UK digital strategy in 2017, which sets out how the UK can build a “world-leading digital economy that works for everyone”, and there are signs that it is paying dividends. The UK government’s 2017 Employer Skills Survey, which examines the answers of 87,430 employers, finds (p.76) 44% of firms report a shortage of digital skills, which include both basic computer literacy and/or more advanced or specialist IT skills, compared with 57% two years earlier. The figure among financial services firms is 17%, also lower but still almost one in five.

This raises the question of whether graduates are leaving university with the right digital skills. A survey of students by Jisc, a not-for-profit that provides digital solutions to universities, shows (p.26) only half of further and higher education students believe their courses prepare them well for the digital workplace, while almost a third say they have not been informed about what digital skills they need. The students were asked about their proficiency in basic skills, such as creating a positive online profile and managing privacy and password setting, which around 90% say they can do. They were not asked about more advanced skills.

This downbeat assessment is echoed by employers. A survey of 500 senior decision-makers in the UK by recruitment firm Robert Half Associates in June 2018 finds that nearly half (49%) of senior leaders in the financial services sector see candidates’ skills as the biggest worry over the next 12 months. As a result, a fifth (21%) say they are looking to recruit candidates with exceptional soft skills, with a view to developing the desired technical skills.

The government’s strategy targets the problem by allocating money to digital training. For example, it has invested £20m to set up an Institute of Coding, which is a consortium of universities and employers, to develop the next generation of digital talent at degree level and above.

Employers will also need to make their own investment. The WEF says companies must develop their own techniques and find partners for reskilling and upskilling employees. One example is Edinburgh-based company CodeBase, which is running a three-year programme, Creative Bridge, marketed as a ‘creative industries accelerator’ to help individuals and firms stay ahead in the digital world.

While the Fourth Industrial Revolution will shake up employment in financial services, both recruiters and employees need to remember new transferable skills will emerge. The HSBC report, Human advantage: the power of people, identifies what it calls the three Cs – curiosity, creativity and communication – that will continue to differentiate humans from machines in the workforce.

Seen a blog, news story or discussion online that you think might interest CISI members? Email bethan.rees@wardour.co.uk.