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How should you prepare your organization and people for the digital age?

Welcome to the new normal, an age of permanent disruption, groundbreaking trends and ongoing transformation. Right now, the companies making radical changes and shaping their workforce with the right skills, attitude and flexibility are leading the financial services industry into the future.

What will the financial services industry look like in 2030?

How can leaders better sculpt their workforce?

What are the essential skills to survive and thrive in the future?

How can leaders promote agility within their organizations?

New and evolving technologies are revolutionizing the future of the financial services industry. New business models will arise and banks will investigate fully-digital architecture to enhance their technical abilities and promote agility.

To future proof their success, banks must think beyond technology.

Banks must act today by making change management an essential, upfront and ongoing component of their transformation initiative.  

A major cultural shift is essential to achieve a workforce willing and able to take part in this transformative journey.

Jean-Pascal Nepper
Partner, KPMG Luxembourg

The impact of AI on organizations

In this Fourth Industrial Revolution, these concepts are transforming the workplace into a collaborative space between humans and machines:

  • artificial intelligence (AI)
  • blockchain
  • predictive analytics
  • machine learning
  • robotic process automation (RPA)
  • cognitive platforms.

What we considered science fiction is becoming a reality

AI affects jobs by automating, reorganizing and dramatically redefining work at task level. Employers are already feeling the pinch of digital labor and millennials worry that computers will take their jobs.

Across all sectors, AI will disrupt and disturb workers in the short term. But it will also allow employees to focus on their strengths while unleashing new levels of productivity and value to employers. Still, experts cannot agree on how AI will ultimately impact the workforce.

For example, 60% of HR executives surveyed in the 2018 Future of HR Study1 believe AI will eliminate more jobs than it creates. But in KPMG’s 2018 Global CEO Outlook Study, business leaders believed the opposite, with 62% saying AI will create more jobs than it eliminates2 .

As the future of AI unfolds and its influence on the workforce becomes clearer, HR leaders must predict how their workforce should evolve to incorporate intelligent automation.

AI will affect tasks within jobs, rather than entire jobs. In order to increase productivity, organizations will need to radically transform their job functions and processes. By reinventing the workplace to integrate AI, workforce planning will inevitably be replaced by strategic shaping.

60% of HR executives think AI will eliminate more jobs than it creates1

62% of CEOs believe AI will create more jobs than it eliminates2

“Change is the law of life and those who look only to the past or present are certain to miss the future.”

John F. Kennedy

The technology used by the financial sector has evolved more gradually than in other industries. This is partly due to regulatory restrictions on new companies entering the market in many jurisdictions. However, the ability of companies to adapt quickly will only grow more critical over time3.

In this context, business leaders should ask themselves, “What key skills do we need to thrive in the future and where can we start developing them?”

KPMG has developed the answer: workforce shaping. A cutting-edge discipline that devises the optimal shape of a workforce that’s required to successfully deliver strategic scenarios five to 10 years ahead.4,5

As employees’ jobs constantly evolve, they become learning workers. Organizations need to reinvent the workplace and enable AI-human interaction to support skill acquisition.

As we begin to shape and redefine workforces, new HR roles will emerge. This includes a “workforce shaper” who integrates business strategy, workforce analytics, innovation and the people agenda while keeping short- and long-term requirements for people and skills in mind4.

While transitioning to redefined workforces, organizations will need to remain agile in the face of ongoing digital disruption. They must nurture new leadership skills such as providing meaning and purpose, reducing ambiguity and designing new systems and environments.

Organizations can ensure they have the right skills, in the right place and at the right time, by focusing on these four steps:

 

  1. Truly understand what the data is telling you: Understand the possible business futures of the bank and its associated business levers; the extent to which they will be pursued; and the time frame for this to happen.
  2. Build a strategy for your workforce of the future (WFOTF): Understand future workforce needs and work backwards from a future vision to include skills/capabilities, technology/AI, leadership, work structure, labor supply, people practices and organizational principles
  3. Define a plan to achieve your strategy: Understand the attrition, retention recruitment and training plans for capabilities identified as a common skill for the future. This process should produce a set of initiatives that support the workforce strategy
  4. Build a compelling story to help the workforce engage with change: Build a compelling story with the data to inspire, excite and engage the future workforce audience.
roadmap

The human-machine alliance

Economists and researchers believe that deploying digital technologies will impact how organizations perform tasks and apply skills, while not replacing entire jobs. 

When ATMs were introduced in banks, the number of staff did not decrease hugely because people were retrained into more client-focused selling jobs6. Therefore, the impact of AIs at the task level means organizations must reinvent their workforce to realize productivity gains. Thus giving their staff an unprecedented opportunity to humanize their work as machines take on repetitive, lower-value tasks. 

The future sees humans and machines working together in redesigned workplaces. Skills like design thinking, innovation management, caring, communication, teaching and systems thinking will be as essential as coding and creating neural networks5

Companies must strike the perfect digital-analog balance to succeed in the new workplace. The time is now for financial institutions to address their workforce agenda.

While digital technologies are a critical component of this transformation era, companies must also figure out skill sets to help them understand, contextualize and drive greater value from consumer interaction. Some financial institutions are already seeking out data scientists, psychologists to provide insights into the customer mindset and people from companies that deliver peak customer services. 

The shift toward advanced skills and approaches must be aligned with the traditional business. Many current advancements are digitizing traditional financial services, such as creating a simple online mortgage application process or providing a hybrid wealth management solution for low-value portfolios.

At the same time, financial institutions may require a workforce strategy that keeps traditional lines of business while acquiring or partnering with a fintech, or setting up a separate digital model and workforce that runs in parallel7

It’s still unclear how the financial services industry will look like in 2030 and the type of workforce required to succeed. What we do know is that companies with a “change mindset” that navigates a data-driven environment and balances the interests of shareholders and employees will thrive in this digital era. 

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.

Charles Darwin

References

1. KPMG. Future of HR Survey, 2018

2. KPMG. Global CEO Outlook, 2018

3. KPMG. The future is open: Reshaping the banking experience, 2019

4. KPMG. Rise of the Humans 3: Shaping the workforce of the future, 2018

5. KPMG and Big Innovation Centre. Learning to learn: The future-proof skill, 2018

6. KPMG, Jesus College Cambridge and Harvey Nash. The future of work, 2016

7. KPMG. Frontiers in Finance Issue #59 Workforce shaping, 2018