No one in financial services is unfamiliar with the disruptive forces shaping the future of the industry. With massive changes in technology, increasing competition on multiple fronts, evolving customer expectations, and ever-greater regulatory demands, financial institutions must walk a careful line between maintaining current services and embracing the technological, cultural and structural innovation that will be required to survive and thrive over the long term.

Just as legacy technology can pose a stumbling block to innovation, so too can legacy talent strategies and mindsets. It has become clear that financial institutions must attract and retain (or develop) a new breed of talent to create the capacity to support scaling their innovation initiatives. Yet how organizations approach this challenge – and the type of talent companies are looking to attract – can vary widely. Companies must engage critically with this reality and implement forward-thinking strategies to position themselves at the forefront of the coming workforce revolution as an employer of choice.

Is 'top tech talent' the right fit?

New and evolving technologies are shaping the future of the financial services industry on an unprecedented level. Current activity ranges from investigating specific uses for technologies such as blockchain, through to combining multiple automation technologies such as AI, cognitive and Robotic Process Automation (RPA) into an Intelligent Automation (IA) strategy to solve complex business issues. As organizations investigate potential applications of these and other technologies – and as fintechs, insuretechs and 'hyperscales' make greater inroads into the industry – access to the talent necessary to drive a robust innovation strategy becomes a strategic imperative. As a result, many financial institutions have made it a priority to hire 'top tech talent', competing with the likes of Google and Amazon to attract the best and brightest.

These challenges contribute to some organizations' decisions to create innovation labs in separate offices from the main business. These labs are often located in trendier locations, with more relaxed environments and greater freedom to innovate. However, the results of this innovation culture must ultimately be embedded into the core business as part of long-term transformation.

Hiring with a growth mindset

Despite the need for critical technical skill sets, organizations can focus on technical hiring to the detriment of their overall talent strategy. While much of the current disruptive change is technology-driven, future success in this new paradigm cannot be achieved through deep technical competencies alone.

For example, many financial institutions are seeking to re-imagine their customer experience. The bar for great customer service is being set from outside the industry, often by digital interactions with companies like Netflix, Uber and Airbnb. While using emerging or digital technologies is a critical component of engineering this change, companies also need to look to the skill sets that will help them understand, contextualize and derive greater value from customer interactions. As a result, some financial institutions are seeking everything from data scientists and psychologists who can provide insight into the customer mindset through to sourcing individuals from companies already delivering peak customer service for their 'on the ground' knowledge.

Employee mindset is also a critical success factor. While specific skill sets and competencies can be supported through training, individuals who lack a 'change mindset' can hold an organization back, regardless of what appears on their resume. Financial institutions should place a priority on attracting, hiring and retaining individuals who are agile, adaptable and eager to learn, regardless of their role.

Maintaining current competencies

The shift in the workforce toward newer skills and approaches must also be carefully balanced against the needs of the traditional business. Many current advancements involve finding ways to digitize and streamline 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, traditional lines of business – and their associated core skill sets – must be maintained. While innovation is critical, it is equally important not to miss out on hires that possess industry-relevant skills in accounting, asset management, risk assessment and underwriting. For some organizations, the ideal strategy for the current market may be to maintain the traditional business while seeking to acquire or partner with a fintech, or set up a separate digital model and workforce to run in parallel.

Recommendations for workforce transformation

For financial institutions looking to evolve their workforce and to help facilitate change associated with technology-driven innovation, we recommend:

  1. Creating a culture of innovation. Change starts with culture – and major cultural change comes from the top down. Top leadership must instill the message that not only is innovation required for the organization to survive, but that innovation requires everyone within the organization to start thinking differently. That means fostering an openness to learning, change, and improvements at all levels. Leadership must also commit to workforce diversity to enable diversity of thought and capability within their teams.
  2. Focusing on education. While education around specific skills and competencies will be important, for many organizations the more immediate needs are education and communication around innovation and change. Employee anxiety is high, with much of the financial workforce feeling threatened by the impacts of new technologies. Proper positioning of these innovations can alleviate fear while creating excitement and buy-in surrounding new technology's positive impacts to the business, customer experience and employees' own careers.
  3. Recognizing the growing complexity of the employment market. The natural shift in the employment market, from permanent, full-time employees to a balance with more skilled contract labor, robotics and automation, adds layers of complexity to any talent strategy. Organizations' ability to skillfully integrate these different worker groups and other elements will increasingly be key to success. Creating and maintaining connectivity with specialist contractors will also be an important component.
  4. Evolving leadership competencies. Traditional models where leaders manage vertically integrated teams with direct control over resources need to be challenged. Rethinking leadership roles and competencies, as well as mapping leadership to end-to-end customer experiences, can drive improvements in customer outcomes and advocacy. Removing the distinction between 'build' and 'run' functions as organisations move to more agile change models will ultimately support improved prioritization and enhance the speed of change.

Financial institutions need to strike a balance not only between the need for technology-driven innovation and maintaining the current business, but also with the evolving needs of employee groups, customers and regulators. Prioritizing hiring for a single background or competency area, including tech talent, is challenging. Organizations need to foster an environment where innovation can thrive, for which a talent strategy that focuses on hiring for a growth-oriented mindset, agility and openness to change will be critical to organizations' long-term success. See our interview with Aileen Tan, Chief Human Resources Officer, AIA – Preparing the insurance workforce of the future.

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