Financial services firms are working hard to retain experienced staff and reskilling their workforce for the next few months as the war for talent intensifies.
With businesses across the economy struggling to access people and skills, the majority of financial services firms are putting upskilling and retraining staff (73%) at the forefront of future business strategy and transformation plans, according to the latest survey carried out by the Confederation of Business Industry (CBI) and PwC Financial Services. As a result, three in four finance firms see staff training as a top business priority. Other priorities include ESG and net zero, diversity and inclusion, cost of living, cybersecurity and technology.
Advances in technology and business transformation (69%) and achieving operational resilience (68%) were second and third most common priorities, respectively, for future strategy and transformation plans. The survey found that 74% of firms are looking to upskill their existing workforce in response to disruption. Regulation (71%), changes in customer preferences and behaviours (62%), acceleration in digital technologies (55%), and skills shortages (52%) were the top four trends driving disruption in the year ahead.
RETENTION & RESKILLING
“With a fierce war for talent impacting the financial services sector, it makes sense that firms are putting retaining experienced staff at the top of their to-do list,” stated Isabelle Jenkins, Leader of Financial Services at PwC UK. “That plus the 12% growth in employment, the fastest uptick since December 2019, proves that for CEO’s, building and maintaining their workforce is critical. In fact, our research with the Financial Services Skills Council from earlier this year showed that, reskilling, once seen as perhaps a nice to have, can create cost savings of up to £49,100 per employee compared to recruiting or making a role redundant, a significant sum; especially in light of the increasing headwinds due to inflation.”
“So the business case is clear. However with half of the firms we spoke to admitting that time remains a barrier in delivering training, there remains a crucial shift that some businesses will need to embark on,” added Jenkins. “Financial services firms are aware that the fundamentals have been reset, and the breadth of competition for well trained staff means that firms will need to ensure that they can offer the kind of culture, environment and purpose that will attract and keep the very best.”
UPSKILLING & RETRAINING
Rain Newton-Smith, CBI Chief Economist, agreed: “The erosion of business confidence seen in the last financial services survey has pulled through to this quarter, likely reflecting concerns about the impact of high inflation on the economy. With pressure expected to persist throughout the year, there’s a real need for government to press ahead with confidence-boosting measures now.”
Implementing a permanent successor to the highly successful super-deduction would help to crank-up investment levels and set the country on a path back to higher growth. “One of the bright spots from the survey was FS firms’ commitment to upskilling and retraining. It’s encouraging to see so many firms put staff development at the heart of their business strategies, and that is sure to reap rewards in terms of recruitment and retention later down the line,” added Newton-Smith. “It’s also welcome to see so many firms taking steps to support customers and business clients through the cost-of-living crisis. From improving access to finance and better financial education, finance services firms have a range of tools to help households cope with rising costs.”
SHORT-TERM OUTLOOK
Meanwhile, sentiment across the sector remained poor in the quarter to June. It fell broadly the same quick pace as the previous three months. This is despite business conditions remaining relatively positive and profitability growth accelerating (although business volumes were flat). Furthermore, headcount grew at its fastest rate since December 2019. Looking ahead to the next quarter, financial services firms expect business volumes to return to modest growth. Although they expect profitability growth to slow, employment will broadly unchanged in the three months to September, confirmed the survey.
There was a modest improvement in investment intentions for the next 12 months (compared to the previous year). Land and buildings and vehicles, plant and machinery investment intentions both firmed on the previous three months, while IT capital expenditure plans remain strong. Uncertainty about demand was the most common reason cited for limiting future investment. Nearly half (48%) of all financial services firms have initiatives to support consumer and/or commercial clients with the cost of living/cost of doing business. A further fifth (21%) of businesses said they were planning to set up initiatives in the future.
TOP PRIORITIES FOR FINANCE INDUSTRY
Top priorities for finance services firms, include:
Upskilling and retraining
The most common workforce priority for the year ahead is retaining talent (65%). While 47% of firms report no barriers to training staff, half of respondents (50%) reported lack of time as a key barrier to delivering training needs. Improved workforce agility (59%) is the top objective for reskilling, confirmed the report.
ESG
The report identified accelerating green financing options and products to support wider societal transition to net zero as the most common climate change priority for financial services firms (47%). In order to deliver the social aspect of firms’ ESG agenda, 28% of respondents said they needed a better understanding on how to create an achievable roadmap, while 24% said they needed a standardised governance and reporting framework to improve their ability to track and compare progress against set criteria.
D&I
The most common priority for D&I over the next 6-12 months is supporting health and wellbeing (54%).
Net zero
The most common net zero target dates for FS firms are 2030 (36%). The most widely cited challenge when establishing a net zero target was devising a plan on how to reach it (45%), followed closely by measuring carbon footprint – scope 3 (43%) and scope 1,2,3 (39%).
Cost of living
A combined 48% of FS firms have initiatives to support consumer and/or commercial clients with cost of living / doing business. 21% of firms said that they intend to implement some cost-of-living support initiatives in the future despite not having them currently. The most common actions that FS firms think that organisations in their sector can do to support consumers are improving access to financial products (63%) and financial wellbeing assessments & financial education on products (56%).
Technology
When it comes to technology investment, 43% of FS firms said they are in the “transition” stage of realising the benefits made from investment in IT and tech (i.e., in the process of modernising tech and IT architecture). Making operations more efficient (35%) was the most commonly cited reason for AI and analytics advancements. Financial services firms cited customer experience (72%) as the area of business most likely to be impacted by automation, standardisation and FinTech.
Cyber security
Firms continue to expect to invest more in cyber security over the next twelve months (compared to the past twelve), albeit to a lesser extent than in the previous quarter (+40% from +45%). Placing a greater focus on how to respond to new threats (69%) and improving detection of cyber breaches (65%) were the most common priorities for improving cyber resilience and reducing tech risk.
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