Addressing the Skills Gap in the Financial Services Sector: A Strategic Approach

The financial services sector is facing a looming crisis as it grapples with a dual recruitment challenge. With a workforce that is aging rapidly and not being replaced by younger talent, coupled with the rapid pace of technological advancements, financial services firms are struggling to find the skilled individuals they need to thrive in the digital age.

According to government figures, nearly one in six workers aged 50 to 64 are employed in the banking and finance sector, making up 17.9% of the workforce. However, with a significant portion of these workers nearing retirement age, the sector is facing a potential loss of up to a sixth of its workforce in the next decade. This, combined with a strong desire for early retirement among financial services workers, is creating a significant talent gap in the industry.

Adding to the challenge is the sector’s struggle to attract younger talent, with 80% of financial services recruiters finding the current environment daunting. This has led to a situation where three-quarters of firms have reported vacancies, with 65% struggling to fill these open positions. The specialized skill set required in the financial industry, including expertise in finance, mathematics, analytics, and technology, further exacerbates the recruitment challenge.

Charlotte Crosswell, chair of the Centre for Finance, Innovation and Technology, has warned that there is a growing gap between the demand for technology skills in financial institutions and the available supply of talent. This has led to fierce competition among firms for a limited pool of skilled individuals, with many candidates from outside the sector hesitant to apply due to the high skill requirements.

To address these challenges, financial services firms need to adopt a new approach to talent management. Instead of focusing on filling specific roles, organizations should take a long-term view of the skills needed in the future and invest in developing promising talent. Upskilling existing employees can be a cost-effective and loyalty-building strategy, ensuring continuity and fostering a culture of growth and development within the organization.

Consulting at Davies is taking proactive steps to address the skills gap in the financial services sector by offering Skills Bootcamps for insurance and financial services workers. These 12-week programs are designed to upskill workers with vital data skills, enabling them to meet the growing demands of digitalization within the industry. By investing in upskilling initiatives like these, firms can ensure they have the talent they need to thrive in an increasingly digital world.

The financial services sector is at a critical juncture, and firms must act now to develop a future-focused talent strategy. By investing in upskilling initiatives, fostering a culture of growth and development, and taking a long-term view of talent management, financial services firms can position themselves for success in the digital age. Failure to address the skills gap could have serious implications for firms’ commercial performance and ability to innovate in an ever-evolving industry.