The Strategist

PwC: Financial services sector in sore need of fintech experts

02/22/2017 - 14:30

Nearly three-quarters of executives in financial services sector all over the world believe that a limited number of specialists, who are able to work with new technologies, is a possible reason for slowing growth and low level of customers’ confidence.

PwC conducted an international survey of business executives in the financial services sector, and found out that rapid spread of new technologies creates serious difficulties with staff.

Almost one-fifth of the CEOs believe that new technologies have re-shaped the industry over the past five years; 28% foresee other major changes in the next five years.

According to those surveyed, the industry needs professionals with new skills. Consequently, more than 72% respondents regard shortage of qualified personnel as a threat to the industry’s growth. Leaders of insurance companies expressed the greatest concern.

However, more than half of respondents (51%) plan to expand staff of their companies during the year despite the above-mentioned factors and growing level of uncertainty about global economic growth, introduction of new regulatory standards and increased geopolitical instability.

Only 17% of the companies are planning job cuts. At that, duties of four out of five employees (86%) will undergo changes as a result of automation and introduction of new technologies. This figure exceeds average value of cross-industry results of an annual survey of major companies’ managers, and highlights impact of new technologies on the financial services sector.

Among other threats to the industry growth are called speed of technology shifts (73%), change in consumer behavior (69%) and cyber-attacks (73%). Thus, the modern financial sector is seeking an ability to adapt to new conditions and to cooperate on a par with traditional skills, such as risk management.

Jon Terry, Global Financial Services HR Consulting leader, commented:

"Concerns about possible shortage of skilled labor is growing against the background of rapid pace of technology shifts. Today, there is range of professionals in demand, from industrial robotics engineers to managers with experience in the field of intelligence and innovation. "

Companies of the sector are trying solve this problem. They are changing strategies of selection, retention and development of staff (71%), introduce social and cultural diversity and equal opportunities (85%). Almost two thirds of companies (63%) launched training courses in digital technology to enhance staff development program; 49% are analyzing benefits of integration of automated systems; 41% predict impact of automated intelligence on what skills will be in demand in the future.

However, despite these plans, the study revealed no significant changes in policies or actions of the companies. Taking into account the threat of staff shortages recognized by many leaders it is necessary to convert plans into action.

In addition to the main results, the study revealed significant differences in the industry's approach to issues with personnel:

A larger number of CEOs of asset and wealth management are set to increase their staff (64%), as compared to heads of insurance companies (41%) and banking services and capital markets (45%).

Executives of insurance companies expressed the greatest concern about lack of specialists, seeing it as a threat to growth (81% compared to 70% last year). Besides, they are worried about technological change (83% compared to 69% last year).

Leaders in the segment of banking services and capital markets are somewhat less afraid of shortage of key specialists (68%), are and more likely to use data analytics for selection, development and retention (52% vs. 42% in insurance, asset management and private equity).

Seventy percent of respondents have difficulties in creating and maintaining trust of customers on the background of active dissemination of digital technologies (69%). Representatives of banking & capital markets and insurance segments experienced the greatest difficulties (76% and 72%, respectively).

In addition to technical skills, heads of the financial services sector told that skills in digital technology are the most important (83%).

Jon Terry continues:

"Insufficient and uncertain operational measures taken to address the pressing problems with staff make many large companies lag behind, and result in growing shortage of specialists, while competitors are actively moving forward."

Increasing competition for qualified professionals is partly explained by concentration of efforts in key financial centers in order to ensure growth. Most managers of financial services sector said that London, New York and Beijing will be the most promising in terms of growth over the next 12 months.