Former City Minister Mark Hoban has today called for urgent, coordinated and sustained action from the UK’s financial services sector to meet the unparalleled recruitment and retention challenge posed by global technological, demographic and social megatrends.
An interim report from the Chancellor’s Financial Services Skills Taskforce, chaired by Mark Hoban and convened by TheCityUK, with support from the City of London Corporation and EY, identifies a series of major skills challenges facing the sector.
These challenges include its low spend on training, its lack of diversity at all levels and its perceived values and culture. It also found the technical skills needed by financial services firms are evolving faster than roles can be currently be filled. All of these must be addressed if it is to meet its long-term skills needs.
While there are great examples of action being taken to address these challenges, collectively the sector is simply not doing enough. If it fails to adapt, the UK’s position as a world-leading international financial centre could be put at risk.
Mark Hoban, Chair, Financial Services Skills Taskforce, said,
This is an industry that runs on talent. But financial services is facing an existential skills crisis because of the pace of change in the sector. People are at the heart of the industry’s success and provide its competitive advantage. The digital revolution is transforming the sector and affecting its people too. The skills needed to run these organisations are changing rapidly as are the aspirations of those who work in it. It is vital that we train people in the skills needed for the future so we can match the pace of change.
“Tackling these challenges and equipping the industry for change will require a transformational, strategic and collaborative approach from firms, with support from government and the wider education system. This is essential to ensure its continued ability to support the economy and society into the future and retain the UK’s globally-leading position as an international financial centre.”
Given the scale of the challenge, the Taskforce suggests that recruitment alone will not be sufficient. It will require a fresh approach, greater investment in training and strategic system-wide change. Its final report and detailed recommendations will be published later in the year, but its initial findings have identified four key areas:
- transforming skills across the workforce
- building and maintaining the widest and deepest pools of talent
- challenging perceptions of the sector’s purpose and culture
- ensuring sector-wide transformation and collaborative response.
Some of the key areas for focus:
- Skills gap: like many sectors, financial services have a growing skills gap, up 30% between 2015 and 2017. It is also increasingly dependent on those with the highest skill levels: 60% of employees compared to 45% in the whole economy.
- Diversity of employees and leadership: while 44% of the financial services workforce are women, only a third of senior managers are. Around nine in 10 of financial services workers are white, and while this is broadly in line with the UK population as a whole, it does not reflect the urban centres across the country, where many people who work in the sector are based.
- Attracting and retaining talent: the sector is increasingly struggling to attract the best talent, with MBA graduates from leading schools entering the sector falling from 43% to 28% between 2007 and 2016. Only 10% of young people working in the sector saying that they plan to stay long term compared to 18% across all sectors. Fewer than 40% of students associate creativity and a dynamic work environment with working in banks but highly value these in any future employer.
- Training: the financial services spend less on training than other industries, with the third lowest spend per employee and the second lowest spend per trainee.
The Financial Services Skills Taskforce will publish its detailed recommendations in November 2019. That paper will set out a roadmap for the financial services companies to tackle the challenges and seize the opportunities posed by technological and social change.