A speech by Mark Hoban, Chair of the Financial Services Skills Taskforce at the launch of its final report at EY on Tuesday 28 January 2020.
John, thank you very much for setting the scene for today’s event. Can I thank you and your team for the support you have given the Taskforce since its launch in Summer 2018. It is greatly appreciated.
I would also like to take this opportunity to thank EY for hosting us this morning and for their support for the work of the taskforce, you, Omar, David Storey and your colleagues have helped make this a great success. Similarly, TheCityUK and the City of London Corporation have each made their distinctive contribution to this taskforce. Building on the insights of TheCityUK’s membership and the Corporation’s skills work led by Claire Tunley, we have, with the active participation of the members of the taskforce, now published two reports diagnosing the skills challenges facing the sector and today proposing a range of recommendations to resolve them at both a firm and sector level.
The starting point of our work to look at the megatrends shaping the sector. Financial services as with other parts of the economy is being transformed by a series of megatrends. Technology and data, globalisation and demographics are changing what we do and how we do it. This has profound consequences for the sector as a whole, individual firms and 1.1 million people that collectively they employ.
Let me give an example, the ability I have to manage my finances on my phone is changing the footprint of my bank. The skills my bank needs in order to manage their relationship with me are changing too. More data analytics, increasing use of AI, more cyber security experts and well trained staff to guide me through the products and services on offer.
Globalisation enables my bank to recruit teams so that the sun never sets on their data centres and operational teams; ensuring 24/7 availability of my banking app. But if you have teams or team members across the globe, you need a different set of skills and behaviours compared to the days when you could manage your team by chatting to the people outside your office. If you recruit globally, then people can sell their skills globally working at a time that suits them lifestyle.
As we live longer, we will want to or have to work for longer too. At the age of 55, I am on to my third career. The knowledge we learnt at school, college and university won’t see us through to retirement anymore. As a boomer, I work with Millennials, Generations X and Z and even people who have successfully avoided an ageist tag on social media.
So what does that mean for financial services? We face the threat of disruption on a scale we haven’t seen before. Unlike Big Bang, this isn’t limited to just part of the sector, it is sector wide. That disruption is new technologies, new entrants and new skills, knowledge and behaviours.
For our sector, these megatrends mean that
- We will increase our reliance on higher skills jobs and
- There will be more technical and digital roles and more technical and data components in all our roles.
- New behaviours will be needed to manage a more diverse and more global workforce.
But every sector in the economy – domestically and internationally – is going through this transformation. The competition for talent is intensifying. As one CEO put to me we are facing an existential crisis. If we don’t have the right people we won’t succeed, new entrants to the sector with the right people will replace us. An existential crisis sounds melodramatic and it’s certainly not the language I would use normally, but many business leaders agree that we face a crisis of that magnitude.
As a sector and as individual firms we cannot ignore the skills challenge we face. If we tackle them successfully, then as a sector, we will remain a global leader, increase our productivity and improve our competitiveness. As individual firms if we can get this right, we can develop people to have the right skill sets, improve training and development and seek to reduce recruitment and employment costs.
Our interim report was a stocktake on our progress to date as a sector. We found a mixed picture. There are some excellent initiatives – some of which we have included in our report – but some real challenges.
Let me give some headlines.
- The skills gaps in the sector are increasing – and we are one of the few sectors in the economy where this is happening.
- We are disproportionately reliant on both the highest and lowest skilled workforce.
- The lowest skilled people in our sector are disproportionately based in the North East and Northern Ireland.
- Whilst individual firms may have a view on the skills we need for the future, the lack of a sector wide view makes it harder for us to work in partnership with the education sector and governments to deliver our future needs
- The legacy of the crisis and the loss of trust in the sector has impacted on our attractiveness to new recruit in this war for talent.
- The command and control culture that pervades financial services makes us less attractive than the tech sector for graduates.
- We are leaving talent on the bench. In terms of both gender and ethnicity, there is under-representation in the boardroom. As the council house born, comprehensive school educated, son of a miner, I hope I can say without special pleading, we’re not great on social mobility either.
I could go on, but I hope the message is clear. Firms and the sector need to make a step change if we are to have the people that we need in order to survive and thrive in the future.
In the report, we have set out four families of recommendations and a fifth to establish a skills commission.
These families of recommendations are focused on four areas:
- Invest in our people and work with them to develop new knowledge, skills and behaviours;
- Understanding current and future skills gaps and setting a future skills framework to align firm and sector efforts
- Increasing awareness, widening access, attracting talent; and
- Powering diversity inclusion and progression.
The recommendations are addressed at a firm and a sector level because we believe that whilst actions by individual firms will enable them to make some progress; the scale of the transformation requires employer-led collective action, which is leads to the fifth recommendation to establish an employer-led skills body.
I want to say a little bit about the recommendations. At the centre of these is the truth that we cannot recruit our way out of this crisis. The scale of the challenge in a sector that employs over 1.1 million people tells us that. Absolutely, when we recruit we need to draw upon the widest possible pool of talent – school and college leavers as well as graduates from every community in the country – we cannot afford to leave anyone on the bench. But the people who know our business and our customers the best are those who already work in the sector. But we need to invest in them so to equip them with the new knowledge, skills and behaviours we need to transform our businesses. As research has shown, our people recognise that they have to reskill but if they are to invest their time in this, you must provide them with guidance on the skills they need and for which roles. This will provide a path for the reskilling of the people working in their businesses. Some firms are already doing this. This must be adopted more widely if we are to transform our sector’s skills.
Whilst a firm level approach will bring some gains, we believe there is a way to leverage this by collaborating across the sector. Firm level initiatives risk creating inefficiencies as everyone designs and delivers say their user experience course. But surely it would be more efficient if there was an industry framework for UX/UI to:
- create consistency of content, send
- clearer signals about the importance of reskilling,
- promote the transferability of skills within the sector.
The framework will facilitate collaboration across the sector on skills and send clear signals to colleges, universities and governments that this is the support the sector needs to grow. I have focused on the second recommendation to illustrate a key point underpinning our work – to achieve the scale of change we must work together.
Absolutely, firms need to differentiate in order to compete, but we also see examples of areas where collective action is more effective and efficient. I think the Women in Finance charter is a great example of this. The work the ABI is leading on flexible working and the IA’s work on broader diversity and inclusion are great examples of collective action.
Magnifying individual effort to create sector wide change.
An employer-led Skills Commission
That’s why our final recommendation is the creation of an employer-led Skills Commission to champion the sector level work. This is not to get in the way of excellent work that is already being done, but bring it together and help scale it up.
The Commission can act as the industry’s voice on skills with governments and the education sector. John, as I look at the Government’s agenda on skills and reskilling, I believe that the Commission can play a crucial role in ensuring that the financial services sector plays its role; equipping our people for the changes we are seeing around us. And I am very grateful to you and your officials for support in this initiative and we look forward to working with you as we establish the Commission in the coming weeks.
The City of London Corporation and TheCityUK are committed to work together to support the Commission and a number of firms have already expressed support for its formation. Over the coming weeks, I will lead this work as its interim Chair.
As I look back over the last eighteen months, there are some clear messages for the sector.
There is a strong consensus that we need the people already working in our business to have the right skills, knowledge and behaviours to enable our firms to respond to the challenges posed by data and technology, globalisation and demographics.
That as every sector of the economy faces the same challenges, we have to make significant changes in how we work with our people to meet those challenges.
We must widen our appeal and the talent pool we draw upon both at recruitment and during progression, but we must put the reskilling of our people at the heart of our response. They are our greatest asset.
For this to work for the sector as a whole we need to collaborate. We are stronger together.