An independent review commissioned by HM Treasury has reported that the UK’s financial services sector will lose the war for talent with rival global centres and sectors if it does not take collective action now to tackle a growing skills and talent crisis.
To ensure it remains globally competitive the UK financial services sector must address fundamental challenges including: the technical upskilling and retraining of staff, strengthening industry purpose and culture, and poor diversity within senior leadership.
The Financial Services Skills Taskforce, chaired by former City Minister Mark Hoban, and convened by TheCityUK, with support from EY and The City of London Corporation, found that changes in the workplace due to globalisation and technological and demographic shifts demand a new approach from financial firms to attract, motivate and retain future talent.
Financial services employers must focus on reskilling people who currently work in the sector, if they are survive. In addition they must become more attractive and compelling as a career path if it is to redress a decline in top-performing school leavers and graduates looking to work in the sector, and more closely compete with the increasingly popular tech sector. The report also identified an increasing demand for different skills and knowledge to respond to increasing technical and digital requirements.
To address these systemic challenges and help secure the sector’s future success, the Financial Services Skills Taskforce has set out five core recommendations:
- reskilling, upskilling and retraining staff while protecting and expanding employment in key regional and national centres
- creating an industry-wide future-skills framework linked to an accreditation programme
- attracting, motivating and retaining the widest and deepest pool of talent
- strengthening the purpose and culture of the sector to ensure it remains attractive to future generations of talent
- establishing an independent, employer-led Financial Services Skills Commission to take forward the recommendations and collaborate with partners at a national and regional level to create real change at scale
Mark Hoban, Chair, Financial Services Skills Taskforce, said,
There is no doubt that the financial services sector is facing an existential skills crisis. While there are many examples of good practice, the industry lacks the overarching vision, coordination and focus needed to weather the megatrends transforming global business. Only through coordinated and collective action by industry, the education sector and government can we bring about the necessary system-wide changes needed for UK financial services to stay competitive in a transformed digital marketplace. For this, we need a unified skills framework to reskill our people and attract and retain new talent at scale and cost effectively.”
John Glen MP, Economic Secretary to the Treasury and City Minister, HM Treasury, said:
Financial services are one of our great success stories - not just in London, but across the whole of the UK.
“Yet today’s report shows the industry needs to invest further in skills, boost diversity, and ensure we’re training the next generation of leaders and innovators.
“The sector now needs to come together to make financial services a top career choice, regardless of background or where you live, so we can level up the whole nation and unleash Britain’s potential.”
Key challenges facing the financial services industry:
- Skills gap: like many sectors, financial services has 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 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 the percentage of 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 say 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: financial services spend less on training than other sectors, with the third-lowest spend per employee and the second-lowest spend per trainee.