PwC: Why People Matter More than Ever in Financial Services

"In the automated world, people are more important than ever for the financial services industry," writes Jon Terry.

(Originally published on PwC People Blog)

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Arguably, the financial services sector is more at risk (or has the most to gain, depending on your viewpoint) from the disruption caused by robotics and automation than almost any other industry. The scale of change brought about by increased automation so far has been immense and we've only seen the tip of the iceberg. Technology is transforming the way financial services firms are run, how their products are delivered and revenue is increasingly at risk to new, tech-driven competitors.

The impact on people has been huge. The world's 12 largest investment banks have reduced front office headcount by more than 20% since 2011 and we estimate 32% of UK financial services jobs are at risk from automation by 2030.

Are we reaching the stage where people don't matter? Our latest CEO survey says, emphatically not. We asked 487 Financial Services CEOs to identify the biggest threats to their business, and 73% highlighted the speed of technological change. But almost as many – 72%– named the limited availability of skills. And in some parts of the sector, a recruitment drive is under way; 64% of CEOs in asset and wealth management firms said they planned to increase headcount in the coming year.

In other words, in the automated world, people are more important than ever for the financial services industry. But there's another story behind the figures; what's particularly interesting is the type of skills that CEOs want, and are struggling to find.

Yes, firms are looking for data analysts, automation specialists and highly skilled tech talent, but it's the skills that can't be replicated by machines – adaptability, collaboration, leadership skills – that are becoming more valuable by the day. These are now ranked by CEOs on a par with traditional financial services skills, such as risk management.

This isn't about machines replacing people, but about a workplace where people and machines work together, side by side. That means changing the way we think, work and collaborate.

We shouldn't underestimate the scale of the task ahead. What we're looking at is a fundamental rethink of people strategy. Firms will need to assess the impact of new technology on job roles, skills, reporting lines and accountability, and the culture of the organisation. The job framework of most organisations will need to be completely redesigned, from capabilities to pay, as the business model changes.

Are financial services firms – and their HR functions – up to the challenge? Our survey shows there's still a lot of work to do. 70% of Financial Services CEOs say their organisation has changed its people strategy, but less than a quarter say this change is significant. 60% say they're rethinking their HR function, and less than half (48%) are using data analytics to find, develop and keep talent. The Financial Services industry has enthusiastically embraced analytics when managing customer relations; it's time the same enthusiasm is applied to workforce management.

There's a lot at stake. Those firms that are slow to react to rapidly-changing talent demands will soon find themselves struggling with skills gaps, out-of-touch working models and unable to compete effectively in an increasingly competitive skills market. The right people strategy will help financial services firms re-engage, innovate and differentiate themselves.

The sector is packed with smart, analytical people who are great at problem-solving. And it's a sector that's always been good at innovating and adapting. It's time to apply those skills and capabilities to people strategy – and get ahead of the curve.

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