1Gen Z, a generation exposed to technology profusely in its formative years has begun entering the working world. The generation is estimated to constitute thirty-six percent of the global workforce by as early as 2020.
The unequivocal rise of emerging technologies joins this dominant trend of technologically competent talent in upending workforce dynamics in 2019 and beyond.
In banking, we see this dual theme of changing workforce and rapidly evolving technologies playing out as follows:
The need for new skillsets is one of the most direct consequences of disruption in financial services. On one hand, digital technologies are helping banks unlock new sources of creating value, and on the other, the increasing sophistication of cyber-attacks is placing a new premium on protection of existing value. At the time of writing this document, organizations are expected to lose about $6 trillion in cyber attacks by 2021. Not surprisingly, the demand for cyber security and digital-security professionals is on the rise and will continue to increase in 2019.
The second crucial skillset will be a breed of experienced data scientists and AI specialists who can take use cases and proofs of concept into production. Over the past couple of years, banks have made considerable investments in the form of joint ventures, centers of excellence and collaborative innovation with industry and academia for a variety of advanced use cases. In 2019, banks and enterprises will evolve their hiring and recruitment practices to win the war for talent that can see them through successful live implementations for tangible business results. Retaining this talent and harnessing its potential will also be a challenge that will require banks to redesign their compensation and progression policies in 2019.
Thirdly, extensive automation will be a crucial building block of digital transformation at banks in 2019. Banks will hire automation experts and consultants who can design a roadmap for organization-wide automation and implement such large-scale programs successfully. This automation of front to middle through to back-office operations will require experts who fully understand the implications of automating a set of processes to make the judicious trade-off between automated and manual processes or centralization and decentralization of operations. What’s more, since automation architecture and priorities are unique to an organization, these experts will be required to have a comprehensive understanding of the organization. A fitting analogy for this imminent scenario is the automotive industry of the 90s when two leading behemoths Honda and Toyota rolled out two different initiatives – lean manufacturing and just-in-time respectively – to reap similar benefits of automation.
What are some of the challenges banks will have to overcome as they ready themselves for this new talent?
The university-talent versus talent-demand chasm continues to widen with the pace of development. New market realities demand talent that is not only completely abreast with technological changes but also understands the business of banking. In 2019, we expect enhanced industry-academia collaboration in banking to align student curriculum with market expectations. Banks will collaborate with universities to integrate live projects and expose students to real-world industry challenges.
Compounding the challenge of scarcity of young talent is the dearth of specialists in emerging technologies. In an industry that has been making the transition from manual to automated ways of working for about a decade, the physical documentation, double-entry system, and manual ledger world of banking has been reduced to an F4-F10 world of keystrokes over the years. However, it has left the existing workforce with minimal understanding of the underlying systems and processes. Bringing in AI, security or automation experts for transformation projects is only as effective as the availability and ease-of-access to intelligence within an organization. An understanding of the business is not enough; digital transformation requires knowledge of the customer and interest of the organization and stakeholders within an organization. In 2019, banks will continue to strive for the right mix of people who understand the business, the industry, the customer, and the organization.
A pressing challenge for banks in 2019 will be adapting their culture for the influx of Gen Z, the blend of millennials and Gen Z in their workforce and customer base, and the expanding definition of banking. 2A recent study by PEW estimates millennials to hit the 73 million mark in 2019 to outnumber the baby boomers. The number of people between the age of sixty-five and above is projected to triple by mid-century. Banks will accelerate their efforts to attract and retain this diverse talent mix this year.
2019 will also be the year when the gig economy makes its way into banking. Not only will banks welcome employees to work on short-term projects but will also design organizational practices, so the rest of the organization adapts to the trend. As banks embrace the greatly expanded definition of banking, diversity in the workforce will expand to dimensions beyond age and gender to include talent from industries outside of banking and disciplines beyond banking and commerce.
To do away with old practices of extensive documentation and time-consuming approval processes that deter millennials from using a service, banks will leave behind their hierarchical structures and catch up with game-changing digital upstarts.
Continuous learning and customer-centricity will be deeply ingrained in the culture, and organizations will make learning programs available on mobile devices. Employees will be expected to demonstrate customercentric behavior and modern market practices at all times. A crucial part of a customer-centric culture will also be real-time feedback. The long-recognized benefits of periodic appraisal systems will soon become relics of a dated mechanism at leading customer-centric organizations. These organizations will create mechanisms to cascade real-time feedback from customers down to every business unit to align behaviors and practices.
Thinking sharp, moving fast, acting incrementally but pervasively, and learning continuously will be the guiding mantra for banks this year.
“The key skill sets in this new world will belong to the data scientists who understand when, why, and how customers use bank products, and the storytellers who can place the product or service in the customer’s life when and where they need it.” – Brett King, International Futurist, CEO, Moven.