Over the five years to 2017, according to research from PwC, banking saw a 19% shift towards digital interactions among its customers, accompanied by a 5% decrease in human interactions. Customers are migrating to digital and now expect ‘a digital experience’ from their financial institutions according to the report. Digital transformation is real and underway in a huge swathe of financial institutions.
It seems this shift is having a sizeable effect on the learning departments of these institutions, particularly in retail banking, which tends to lead the way on technology adoption. Recently we ran a Think Tank Dinner in the heart of London’s financial district attended by global learning managers in some of the world’s largest banks, held under the Chatham House rule. What they told us indicated a major challenge for learning departments around new skills for their learners.
Customer migration to digital is changing the landscape of what Learning and Development is expected to provide for learners in financial institutions: ‘the skills that we are now having to think about developing in our organisation are massively different … very different, certainly, to what a traditional banker would require’.
Not all these changes are driven directly by technological change, some are down to factors such as geopolitics and a changing market. However one could argue that those changes too have an element of technology-as-a-root-cause (e.g. no Twitter, no Trump).
As part of our Think Tank discussion, we laid out seven key drivers that are prompting new learning needs for employees of financial institutions.
1 Data and Analysis
Financial institutions have more data on their customers than anyone, and this gives a lot of promise of new paths to profit. But they struggle to extract meaning and value. By some estimates, businesses use only 0.5% of their available data.
2 Open banking
If we want to unlock the real power of data it can’t remain in data ‘silos’. To unlock its value, data needs to be aggregated, compared and combined with other data sets, in some cases shared with other third party organisations. However, security is a prime consideration for financial organisations. This consideration has shaped their culture and protocols. Are they really ready for the culture change this might bring?
Both the frequency and the severity of cyber attacks have ramped up in recent years, making this a major business priority. It’s a trend that does not just affect financial organisations: the 2018 FT Pulse Survey found that 45% of executives across business sectors in Europe, the Gulf and Asia see cybersecurity as a top five priority. Firms might want to take a more open policy towards their data, but at the same time they need to become better at protecting that data from malicious external attacks. Balancing these two powerful cross-cutting forces – being more open with being more secure – provides a major people challenge for financial service firms.
4 Artificial intelligence
The latest wave of automation in industry – getting machines to do not just physical tasks but ‘thinking’ tasks, is more advanced in financial organisations than anywhere else. In a sector in which mathematical calculation, process and procedures figure so strongly, the potential is huge. This wave of automation promises cost savings, and the chance to free up staff currently engaged in slightly ‘robotic’ roles, for higher value work.
Despite its occupying a somewhat perilous position on the downslope of Gartner’s Hype Cycle for Emerging Technologies 2018, Blockchain continues to focus minds in financial services. VC investment in Blockchain startups is up 280% so far this year and the promise the technology offers of greater efficiencies and security to custody, payments, securities trading, etc. makes it a compelling – if controversial – source of interest.
Also figuring highly on the FT Pulse survey as a global business priority, concern about change in world politics and regulation has spiked his year. Issues on the European front such as Brexit and the growth of nationalism generally combine with President Trump’s aggressive America-first trade policy and championing of regulatory easing to provide a backdrop of widespread uncertainty. Change is in the ascendant – and change always promotes training needs, sometimes in unpredictable areas.
It’s estimated that 10-15% of financial staff work on governance, risk management and compliance. Regtech promises to bring advanced analytics, robotic process automation, cognitive computing and the cloud to bring greater efficiency and reliability to the business of compliance, and ultimately to restore public trust in the industry. At $1.37bn RegTech investment in the first half of 2018 was more than for all of 2017, according to this report from KPMG. While most financial companies’ use of RegTech is in its infancy, interest is growing rapidly.