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How banks can overcome the IT skills gap in a post-pandemic world

How banks can overcome the IT skills gap in a post-pandemic world 1

By Zak Virdi, UK Managing Director at SoftwareONE

Banks have always struggled to keep pace with the speed of digital, but the problem has become more pressing in recent years. From a skills perspective, job vacancies for tech roles in UK banking rose to 30%, and the finance industry has called for the creation of a new UK body to boost recruitment in the sector. In a bid to keep up with fierce competition from mobile and online banks and fintechs, established banks are now looking to accelerate digitalisation projects. This is urgent, because COVID-19 has forced a decisive shift to digital. Indeed, since the outbreak of the pandemic, the number of European bank branches has rapidly declined.

However, if banks are to digitalise successfully, and enable a faster pace of innovation, they will need the skills to match. This is no easy feat, as talented people well versed in cloud-native technologies, app modernisation and the legacy tech that many banks continue to operate, are hard to find. This is compounded by the fact that banks also face the reality of a crowd of developers reaching retirement age and taking their skills with them.

Changing skills needs to keep up with fintech

Traditional banks face constant pressure from both industry peers and competitors like fintechs and challenger banks, to provide slicker and more seamless banking experiences. Customers expect new, engaging services and functionality, from contactless payments to digital wallets and banking with wearable devices. While it may be easier for digital-native challengers to continually roll-out new technology, it is a huge challenge for traditional banks to keep up with without digital transformation. However, this is not a simple process.

Let’s take cloud as an example. Migrating to the cloud is seen as a key pillar of any digitalisation project, yet the challenge of building, maintaining and monitoring a complex cloud infrastructure is often beyond the capabilities of existing banking staff. According to Gartner, a majority (80 percent) of today’s workers feel they don’t have the skills required for their current role and future career. To maintain a modern, complex cloud ecosystem banks need more skilled personnel. But adding to the issue is that 53 percent of business leaders struggle to find candidates with the right abilities. The good news is that there are options for banks to address the skills challenge:

  1. Hiring new talent: Finding someone new with the skills you need is the most obvious solution. This enables banks to pick the specific type of candidate they require, only interviewing those that fit the bill. However, hiring externally is harder when looking for more niche capabilities, and it costs more. Legacy banks also struggle to attract candidates due to the ‘innovative’ and ‘trendy’ reputation of a career at a fintech. When recruiting for roles requiring advanced IT skills – for example, cloud-native orchestration, SAP expertise or DevOps – the pool of potential candidates is small, and banks can end up paying a premium. While hiring new team members to support your existing IT team may be the first option banks consider, it certainly isn’t the only answer.
  1. Upskilling staff: The World Economic Forum has estimated that 54 percent of workers will need significant digital reskilling by 2022. Looking inward at extra training to advance the skillset of existing staff can be a great way to bridge the gap. The benefits of upskilling include reduced strain on individual employees, less cost and resource drain, and improved collaboration. It will also pay off in the future as established banks build a bank of skills to rival those held by employees at challenger banks. As part of this process, banks will either need an internal skills champion, or an external training partner. Also note that upskilling is gradual and continual; even after training staff, they won’t be experts and will need starter projects to practise what they’ve learned.
  2. Finding the right partner: Training existing staff and hiring helps futureproof in the long term, but doesn’t solve immediate need. Moreover, some banks may decide they don’t have the capacity or resources to pursue upskilling. So another avenue for banks to consider is finding a partner that can fill a skills gap quickly and with little hassle. Outsourcing IT can save time and resources, and enable projects to move ahead faster. With this approach, banks don’t have to spend hours interviewing potential candidates or training employees each time they embark on a new digital transformation project that requires a specific skill. In addition, banking IT teams can focus on fulfilling their day-to-day roles to the highest standard, without having to tackle unfamiliar or new tasks.

Closing the IT skills gap is only going to become more complicated as banks continue to digitally transform, with the added complication of operating in a highly regulated and competitive sector. A reliable and highly-skilled IT workforce is crucial when pursuing a digital-first future. Whether banks choose to hire-in, upskill or outsource, a clear roadmap needs to be developed that encompasses where skills gaps are and how they can be addressed, to ultimately support financial organisations in their digital transformation efforts.

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