Banking
Skill Development as a real catalyst driving Business Model Innovation in Banking
Global Banking & Finance Review®
Company
By Narasimha Nagaraja Prasad, Senior Director, Product Management and Strategy Group,
By Narasimha Nagaraja Prasad, Senior Director, Product Management and Strategy Group, Infosys Finacle
When we look at the quantum of change sweeping the banking industry, we often focus on how the landscape is evolving and the type of infrastructure needed to step up and deliver in this dynamic environment. However, one key aspect of driving this change is access to the right skills. Bank must have the willingness and as well as ability to drive the kind of talent, capabilities and teams that are needed to meet new challenges.
Jay B Barney, in his book ‘Gaining and sustaining competitive advantage’, provides an interesting framework called “VRIO” to look at resources and capabilities. It recommends looking at resources through the lenses of Value (V), Rarity (R), Imitability (I), and Organization (O). If we apply this to a people perspective, it means asking questions such as ‘How valuable are the skills available within the organisation? How many competing firms already possess these particular valuable resources and capabilities? Do firms without a resource or capability face a cost disadvantage in obtaining these skills compared to firms that already possess them? Is the company organised to exploit the full competitive potential of its resources and capabilities?
Of course, this is not a static exercise. Rather, the answers will change with time. Resources and capabilities that have been valuable in the past may no longer be required. Changes in customer expectations, industry structure, new age competition and technology can render an organisation’s resources and capabilities less valuable.
When it comes to ensuring a workforce that is equipped to effectively support a bank’s strategy and aspirations, the following process can be helpful.
Step 1: Review and assess
The first step is to understand the skill sets that are needed for the job at hand and compare them with what is available within the organisation. This can help assess the gap between the skill sets that the particular job demands vis-à-vis the skill set existing within the organisation. Once this is clear, the organisation can consider various options available to bridge this gap and take action accordingly. Organisations must take a holistic picture considering skills offered by employees, skills offered by machines, such as through automation and AI, and skills offered by the gig economy.
Step 2: Renew the learning infrastructure
In the book, ‘The Live Enterprise’ by Jeff Kavanaugh and Rafee Tarafdar, the authors make a mention of a quote by Nandan Nilekani which says, “The only friction between an employee and their learning should be their motivation. And the organization should take care of the rest.” The lack of learning opportunities should not be a deterrent. That’s why organisations must invest in various modes of learning that provide opportunities for any time anywhere learning, byte-sized learning, and on-demand learning.
Step 3: Bring in the reinforcements
Banks can look at skills from two perspectives. One is to develop new and valuable resources and capabilities. Banks can look at a buy/build/partner kind of model in order to add new capabilities/skills. In the ‘buy’ approach, both organic and inorganic way of acquiring skills can be considered. The acquisition could be explored to acquire the teams and skills rather than just the IP of the organization. In a ‘build’ approach, it is about upskilling and reskilling the existing capabilities of the organization. In the ‘partner’ approach, it is about working with partners which can augment the skills and capabilities.
The other perspective is to apply traditional strengths in new ways. For instance, the banking industry construct can be broadly classified into product management and customer experience management. Banks can decide to leverage the product management capabilities with existing available skill set and provide banking as a service kind of offerings. It can work with specialized organization for customer experience management.
Banks can take hybrid approach of combining these options as well.
Step 4: Retire non-relevant skills
It is important to step back and assess operations and processes holistically rather than blindly performing a lift and shift with new technologies. For instance, does the process need to be performed completely by humans or can it be done by a machine or through a human plus machine combination? From a resource point of view, it is then critical to hire people who have the necessary critical skills and ability to think differently and explore these options. The World Health Organization (WHO) defines life skills as behaviours that enable individuals to adapt and deal effectively with the demands and challenges of life. This means that while learning new software tools is necessary, it is not sufficient. Instead, learning how to learn is the most important skill in a constantly evolving world. If we apply this in an organisational context, this boils down to the ability of the organisation to learn new skills on a continuous basis and adapt as needed.
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For banking organisations, building an organisation that has the relevant skills to take on changing realities means building a culture of continuous learning, providing the required support system for learning, and focusing on overall profile development within the organisation.
Skill development refers to the process of identifying and improving the skills necessary for effective performance in a job or profession, particularly in response to changing industry demands.
Business model innovation involves creating, refining, or transforming a company's business model to improve value creation, enhance customer experience, and gain a competitive advantage.
Continuous learning is an ongoing process of acquiring new skills or knowledge throughout an individual's career, essential for adapting to changes in the workplace and industry.
Workforce assessment is the evaluation of the skills, competencies, and performance of employees to identify gaps and areas for improvement to align with organizational goals.
Organizational culture refers to the shared values, beliefs, and practices that shape the behavior and attitudes of employees within a company, influencing its overall effectiveness.
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