Underinvestment in digital skills will see financial services pay a high price

Published : 2 years ago, on 13/12/2022

By Alexia Pedersen, VP of EMEA at O’Reilly

Earlier this year the Bank of England warned that cyberattacks pose the biggest risk to financial institutions, both in the short and long term – more so than current trends of inflation and unstable geopolitical upheaval. However, while awareness of this very real risk is high, the financial sector’s investment in recruiting and training for cybersecurity skills remains concerningly low. And, while hackers continue to up the ante, consumer expectations are also skyrocketing.

Digital transformation is driving innovation, where new services are often designed and delivered using sophisticated cloud architecture. However, like its cousin, cybersecurity, the financial industry is not investing in the cloud skills it desperately needs. According to our recent research, the demand for digitally skilled workers within the UK’s financial sector is outgrowing the level of digital skills available. Of the HR leaders surveyed, more than a third said cybersecurity talent is most in demand, followed by cloud and data analysis.

However, with cybersecurity top of the list of concerns, only a limited number of finance companies are willing to spend more than £10,000 on recruitment (27%) and learning and development (L&D) (26%) to hire cybersecurity talent in the next twelve months. When considering the potential costs of cybercrime alone, this is a paltry sum to deal with the sector’s most significant threat.

Meanwhile, the majority plan to spend no more than £10,000 on recruitment (60%) or L&D (65%) to bolster cloud skills. Without innovation, financial institutions will wither. Again, investment in vital cloud skills should be reviewed.

Fortunately, HR leaders are not blind to these issues, recognising the need for digital talent to bolster resilience and innovation. With the threat of recession looming, over seven in ten companies within the UK’s finance sector reported that they plan to spend more on tech L&D over the next twelve months.

Stop relying on recruitment

It’s no secret that there is a near-global digital and technology skills shortage. A report published earlier this year revealed that the financial sector’s widening skills gap is having a significant impact on productivity for over 80% of companies. At the same time, in late 2022, there were over 55,0000 vacancies in the financial services sector; an increase of more than 70% from the same period last year.

However, while 54% of financial services companies are willing to spend more than £25,000 on recruitment, under half are willing to invest the same in L&D to boost vital tech skills including cybersecurity, cloud and data analysis. Overall, when considering the broader range of digital skills required by the industry, the majority (89%) of companies within the financial sector plan to spend between £25,000 – £50,000 on recruitment for tech vacancies over the next twelve months. Yet only 80% will spend the same amount on tech-related L&D.

A decade of recruitment challenges has proven that the technology gap cannot be closed by hiring – the talent is just not there. With a dual crisis of recession and talent deficits, the finance sector must explore other ways of solidifying its skills strategy. The most obvious way of doing this is to double down on technological L&D as a core strategy.

Consider that almost two-thirds of financial services employees believe colleagues that lack digital data skills are most at risk of redundancy. The same report highlighted that nearly four in ten said they were considering leaving the sector in the next five years. Of these, two-thirds said that if they were offered the opportunity to upskill they would stay. Here lies an untapped pool of potential talent that could be supported to increase vital skills, securing their own futures as well as that of their employers.

Echoing this, the government’s UK Data Skills Gap report identified that ‘The supply of graduates with specialist data skills from universities is limited. While many companies undertake to train their own workers internally, half of all workers surveyed reported they had not received any data skills training within the last two years despite considerable interest in undertaking training.’

Addressing the awareness and action gap

Encouragingly, 99% of the financial HR leaders we surveyed do feel supported by their leadership team to invest in tech-related L&D, signalling the sector’s growing concern around the widening digital skills gaps. Despite this, a fifth of those HR leaders reported that the biggest barrier to upskilling current employees is a lack of talent, followed by a lack of internal buy-in (19%) and insufficient resources (18%). It is clear that rhetoric around digital skills is not being matched by on-the-ground investment and support. Awareness must now translate into action.

Digital upskilling must no longer be seen as an alternative to recruitment but as a leading strategy within the sector. The risks of underinvestment are too fundamental, and the opportunities that may be missed are too important. From cybersecurity to innovation, digital skills are the driving force behind the sector’s transformation. Leaving internal L&D off the table is simply no longer an option.