Banking
Why the digital skills shortage poses a security risk for banks
Global Banking & Finance Review®
Company
By Sam Schofield, Senior Vice President of Enterprise at Udacity
The digital skills shortage has hit a crisis point and the effects are being felt firmly across the UK. Millions of workers lack the vital digital workplace skills necessary to do their job according to a report part-commissioned by Lloyds Banking Group. Not only is this causing a slow down in digital transformation initiatives, but we’re now also at a point where our banks are facing grave security risks and increasingly sophisticated cyber-attacks as a result of both their unskilled workforces and an industry-wide lack of job-ready talent.
Since 2020, enterprises have experienced what McKinsey has labelled a ‘quantum leap’ in digital adoption and digital transformation, but many organisations – particularly those in the financial sector, such as banks – have been left playing catch up due to a lack of digital-savvy staff.
The situation is getting worse too, with additional factors such as the Great Resignation causing banks severe security issues due to a forced reliance on outdated, legacy infrastructure that is increasingly vulnerable to sophisticated cyber-attacks. While the growth of cloud-based banking is undoubtedly the solution due to the built-in security preventions of modern technology, banks are struggling to undergo these digital transformations due to a lack of internal digital expertise.
Legacy infrastructure and the security risk
While we are seeing record levels of investment in cybersecurity (the UK Government reported aggregate revenue of more than £10 billion for the sector last year), the ongoing challenge for banks remains their pregnable legacy infrastructure. Many financial services organisations are still reliant on systems that have been iteratively updated and built upon over years of operation. As a result, it can be a real financial and logistical challenge to maintain and rebuild these systems, especially when coupled with a lack of job-ready digital talent, with the necessary cloud development and cybersecurity skills, within an organisation.
Eliminating legacy architectures and replacing them with new, cloud-based technologies is undoubtedly the way forward, especially for financial services organisations. But banks without up-to-date technology are those most susceptible to security risks, owing to the simple fact that older and more internally convoluted systems tend to be easiest to breach.
Security holes tend to appear when manufacturers stop offering support for older access control systems or when fewer IT professionals have the knowledge and skills required to navigate older architecture. In addition, contemporary cloud-based security solutions, such as zero-trust methods that go beyond classic perimeter security approaches can be complex to set up when data is tied up in older systems. Where the integration of new and old technologies is difficult, data silos can be created, leading to added cybersecurity spending and access frustration.
In a world shifting increasingly to cloud technologies and zero-trust security systems, legacy systems leave banks unable to either compete or effectively mitigate risk, which makes finding a solution for their lack of internal digital expertise a primary concern in a bid to remain compliant.
Skilled staff shortages
Being aware of the challenges associated with legacy systems and cybersecurity is not enough. Digital skills are extremely hard to come in a highly-competitive job market. A recent Udacity and Ipsos study survey found that 59% of employers in the UK could not hire the right people with the technical skills they needed and, in late 2021, Gartner found that the biggest barrier to organisations adopting emerging technologies was the shortage of talent to implement them.
Therefore, even if we were to ignore outside factors, such as logistical complexity and cost, hiring conditions mean that banks’ cybersecurity threats have no quick and easy fix.
Financial organisations also face the reality that the skilled IT professionals they seek often prefer to work with cutting-edge technology over legacy software, and so to hire them when available is a formidable challenge. Many banking business leaders are left perplexed as cutting-edge systems require skilled IT professionals to implement them, but skilled IT workers want financial organisations to have these systems in place already when accepting a job offer.
Addressing the gap
Fortunately, there is a different way to approach the problem. One of the most effective is for banks to change the way they hire by looking at transforming the skillsets of their existing staff.
This is a more long-term solution, and financial services organisations ought to look into talent transformation programmes to teach new digital skills to their teams. Expanding the range of talents that employees possess can only improve the flexibility and resilience of the business, especially in the notoriously faced-paced and competitive financial services industry.
In turn, this will also help to speed up the digital transformation process and subsequently resolve the security risks posed by antiquated IT architectures. Major banks like Barclays and Santander are already taking steps in this direction, with both utilising internal skills training as a more long-term and financially sound alternative to hiring amid a digital skills crisis.
With a broad range of talent transformation services on the market, banks have the option to seamlessly retrain their branch staff into more digital-focused roles. For instance, an underwriter could utilise their existing industry knowledge to make better credit and lending decisions with the help of AI and data analytics. While existing financial analysts could lean on AI and ML to better evaluate their available data resources and make extremely valuable business insights.
By enrolling current staff on talent transformation programmes in subjects, such as artificial intelligence, data science, cloud software development or cybersecurity courses, banks can tap into a readily available talent pool that has that invaluable industry knowledge, which can then be integrated with the tech of the future.
As the skills shortage persists, using the more creative solution of transforming the skillsets of existing talent is paramount to solving the grave security risks faced by banks lacking job-ready talent. Equally, banks can use this technique to upskill their entire workforce, closing the digital gap in the financial services sector and mitigating growing cybersecurity threats.
Digital transformation refers to the integration of digital technology into all areas of a business, fundamentally changing how it operates and delivers value to customers.
Cybersecurity is the practice of protecting systems, networks, and programs from digital attacks, which aim to access, change, or destroy sensitive information.
Legacy infrastructure refers to outdated computing systems, software, or hardware that are still in use, often posing security risks and challenges for modern operations.
Talent transformation involves developing and enhancing the skills of existing employees to meet the evolving needs of an organization, especially in technology and digital areas.
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