Financial firms fight to secure future digital skills

By Tim Muzio, Head of the Payments practice, Odgers Interim

The financial services sector has a busy couple of years ahead. The rollout of open banking and PSD2 in January have thrust technology into the boardroom and strengthened market competition. The question however, is whether banks have the digital skills needed to harness these changes, and gain an advantage over their competitors.

In practice, the changes mean that customers will have more power in the market and be able to switch their accounts or mortgages to another provider more easily. This will in turn provide challenger banks with fresh opportunities to lure loyal customers away from the high-street banks.

It also means that all payment account providers in the UK, and in the EU, will have to provide third party access to customer data. Banks will have to secure their full data supply chain internally to prevent security breaches, while also reassuring customers externally, as well as stakeholders, that details are adequately protected.

In response to this, we’re seeing an uplift in demand for digital roles – particularly permanent and interim professionals with cyber security expertise.

We’re seeing an increasing number of executive level interim hires across the functional c-suite, in particular CISO and Head of Digital. These interim roles have been of interest but in addition there has been an increase in CFO and HRD hiring, as banks turn to interim resource to plug internal knowledge gaps or “scale up”.

This drive to digital is already imperative for firms, and even more so due to the introduction of General Data Protection Regulation in May this year.

This is only one side of the coin however. Banks are keen to turn these regulatory changes into tangible benefits for customers, but they also need to effectively communicate these. And banks have a challenge on their hands – recent research from Which? revealed that 92% of the public has little understanding of open banking.[1]

So, the solution is investment in product development and customer engagement and retention. While this means marketing and sales skills are set to become more valuable, the increasingly online nature of customer-focused initiative means banks are on the hunt for digital innovators, who are in short supply.

Blockchain fintechs are growing in volume and while the blockchain market in financial services is largely undeveloped, progress is good. The financial services industry is having to ‘learn’ and invest in start-ups to see how best blockchain can add value to the organisation and the wider industry infrastructure.

There is no doubt there will be developments here but ‘baby step’ progression will be more likely. We’re likely to see ‘back office functions’ develop first, then regulatory overhaul will happen without stifling innovation, to allow for more progression.

The fight for digital talent is set to intensify further with the adoption of blockchain technology and the troubled rise of cryptocurrencies.

Most likely, risk and technology functions within financial institutions will become ever more closely aligned in their priorities – and interims will be a valuable resource to ‘hold the fort’ and oversee these fundamental operational transformations.

Cryptocurrencies in themselves are a different ball game, unregulated and as we’ve seen over the last few months, a highly volatile asset with thousands of different types. Banks and financial institutions are justifiably sceptical of the future role digital currencies will play in the sector but there is certainly a market place and it’s a case of which ones will shine and under what parameters. The next few years will see a radical change in this landscape and a very large electricity bill to show for it.

Financial services firms are not only competing against each other for customers, but also for talent which will determine their digital prowess in the market and ultimately the future of the business. Faced with a narrow talent pool, securing these valuable digital skills could be their hardest challenge yet.

[1] https://www.which.co.uk/news/2017/10/open-banking-92-of-the-public-in-the-dark/