- Through a survey of 112 financial services leaders, we’ve identified the industry’s trends, challenges, and opportunities in 2022.
- Our research indicates that industry players are focused on reshaping their workforce strategies, namely by enabling employees with digital capabilities and shifting the way they navigate the talent landscape.
- To act on these critical workforce opportunities, financial services leaders should:
- Prioritize regular reskilling and upskilling
- Measure and adapt with data and analytics
- Build capability and capacity with a Managed Service
- Adopt agility to transform ways of working
In December 2021, North Highland surveyed more than 500 business leaders across industries, exploring their thoughts on the trends and challenges expected in 2022. While each industry had specific focuses, one takeaway was consistent across the board: The future is very much in flux, and business leaders must learn to be flexible. This blog series explores the insights from the study, offering the advice you need to capitalize on the trends and build agility for a fast-paced, quickly changing future.
Triggering transformation with internal improvements
Financial services leaders are experts at managing instability in the economy and workforce, and these two factors are at an all-time high. Today, the economy, supply chain, talent pool, and customer demand are in constant flux, and financial services leaders are leaning on the workforce to level up and power transformation in 2022. These leaders also know that significant work is needed to prepare employees to carry forward continuous change.
Our 2022 transformation trends survey shows that financial services leaders are focused on reshaping their workforce strategies, and two key themes are emerging: boosting employees’ digital capabilities and navigating the challenging talent landscape. Here we’ll share our insights on how industry executives can tackle these trends now and for the future.
Enabling employees with digital
Skills and capabilities in the financial services workforce must evolve in the year ahead. Around a third (32 percent) of industry leaders cite workforce skills and capabilities as critical to solving transformation obstacles in 2022. Meanwhile, nearly all industry leaders agree (28 percent strongly agree and 59 percent agree) that successful transformation requires anticipating changes in talent and skill needs.
In particular, leaders are concentrated on enhancing digital and technology capabilities among the workforce. This is the number one transformation goal for financial services leaders (40 percent) in 2022. And for good reason: Among industry executives, 30 percent say they use digital capabilities as a technique to deliver transformation, and 33 percent believe technological capabilities play a significant role in improving an organization’s speed to market. Digital capabilities are important in operations assessment, enhancement, and continuous improvement (according to 48 percent of leaders) and enhancing the customer experience (42 percent).
For financial services, the pandemic accelerated digital transformation by years. Examples can be seen across banking, wealth management, and beyond:
- You’ve likely experienced it first-hand: U.S. banking is undergoing revolutionary changes in the way financial services are being delivered to customers. Driven by the COVID-19 pandemic, the sector has been at the forefront of digitization, with many banks incorporating digital offerings over the past couple of years.
- In wealth management, companies are increasingly using emerging technologies such as AI, cloud, big data analytics, and robo-advisors in their advisory and retirement services to enhance client engagement and improve workflow.
- Additionally, to manage risk and maintain compliance, financial institutions are utilizing digital solutions such as robotic process automation and AI-driven tools for risk and compliance management.
And while digital transformation has taken the industry by storm, leaders know there is still significant work to be done to equip the workforce with the capabilities to effectively leverage emerging technology. Nearly a third of financial services leaders consider digital capabilities to be a primary barrier to organizational adaptability and 20 percent of leaders cite insufficient workforce technology skills as a major roadblock.
ACT ON THE TRENDS
Tapping into trends that support an organization’s transformation strategy involves creating learning opportunities and measuring data and analytics (D&A).
- Create continual opportunity for skill-building. Forty-six percent of financial services leaders say their ability to deliver transformation value hinges on employees' skillsets and toolsets—especially related to tech and digital. With that in mind, industry leaders must prioritize reskilling and/or upskilling programs in their workforce plans (36 percent say they already are). With an intentional focus on reskilling and upskilling for digital capabilities, you can ensure your workforce is able to take advantage of the technology and digital tools that will enable them to adapt to rapidly changing (and often unpredictable) customer demands. Importantly, reskilling and upskilling cannot be something you require of your workforce just once. Leaders must establish a continuous improvement process, or risk missing out on emerging trends in technology and falling behind competitors. You need to make space for continual skill-building; that begins by revisiting KPIs and individual performance frameworks and moving toward on-the-job skill-building. Keeping the multigenerational and diverse nature of the workforce in mind is key in this process. Different subsets may vary in their learning styles or preferences, and support structures may need to change as a result. As reskilling/upskilling become a part of your organization’s culture, be sure to identify metrics you’ll use to measure and monitor program success over time. Digital literacy assessments can help show progress and maturity over time.
- Measure and adapt with D&A. Speaking of metrics, financial services leaders can effectively use D&A to build digital maturity among employees. Yet, many financial services leaders have not figured out how to harness the power of data: 33 percent say D&A capabilities are a primary barrier to their organization’s ability to be more adaptive. By establishing high-performance and scalable data environments that deliver real-time insights and advanced analytics, you’ll be able to extract meaningful patterns in workforce behavior and analyze employee interactions with digital tools, for example. This can inform how best to approach and design your reskilling/upskilling programs.
Navigating the talent landscape
In addition to enabling employees with digital capabilities, financial services leaders are also taking a broad look at the talent market. Every industry is feeling the pinch of the Great Resignation, and 25 percent of financial services leaders say talent turnover and acquisition challenges are an internal obstacle to executing their 2022 transformation strategy. Thirty-eight percent also note that their organization’s talent acquisition strategy plays a primary role in digital maturity.
Financial services leaders know solving the labor shortage won’t be easy: 26 percent say they expect talent attraction and retention to be a challenge in 2022 and 38 percent are looking to do exactly that. They know they’ll need to aim for efficiency, adaptability, and alignment in the year ahead to overcome talent challenges. Specifically, they’ll focus on improving employee ways of working (36 percent) and increasing cross-functional collaboration and organizational agility (cited by 33 percent of leaders as a top barrier to flexibility) to retool their workforce strategies in support of business objectives.
ACT ON THE TRENDS
Industry leaders should focus on two areas to improve organizational adaptability in 2022: utilizing managed services and workforce transformation.
- Build capability and capacity with a Managed Service. With the demand for highly skilled workers outpacing our ability to produce them, and the pace of change in the workplace delaying our ability to adapt fast enough, skills gaps quickly emerge. To fill the gap, organizations should embrace a more adaptive workforce strategy—one that strategically allocates the right professionals to the right work at the right time, so you can progress along your transformation journey without missing a beat. Leaders can employ a Managed Service to bring in a team of experts that will help build long-term capability while ensuring immediate transformation progress. Thirty-seven percent of financial services leaders are already considering employing a Managed Service this year. If you’re working to enable a more digital workforce, for example, bring in data and technology experts to help you quickly make use of new resources with a targeted approach to optimizing processes and increasing efficiency. This adaptive workforce solution allows you to immediately take advantage of your investment. All the while, these experts are also teachers, skilled at building internal capability for the long haul.
- Adopt agility to transform ways of working. For financial services firms to strengthen cross-functional alignment, consider building agile ways of working that bring stakeholders together to learn, improve, and transform more adeptly. Leaders should work to eliminate traditional operational silos and evaluate how roles, skillsets, team configurations, talent management processes, and career frameworks can be optimized. And as you build new ways of working, you’ll need to take a people-centric approach that engages employees, nurtures adoption, and protects against change saturation. By prioritizing change management, you’ll maximize employee engagement around new ways of working.
Continuous change is now the status quo. Financial services leaders are focused on growing their workforce’s digital maturity, and that of the organizations they serve. These leaders are also considering how to solve multipe workforce challenges and implement transformation strategies as intended. Learning and adaptability will be critical in 2022, and smart financial services leaders are developing ongoing transformation strategies that are strong enough to flex as needed.