As financial services companies continue to grapple with many challenges, they’ll achieve agility with new technologies—including AI—and smarter talent management strategies.
If the last few years have taught banking and capital market leaders anything, it’s to expect the unexpected. The next few years will offer more ups and downs, as multiple forces—new regulatory requirements, digital-first competitors, and advancing AI technologies—challenge organizations’ balance sheets and ways of doing business.
Toss a growing workforce skills gap into the mix, and it makes perfect sense why so many financial organizations are letting go of old assumptions and embracing the transformation of their core technologies and talent management practices.
Here are four major banking and capital markets trends to track as leaders look to harness gale force-strength winds of change into forward momentum.
To thrive in the future, banks must react quickly to changing market conditions and customer preferences—challenges that AI- and machine learning (ML)-enabled digital tools can help meet.
AI is particularly well suited to reduce manual, time-consuming tasks—fraud detection, predicting outcomes—freeing finance teams to deliver the keen insights needed to innovate and grow.
“Applying AI and ML is essential to the future of finance,” says Sayan Chakraborty, co-president and leader of product and technology at Workday. “Finance teams can get help managing risk and eliminating inefficiencies by reducing what used to take months or weeks down to just hours or minutes.”
Consider a common pain point: monthly closes. Among financial organizations, 20% need 5 or more days to close month-end financial reports, according to a Workday-sponsored IDC survey. With AI’s automation potential, that time might be slashed to a single day.
AI functionality can automate the creation of bank reconciliation statements and customer deposit records and improve customer recommendations and forecasting by quickly processing the trove of data at financial firms. For scenario planning and predictions, predictive modeling empowers CFOs to look beyond conventional financial reporting. By leveraging integrated front- and back-end data, AI helps in moving from historical data analysis to real-time decision-making.
“If firms can create opportunities for talent to work on innovative projects and interact with customers in new ways, it could attract smart people with in-demand skills.”
Nicole Carrillo
Managing Director, Financial Services Industry
Workday
The productivity gains promise to be huge—potentially as high as 30%, the most of any sector, according to Accenture research.
“You need agile technology to cope with rapid change,” says Emma Castledine, enterprise architect at global payments firm Checkout.com. “Automation can eliminate an enormous amount of manual effort by the finance team, allowing them to focus more on the stuff that’s value-add.”
Making the most of AI, however, requires building a foundation of trust, both in how the technology is used and the quality of the data underpinning AI tools. In fact, 45% of banking leaders cite improving data quality as one of their biggest challenges within the past 18 months, while 93% of decision-makers say it’s important for a human to assist AI or ML when making significant decisions, rather than allowing the technologies to do it alone, according to a global Workday study. But if the industry can solve for these potential barriers, the upsides are huge.
“AI and ML are going to help across multiple functions, adding value in new ways and at entirely new scales,” says Nicole Carrillo, managing director, financial services industry, Workday.
Peek behind the curtain at many banks and you’ll find a good number are still working on legacy core systems, U.S. Bank CIO Andy Bingenheimer said at Workday Rising in 2023.
But that’s changing. Many finance organizations are cutting loose from costly legacy systems to reduce IT complexity and accelerate new growth. In fact, improving technology infrastructure tops the priority list for almost half (46%) of bankers, the previously mentioned IDC survey found.
“We are seeing financial institutions implement these platforms [with embedded AI capabilities] in an agile and iterative manner to enable data-driven decision-making to generate customized content to drive the hyper-personalization that our customers are demanding, and get investment insights and trade predictions,” said Kalpana Ramakrishnan, partner, head of KPMG’s U.S. Financial Services Advisory, at a Workday Rising session in 2023.
To boost business, banks must provide a trusted experience with a focus on highly personalized customer insights—think monthly cash flow analysis and spending broken down by category. And they must do it across the entire omni-channel experience, whether customers “walk into a branch, call their bank, or bank online,” Ramakrishnan said. “So expectations are pretty high from a digital-first standpoint.”
“You can’t put tomorrow’s talent in yesterday’s jobs.”
Stefanie Coleman
Principal, People Services
EY
The banks with a competitive edge will be those that use these digital tools to individualize the consumer experience, thinking about digital not just as a service, but as a conversation, Accenture’s AI On Banking report finds.
“Digitalization has improved banks’ ability to solve customers’ most basic needs, but conversations about their financial aspirations and how the bank can help them achieve their goals have become increasingly rare,” Accenture reports. “Yet the goal of increasing the proportion of digital sales depends on it.”
The silver tsunami of baby boomer retirements is already well underway, but banks and other firms are having a hard time recruiting younger workers and tech talent to help seize the digital future.
By 2025, Gen Z will make up 27% of the global workforce, but this workforce is often skeptical of the banking industry, a 2023 EY survey found. That’s one reason why the financial services industry faces one of the biggest talent gaps of any sector in the coming years.
“You can’t put tomorrow’s talent into yesterday’s jobs,” says Stefanie Coleman, principal, people services, at EY. “The next generation of workers expect to be digitally enabled in their roles and to do work that they find rewarding. They want to experiment and try out a range of different roles, which will help them build as many skills as possible.”
Providing a modern employee experience involves more than just ensuring new hires aren’t stuck with legacy systems and static spreadsheets. Organizations will need to fine tune roles and responsibilities to the expectations of in-demand talent and rethink workforce development practices, including how to identify skills gaps and design targeted retraining and professional development programs.
“We’re seeing increased demands for work life balance and flexibility. Some predict that by 2050, half of our workforce will be contingent.”
Kalpana Ramakrishnan
Partner, Head of U.S. Financial Services Advisory
KPMG
That’s where AL and ML capabilities can help, matching skills gaps to training opportunities and employee skills to new projects.
“If firms can create opportunities for talent to work on innovative projects and interact with customers in new ways, it could attract smart people with in-demand skills,” Carrillo says. “If banks can step up, we could see really excited workforces.”
Circle Internet Financial, a peer-to-peer payments technology company, is taking a proactive approach to AI and the employee experience. The company encourages employees to experiment—within data and privacy boundaries—on the company’s internal ChatGPT clone.
“We’ve started an effort to ensure that every employee at Circle is trained on how to use AI technologies to push the envelope and to boost their productivity,” Chief People Officer Brian Christman said at the financial services keynote at Workday Rising in 2023.
Across the globe, more and more organizations are exploring how a flexible workforce can help solve talent and skills gaps.
“We’re seeing increased demands for work life balance and flexibility. Some predict that by 2050, half of our workforce will be contingent,” KPMG’s Ramakrishnan said.
Already, as many as 30% of workers in some financial organizations are contingent workers, and 35% of finance companies plan on using more contingent workers in the coming years.
The benefits of flexibly tapping an in-demand pool of specialized skills aren’t hard to see. With market-shaping conditions such as technology advancements and climate risks accelerating, hiring can feel like a fraught guessing game for financial firms. Contingent workers allow companies to quickly shift gears when market demands change.
But it isn’t solely more contingent workers that are giving banking organizations additional workforce flexibility. Many are relying on tech and AI to take a more skills-based, rather than credentials-based, approach to talent management. AI allows firms to better predict the skills their organizations will need tomorrow so they can make smarter hiring choices today.
“Having a skills-based approach brings a lot more agility into play, versus the traditional idea of hiring for growth, and downsizing for shrinkage,” says Sophie Sharp, senior vice president, global industries and value management, Workday. “This transformation is not only about embracing new technologies, but also about reimagining talent management to foster a workforce that will keep the banking sector dynamic.”
To learn more about how Workday can help your organization grow, visit Workday.com/banking.
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