New technologies demand new kinds of talent and make addressing labor shortages easier.
Many financial institutions face a Darwinian choice as they struggle to fill positions, especially at the junior levels. Either evolve, or fall behind.
Thousands of critical jobs need to be filled, according to a recent report published by the Professional & Business Services Council and Financial Services Skill Commission in the UK. The report’s authors conclude that closing the skills gap could increase annual outputs by 12%, equivalent to £38 billion ($52 billion) by 2038.
The Covid-19 pandemic has accelerated financial services’ adoption of automation and digitalization, which has changed the required skill sets in demand. As a result, there is a need to bridge the gap between employees with traditional banking skills and those with data management experience.
Financial firms also face the challenge of incorporating remote employees and new geographic hubs into their operations and strategic plans, and competing with emerging sectors for candidates with the same talents. Above all, booming capital markets and the mergers and acquisitions created by the recovery have generated an urgent need for young professionals to support the deal-rich environment.
From public companies’ earning calls to industry reports, the trend impacts hiring practices and execution alike.
Wall Street firms have changed their recruitment processes, with the largest banks—like Goldman Sachs and JPMorgan Chase—reportedly adjusting their practices to expedite the interviewing and hiring of candidates. Also, several private-equity funds, such as Blackstone, have started their recruitment process much earlier, with innovative student programs.
For functions that banks can’t outsource, like investment banking analysis, they are letting more employees work remotely as a partial solution to the shortage of talent.
Meanwhile, several financial institutions have increased wages to stay competitive. Bank of America already announced such a raise, even for its junior employees.
Finally, new technology can demand new kinds of talent but also can address the talent shortage. For example, in the investment management space, JPMorgan acquired an automated investment platform that specializes in offerings linked to environmental, social and governance factors, which has expanded its ESG investment operations.