The workforce challenges of an evolving banking sector

"25% to 31% of business services jobs are at risk of automation in the next 20 years."

Industries the world over are being turned on their heads by novel new business models. Combinations of new technologies are allowing companies to serve customers in ways that had previously never been imagined - or indeed even been possible.

Consider for a moment that the world's largest retailer doesn't own or operate any shops. The biggest taxi company owns no cars. Some of the largest property rental businesses own no properties of their own. The list could go on and on. Disruption is well underway across a swathe of industries.

That’s not all though. Analysis published by Deloitte earlier this year found that 25% to 31% of business services jobs are at risk of automation in the next 20 years. Repetitive and highly structured jobs are expected to decline as a result, while new and more highly-skilled roles will simultaneously be created.

This is set to trigger a challenge for recruitment teams in an economy where the skills gap is becoming wider. It also leads to a social policy debate at government levels around the skills we should train our children in so as to prepare them for careers that are as yet undefined.

But what of the banking sector?

The banking industry is one where the future impact of these forces is hardest to predict. Here's a sector that is weighed down by the kind of regulation that many of these other industries simply do not face. It's a sector that's hampered by the burden of legacy IT systems. To a degree it's also been cosseted by the inertia of customers who've been reluctant to switch banks. But things are changing nonetheless.

Banks are increasingly aware that whilst existing account holders may to some degree feel "locked in" as customers of their current providers, the new generation of customers will expect banks to be as slick and smartphone-optimised as everything else they interact with on a daily basis.

New challenger banks and startup fintech companies are able to come to market offering products and services that are far more attractive to this new generation of digital native consumers.

The major banks, meanwhile, have been streamlining their operations to try and position themselves to compete with new challenger banks. Rafts of redundancies have been seen at the major high street banks, with each investing in ever greater digital capabilities so as to serve customers with the minimum of human interaction.

The consulting industry is at the forefront of these changes, working with both new entrants and the high street banks to bring the industry up to speed. There are some big questions to be answered at a societal level though.

Are we happy to foster the growth of alternative currencies, or an evolution of the sector in a way that decimates traditional middle-class jobs? What's the right balance between regulation and allowing our banking leaders to innovate? To say nothing of ownership.

Imagine if an Amazon of the banking world were to emerge, winning customers on a global scale but with none of the infrastructure or headcount costs of our traditional banks and a tax location far from our shores.

"The repercussions for both the workforces of banks and of consulting firms are far-reaching."

Banking’s impact on the consulting industry

Of more immediate concern, of course, is the potential impact that Brexit could have on the banking industry as a whole. Will there be a wholesale shift of certain functions to other European cities and a hollowing out of the businesses in London?

What talent shortages will emerge in the London market in the wake of whatever Brexit deal is ultimately concluded? Finally, how will these changes impact the demand for consulting services.

At least in the medium term there’s the scope for banks to need more rather than less consulting advice to manage the transition process successfully. But the repercussions for both the workforces of banks and of consulting firms are far-reaching.

Of course all these issues are of considerable importance to the consulting industry. Lest we forget, the public sector and the financial services industry have consistently been the two largest buyers of UK consulting services.

So anything that materially impacts banking has the potential to have a significant knock-on effect on the consulting industry’s well-being too.

Our fortunes are intertwined and we’re entering a period when banking is likely to face greater pressure to change than at any time since the Big Bang.

Have a view on what’s in store for the banking sector, or any other industry impacted by these changes? Do tweet us your views on @rdw_search.