Closing the skills gap: the key to maintaining competitiveness and boosting innovation

Blog By Claire Tunley, Chief Executive, Financial Services Skills Commission.

Four years ago, the Financial Services Skills Taskforce published its final report calling on the industry to invest in skills to maintain competitiveness and support the UK’s position as a leader in Financial Services.  Since 2020, the industry has undergone considerable transformation. Advancements in technology, geo-political tensions and changing workforce demographics mean our sector is still facing unprecedented change.

As we reflect on the findings of the Taskforce report, it’s important to ask what has been achieved in the last 4 years and are we any closer to addressing the skills gaps once and for all?

Set up by Philip Hammond in 2018, the Taskforce looked at how skills contributed to the competitiveness of the Financial Services sector in the UK.  The findings were seismic – skills were changing and evolving at a rapid rate and investment from employers, employees and government were not keeping pace with the skills demanded, particularly around tech and digital skills The report emphasised that the skills gaps present in the existing workforce could not simply be addressed by recruitment. The ability to secure top talent through attractive renumeration had waned.  The answer was to invest in upskilling and reskilling the 1million people already working in the sector.  If not addressed, financial services would be heading towards an “existential crisis”.

I am pleased to report that significant progress has been made in the last 4 years. Through the industry’s commitment and will to succeed, the sector has come together and created the Financial Services Skills Commission (FSSC) as a vehicle for collaboration and cooperation to tackle existing skills gaps.  Despite warnings that employers would be reluctant to collaborate on skills and talent issues, viewing it as a competitive issue, industry partnership has been overwhelming.  The Commission has almost tripled its membership from 15 to 42 firms in less than 4 years – demonstrating the importance of skills to the success of the sector.

The Commission’s objective was clear – to reduce skills gaps, shift the dial on skills and mobilise lasting change that would continue after the Commission ceased to exist.  We are achieving this by creating practical, actionable content and research, that firms can adopt and embed long-term.  We have called for Boardrooms to prioritise investment in skills and ensure skills forecasting and planning are an integral part of an organisation’s workforce strategy.  Our core message is simple – you can’t effectively invest in your people if you don’t know where you are and where you want to get to.

Today, firms and stakeholders are listening – improved skills forecasting has enabled the creation of a Future Skills Framework. Developed with NatWest, the framework supports firms to identify existing capability gaps and plan investment in upskilling and reskilling. We are seeing employees in the sector, benefit from around 3 days of learning a year, including on-the-job learning and coaching (1). The latest government data shows that the amount Financial Services invests per trainee has increased by £790 between 2017 and 2022 (2). With skills shortages in areas including coaching, relationship management, AI and digital literacy, business leaders are signalling, that a successful Financial Services industry must focus on developing future skills and behaviours, moving away from rigid job roles; the future will be about skills not jobs.  The business case for investing is significant, and we identified the potential gains in our recently published People + Technology report, supported by PwC UK and EY. Financial Services could contribute an additional £555 million per year to the UK economy by closing its skills gaps. This equates to £3,340 per annum for each employee who has a skills proficiency gap. Furthermore, our business case for reskilling shows firms can save £49,916 for each employee reskilled versus a redundancy and hiring approach.

By providing clarity on the skills needs of the sector, we are also informing work in other areas. Our Inclusion Measurement Guide template is being used by the FCA and further afield for the World Economic Forum as well as the Institute for Apprenticeships and Technical Education and Mayoral Combined Authorities in the UK.  Our ground breaking research on the Menopause with Standard Chartered identified practical actions that firms have adopted to support employees experiencing the menopause transition to help attract and retain female talent. We know that skills are integral to business success and a driver of competitive advantage and growth. Reskilling, upskilling, and a sustained pipeline of talent can unlock productivity, drive innovation, and maintain completeness, boosting our economy, workforce, and wider society.

Progress is being made, the Commission is a masterclass in cross-sector collaboration, with the will to embed lasting change. We still have some way to go to reach the finish line, but the end may well be in sight.

Editors notes:

• FSSC Member Survey
• ESS 2022,

The FSSC is hosting a Future Skills Conference in partnership with TheCityUK on Tuesday 5 March, 09:00-14:00 at etc.venues Monument, 8 Eastcheap, London, EC3M 1AE. The event will focus on the talent and skills challenges and opportunities facing UK-based financial and related professional services, Sponsored by Lloyds Banking Group and Yorkshire Building Society, the event will bring together senior practitioners from across financial and related professional services, regulators and policymakers to discuss how to ensure the industry has the skills and talent it needs for the future and can continue to drive growth and prosperity across the country. For further information and to register please click here

For more information about the Financial Services Skills Commission, please visit here https://financialservicesskills.org/