This is not up for discussion: the banking sector has been changing faster than ever. Recent regulations including PSD2, combined with the raucous arrival of new players in the market such as FinTechs, GAFA and neo-banks, are compelling traditional banks to reinvent the model which made them successful. If they want to stay in the game, they had better catch the digital train which already left the station some time ago. A whole new generation has already boarded that train, looking for personalised advice and real-time access to their data; not only that, the digital train has also disrupted traditional banking jobs and created new ways of working. Let’s take a look back at the 2018 Banking Day which took place on Tuesday, 6 March.
The banking industry 2.0
The banking industry ecosystem has experienced considerable disruption since the advent of the internet in the late nineties: the bank-customer relationship has gone through change after change and customers now prefer digital channels to brick-and-mortar offices to conduct routine transactions. Therefore, new technology has led to the emergence of new players able to meet the needs of customers eager for personalised advice and real-time interactions: FinTechs, GAFA and, more recently, neo-banks, quickly stepped into the breach, providing a real alternative to traditional banking-sector players. Despite those sizeable challenges, banks should not admit defeat by any means. While the current environment is pushing them out of their comfort zone in order to evolve, trust and security are still invaluable to customers. And in those areas, banks have a big advantage over new entrants.
“Today, bank customers – and millenials in particular – are looking to strike up an à la carte relationship with their bank. For basic transactions such as checking their bank accounts or making bank transfers, they’d rather use mobile applications on their smartphones or tablets. However, one-on-one human interaction is still on the cards when it comes to making more important transactions” says Roxane Haas, a partner at PwC Luxembourg and the firm’s Banking Leader.
On that premise, working together with FinTechs will be key for banks, as it will enable them to innovate in the digital area and offer a more complete experience to their customers. While this will undoubtedly revolutionise the banking sector’s business model, it will also have implications on banking-sector jobs.
Digital is disrupting banking jobs
The digital revolution is under way and it is bringing far-reaching changes to banking-sector jobs. The evolving requirements of bank customers and the intensely close relationship they have developed with digital tools are changing what is expected of banking specialists. These are forced to take the arrival of new market entrants into consideration if they want to remain competitive. This environment results in a new way of working, redefines traditional banking-sector jobs but it also encourages banks to look for hitherto unheard-of profiles.
“Anticipating future changes to banking jobs must be a priority for banks if they do not want the digital revolution to pass them by. To get in step with FinTechs, banks will need to reinvent the way they work by focusing on more digitally minded candidates such as data scientists or big data specialists. In this ever-changing environment, technical skills are evidently paramount, but attitude and behaviour also play a crucial role. Tomorrow’s talents will have to be ready to face all kinds of situations, to come up with solutions and to learn quickly, whether on their own or as part of a team. The challenge will be to attract those profiles to Luxembourg and to make sure they stay in the country.” says Roxane Haas.
Some of the banks’ existing functions will need to be revisited for the digital age. This will lead to a sea change in the banking profession to which employees will need to be prepared. The Luxembourg government has looked into the matter and it has set up the Digital Skills Bridge project, which will be launched this year and which was discussed during the Banking Day. Businesses which face major challenges in adapting their organisation due to the introduction of new technology will be able – upon request – to receive technical and financial assistance so that they can make a significant investment in upskilling their employees. The project is designed to anticipate new requirements for skills in future and existing jobs and thus to make the labour market more efficient.
For banks, the road ahead is therefore paved with tremendous opportunities, providing they are able to anticipate how to transform and they can get to grips with all things digital.
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