The Productivity Agenda: Upskilling the workforce of the future to create a competitive advantage in financial services

· One in four financial services firms (27%) spending more than 20% of operational costs on change management projects – but industry lags behind in reaping the rewards
· Use of the gig economy is central to upskilling within the workforce and is expected to increase significantly in the next 3-5 years
· More than three quarters of firms (77%) are tracking productivity at some level, citing productivity improvements as a result
· 90% of firms that use tactical digital tools, such as AI, have experienced greater productivity

Financial institutions are spending, on average, 14% of annual operating costs on change management functions in order to drive greater productivity gains, a new PwC study has shown.

According to PwC’s report,?“Productivity 2021 and beyond: Upskilling the workforce of the future to create a competitive advantage in financial services,” more than one in four firms are spending more than 20% of their operating costs on change programmes. For organisations going through challenging periods thiscost can exceed 30%.

PwC’s productivity research, that surveyed over 500 financial services businesses globally, and received over 60% of responses from C-suite leaders, looked at some key workstreams implemented by financial services businesses and evaluated its impact on productivity.

Despite continued cost pressure and the impact of COVID-19, spending on change programmes has increased since 2018, and is up 5% year-on-year. The top three organisational change priorities, ranked by importance, are client and customer satisfaction (90%), regulatory compliance (85%) and operational resilience (82%).

Within these areas, 60% of respondents have implemented specialised training programmes and 51% have introduced career mentors and coaches, to support the upskilling of their workforce and improve productivity. 43% of respondents have also offered their people the opportunity to second to other businesses, with a commitment to securing their place at the firm at completion.

There is also a need to ensure specialist skills are imported into the industry, via crowd-sourcing and use of the gig economy. Eighty percent of respondents who use the platform economy to support their business feel like it delivers high value, with 62% recommending this approach across the industry. At the moment, only 5% of financial services employees come from the gig economy.

John Garvey, PwC’s Global Financial Services Leader, PwC US, comments: “Despite increasing change budgets, it is often not proportionate with results. Financial services in particular is lagging most other industries in this aspect. Leaders in the industry are looking seriously at their workforces to evaluate which roles need to be performed by permanent employees and which can be performed by 1gig economy workers, contractors or even crowd-sourced on a case-by-case basis. In a post-COVID-19 world, alongside a growing need to accelerate digitisation efforts, businesses need to improve their performance and ensure they are getting the most out of their workforce – however it is made up.”

Financial institutions are increasingly recognising that they must accelerate productivity efforts if they are to create sustainable business models. 72% of those surveyed are planning to implement additional specific measures, compared to 53% in 2018.

More than three quarters (77%) of financial services firms are tracking productivity at some level. Hourly time tracking (15%) or periodic time studies (25%) are still rare, and only 37% of those employing these measures believe that such tracking will improve productivity, down from 63% in 2018.

Respondents to the survey cited several obstacles to consistent and detailed productivity analysis, including a perception that doing so would cost too much (44%) or take up too much of employees’ time (39%). In addition, employee resistance (38%) to workforce analytics has crystalised in recent years.

The range of digital tools and technologies available to supplement human employees is expanding rapidly, and the financial services industry is capitalising with almost 80% of respondents using these tools to improve productivity.

Of those firms that use tools, more than half are using AI, 40% deep learning and 37% robotic process automation. 90% of these businesses have seen an improvement in productivity as a direct result.

Costa Natsas Financial Services Leader for PwC Africa says:

“As digitisation becomes ever more critical and technology solutions increasingly involve collaboration with third parties, firms need new capabilities. Most organisations have already digitised to some degree and are seeing productivity gains as a result, but there’s much more that can be done. It’s not just technical skills that workers need. They also require training in new ‘soft’ skills, such as agile methods and advanced collaboration techniques.”

Our survey shows that many firms are taking concerted action to implement this sort of training. They’re also putting in place the resources and technology infrastructure necessary for making productivity gains.

Natsas comments further:

“There are many ways for financial services firms to address the daunting productivity challenge, but they all share a common foundation. You need to improve the digital IQ of your workforce, along with relevant softer skills. These skills are even more critical in a post - COVID-19 environment.

“This skills challenge calls for a comprehensive talent strategy and approach and the execution of specific upskilling efforts that can explicitly demonstrate the tie between investment and improved business outcomes.”