Lack of digital skills is weighing down on financial services firms

Despite a significant range of changes that financial services firms in South Africa are making to their operations, inertia in the talent development department is hindering their progress. This is according to new PwC analysis, which suggests that 80% of financial services leaders are worried about a skill shortage.

The financial services sector in South Africa is situated at the unique intersection of being one of the fastest evolving sectors in a stagnating economy. The rapid rate of technological advancement has placed South Africa among the fastest growing financial technology (FinTech) markets in the world.

Major companies in the sector have made a variety of structural changes, including major modernisation drives, automation, a focus on innovation and more cost effective operational techniques. Recently, the sector has also begun heavy investment into improving the customer experience.

Analysts suggest that digitalisation is making financial services increasingly uniform, at which point customer service is the best differentiating factor and source of competitive advantage for companies. As a result, driving customer experience has become a top priority across the sector.

However, one area where the sector has been slow to accumulate pace is that of digital skills. Much has been made of the lack of digital skills in the South African market, and how this could contribute to a further spike in unemployment with the advent of artificial intelligence.

Despite reports that South Africans are engaged with boosting their skill profile, the financial services sector is concerned about a shortage. More than half of the Chief Executives in financial services sector have indicated that their firm has not been able to generate innovative momentum due to a lack of necessary skill.

Commenting on the scenario, PwC Africa’s Financial Services Leader Costa Natsas said, “Globally, financial services firms are transforming their ways of working seeking to enhance innovation in the products they create, the experiences they offer their customers and employees, and their ways of doing business. The institutional boundaries that defined the financial services industry for years are dissolving, with banks and insurers embracing new kinds of customer offerings, new channels through which to offer them, and new types of journeys and experiences.”

“As a response to all these factors, many financial services companies are transforming their business models and processes. They are embracing artificial intelligence (AI), data analytics and design thinking. But for some, their existing workforce, may not have the skills needed to keep up. Financial services firms are doubling down on a commitment that might not have been on their radar a few years ago – a commitment to digital upskilling,” added Natsas.