Introducing the report at a virtual conference call yesterday [24 April], Claire Tunley, CEO of the FSSC, said that “getting the right training to the right people at the right time” are the most important things for businesses that bridge those skills gaps.

“We know that skills gaps remain prevalent, but it’s also clear that firms are taking positive steps to close [those] gaps as they pivot towards adopting AI, looking towards net zero, and there’s real effort involved in forecasting at a greater depth and [with] greater detail. 

“Skills are becoming much more of a topic conversation regularly at the most senior level of [the boardroom], but also firms are doing more reskilling, deep reskilling of individuals.”

The report says that recruitment pressures eased compared to their historic peak in summer 2022, with increased jobs, lower attrition rate and financial services (FS) employees staying in their roles for longer.

However, “skills gaps still persist” and more action is needed “to attract and retain talent in our sector”. The FSSC report says talent attraction/retention “remains critical”, including improving internal mobility to fill vacancies and putting in place reskilling programmes.

“Compared to 2022, we’ve come down from that record high of vacancies that we had in 2022. But about three in 100 roles and financial services still remain unfilled,” said Katharina Ehrhart, policy and research manager at the FSSC.

“Those roles that were hard to fill in 2022, the same roles remained hard to fill in 2023. So that was data software, cyber and risk roles and now product managers have joined that hazard category for the first time. This seems to be linked to strong demand for front office roles last year.”

According to the report, vacancy data aligns with the views of leaders: the majority of UK CEOs (78%) report skills shortages within their organisation in 2023, and 68% specify a lack of tech capabilities inhibiting their ability to transform (PwC 27th UK CEO survey).

“By 2035, 260,000 highly-skilled people are likely to leave the sector due to retirement, moving to other sectors and leaving the workforce for other reasons,” says the report. 

“To remain competitive, we need to maintain our pipeline of talent joining the sector to stand any chance of filling the gap on skills. 

“Currently, 6,800 apprentices and 8,000 grads join highly-skilled roles each year and both have declined over time, either in absolute or relative terms. Apprenticeship starts plateaued at 11,000 in recent years – compared to 15,000 in FS pre-2017. 

“The number of graduates entering FS has remained relatively stable, but as a share of all graduates it has dropped from 8% to 4% in the most recent data for 2020/21.” 

The FSSC has been gathering firm-level data on supply and demand trends for the 13 future skills included in the FSSC Future Skills Framework since 2021. They include coaching, teamwork, creative thinking, empathy and machine learning/AI.

In this year’s report, the not-for-profit organisation has seen demand outstrip supply, with “all but one of the skills growing” at an exponential rate. One skill that is undergoing rapid change is in the ‘behaviours’ section, which includes agile skills, empathy skills and coaching skills, where the supply-demand gap has increased from 10 to over 25 percentage points.

For technical skills, machine learning and cyber security have the biggest gap between supply and demand, with 34% and 33 % respectively. Machine learning had the largest gap in 2022.

With artificial intelligence (AI) becoming the increasingly relevant hot topic in the months ahead, it is reported by the FSSC that “almost two thirds of global CEOs expect that AI will deliver efficiencies in the way colleagues use their time at work”, with time spent otherwise on innovation and deepening client relationships.

AI is set to affect highly-skilled roles, such as analysts, account managers or actuaries more than customer service and admin roles. But it does not mean a wholesale replacement of manual skilled roles being usurped by AI.

Gender balance
Ehrhart commented that it was a positive development that more women were hired in FS in 2023, but alternatively they do make up a lower share of the talent pool. Some 43% of women applied for a job in FS in 2023, while the figure was 57% for men. 

Of the hiring process, 52% of women were successful in their endeavours, while 48% men were brought onboard as well. The data comes from a FSSC member survey 2023, with information from 14 firms for 890,000 applicants, 24,000 hires and a combined workforce of 180,000.

“We can see the positive impact of firms working really hard to redress the balance with programmes directed specifically at women, for example, at women and tech, and they’re bringing more women into highly-skilled roles,” said Ehrhart.

• The 2023 FSSC Member survey took data points which were validated in a series of meetings and calls between FSSC and its members, of which 25 firms participated. Data from EY Skills Foundry and Eightfold AI was also included, featuring a sample based on 50 businesses and 13,000 current skills profiles. User requested ONS data was also provided.

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