From the past few years, we have seen the unprecedented milestone of AI. From machine learning and deep learning to generative AI, the growth in these fields has significantly transformed the industry. Throughout 2023 and 2024, significant developments such as the emergence of AI agents and the adoption of custom GPT models by banks have enhanced efficiency and productivity. Meanwhile, major techs are accelerating their pace of model development, driving innovation in the AI space. In this article, we will explore how AI is changing the industry and how organisations can build a more resilient workforce.
How do organisations react to the AI transformation?
A significant majority of banks are integrating AI into their operations, with strong support from board-level executives. This marks a definitive shift from traditional systems to more agile AI-driven solutions.
- 45% of banks are already integrating generative AI into their technology stacks, while another 30% are in the early stages of exploring its potential.
- 91% of respondents reported that their AI and cloud initiatives are endorsed by the board, indicating strategic prioritisation.
- 63% of banking decision-makers affirm that generative AI is playing a pivotal role in accelerating the transition of banking applications to the cloud.
Banks, which are highly regulated in terms of compliance and risk management, are increasingly adopting AI to boost efficiency and productivity while providing value-added services to clients. AI is disrupting various functions across the banking sector, from retail banking and wealth management to compliance and insurance.
The Impact of AI on Financial Services Is Now Real
The increasing adoption of AI benefits all industries, especially financial services, by boosting productivity and efficiency in KYC, reporting and customer services, etc. Another example is Klarna, a buy-now-pay-later fintech company using generative AI to cut marketing costs by $10 million annually. Employees at Klarna use tools like Midjourney, DALL-E, and Firefly for image generation, saving an additional $4 million on external marketing suppliers.
More than 80% of professionals in financial services are leveraging tools like ChatGPT (which we call it Bring Your Own AI – BYOAI), even though many organisations have not formally approved or integrated such tools into their workflows. This trend indicates a growing reliance on AI for tasks like data analysis, customer service, and content generation, highlighting a potential gap between the tools employees find valuable and the technologies officially sanctioned by their employers.
Additionally, regulators are increasingly turning their attention to the implications and challenges posed by generative AI. The number of AI-related bills passed worldwide increased from just 1 in 2016 to 148 in 2023, according to the AI Index Report done by Stanford University.
How Is AI Transforming Industries and Job Markets?
AI is reshaping the labour market, leading to disruption across industries, organisations, and among professionals. AI’s impact on jobs can be categorised into three main areas:
- Displacement: Certain roles become obsolete, requiring workers to transition to new fields or face unemployment.
- Augmentation: AI enhances human capabilities, allowing professionals to perform tasks more efficiently and focus on higher-level responsibilities.
- Creation of New Industries: AI innovation opens up entirely new job opportunities that previously did not exist.
These changes necessitate reskilling, upskilling, and strategic adjustments from senior leadership.
According to the LinkedIn workforce survey 2024, 4 in 5 people want to learn more about how to use AI in their profession. However, 57% of global leaders lack confidence in their leadership team’s AI skills and knowledge.
Many organisations recognise the urgent need for upskilling and reskilling. For example, SkillsFuture provides a budget of 4,000 Singapore dollars to upskill and reskill citizens aged 40 and above. JP Morgan ensures all new hires receive training in AI to better understand industry knowledge. Companies are developing a broad mix of strategies, from top-down approaches to partnering with learning providers to train employees on various AI-related topics.
The Future of Skills in Finance
The skills required in today’s industry are not the same as years ago. The acceleration of technology has transformed job requirements, demanding proficiency in digital tools, adaptability to AI, and a continuous learning mindset to keep up with rapid advancements.
A New Skills Framework: SHIME
CFTE’s Fintech Job Report analysed 40,000 jobs in Fintech and created the SHIME framework, a qualitative tool to help the industry identify key skills in financial services. SHIME can help individuals assess their skills, analyse strengths, and identify areas for improvement in an AI-driven world. It can also assist companies in understanding the skills required for new hires and aid governments in framing their strategies for workforce development.
The exponential growth in finance requires new skills, and the skills gap influences all levels in finance, from organisations to sectors to countries.
Getting Everyone AI-Ready
The impact of technology on the industry has been nothing short of transformative. Achieving AI readiness involves several crucial pillars: foundational knowledge, skills and capabilities, which involve acquiring the necessary expertise to work with AI tools and technologies; and risk understanding and management, which requires recognising and mitigating the risks associated with AI. Additionally, effective data management is essential for ensuring efficient and secure data handling. Identifying AI use cases is also vital for understanding where and how AI can add value. Finally, a mindset of strategic thinking is necessary, embracing change and being open to innovation. Each of these pillars is essential for leveraging AI to drive industry transformation.
By focusing on these pillars, organisations can cultivate leaders who are knowledgeable about AI and capable of guiding their teams through digital transformation.
What are the Strategies for Effective Upskilling?
Top-Down Approaches
Effective actions to address the skills gap often involve long-term, collaborative strategies that engage governments, central banks, educational institutions, businesses, universities, and other stakeholders. Key steps include:
- Strategy: Acknowledging the problem and prioritising it at the top of the agenda. Regulators and central banks play important roles in implementing and enforcing alignment.
- Alignment: Providing guidance on talent trends, setting skills frameworks and curricula, and allocating funding to stakeholders.
- Implementation: Raising awareness on digital and financial literacy through regular training and a multi-stakeholder coalition.
Common Approaches to Building AI Literacy
Diverse AI knowledge and implementation strategies are essential for everyone in the organisation. CFTE recommends tailored approaches to maximise impacts and learning outcomes:
- Senior Leaders: Understand today’s world to make better strategic decisions.
- Mid-Level Managers: Build solid knowledge of industry use cases to identify opportunities and risks.
- Domain Professionals: Understand different business units or support functions.
- Entry-Level Analysts: Quickly apply AI understanding to their jobs.
By adopting these strategies, organisations can ensure that their workforce is equipped with the skills needed to thrive in an AI-driven economy.
The Time is Now
Throughout this period, we must address several crucial questions to tackle the new skills gap in financial services. What types of programmes should we develop? What policies are currently in place to support this reskilling mission? What specific skills are essential? In a rapidly changing world that challenges governments, organisations, and individuals, there is a widening skills gap for those unable to adapt to the new digital landscape. Identifying this skills gap in financial services is crucial for developing a digitally resilient and future-ready workforce, making it a top priority for governments.
But how can governments, regulators, and other policymakers drive this progress? The need for action has never been more urgent. How we approach this challenge will determine our success in preparing the workforce of the future. At CFTE, we believe that quality online education is the key to succeeding in this mission. By understanding new ways of working and adapting to the evolving environment, we can strategically approach upskilling and ensure success.
Learn more about CFTE’s programme: https://courses.cfte.education/
Learn more about AI in Finance Academy: https://courses.cfte.education/ai-in-finance-academy/
