With the combined impact of the COVID pandemic, increased geopolitical uncertainty, and a trend towards more stringent ESG requirements, 2021 is proving to be full of challenges for bank management. Against these emerging issues, further technological development is creating new profit centers, freeing up manpower to focus on more important matters, and allowing the financial sector to improve its public image.

The market research firm Gartner surveyed 300 CFOs and other financial executives in its “Top Finance Trends and Priorities for 2021” report, and found five must-have digital finance skills: technology and automation, business process management, data literacy, advanced analytics, and business partnering and collaboration. It also listed five digital accompanying competencies, or larger problems that can be solved through these skills: technological literacy, digital translation (technical communications), digital learning and development, digital bias management, and digital ambition (an early adoption mentality).

These lists do a good job conveying the breath of changes that emerging fintech technologies will bring. Some changes, mostly involving technological infrastructure, are oriented towards efficiency. Others are oriented towards customer service and added value. Some of the necessary skills are inward-focused, while others are focused on the larger ecosystem, and still more involve the social and regulatory impact of algorithms.

An active regulator

Despite the importance of technological growth, corresponding skills are still lacking in the boardroom. A report by the accountancy Accenture reveals that bank boards of directors lack members with experience in the tech sector. 10% of directors are now in that category, up slightly from 6% in 2015. This deficiency has a variety of potential effects, from errors in business strategy to tactical errors in selecting suppliers or systems.

The report singled out the UK as a country that has done somewhat better than average, where that number was 26%. In addition (although not mentioned specifically in the report), Singapore is another country which has been a consistent leader in this area.

In both cases, the progress that has been made so far is closely related to larger trends involving the government. The Monetary Authority of Singapore (MAS) plays a strong role in promoting the skills needed for technological transformation. In the UK, on the other hand, larger political and other trends have underscored the necessity of the fintech sector, while promoting market solutions. Although these are very different situations, they both underscore the need for bigger-picture thinking when promoting technological upskilling.

‘Can we imagine what life would have been like during last year’s “circuit breaker” lockdown if we did not have PayNow or FAST?’ asked Ravi Menon, Managing Director of MAS, referring to systems used in Singapore for funds transfer and payment. The remarks were part of a “growing timber” series of webinars jointly held by MAS and the Institute of Banking and Finance (IBF), the counterpart of TABF in Singapore.

Menon used SGFinDex, a personal finance app powered by open banking, as an example. The intuitive front end makes the design look simple, but in fact, development of such an app involves product managers, business analysts, system and security architects, API designers, UI/UX designers, software developers, testers, production supporters, and data analysts. “The multitude of technology talent needed to develop and manage just this one single product is staggering,” he commented.

MAS is not just watching the situation, but is working actively to ensure that Singapore’s financial talent pool remains at a world-class level. The Financial Training Scheme AND IBF-Standards Training Scheme subsidize fees for a number of courses, including “deep-tech” concepts for “future-enabled skills.” Many of the corresponding practical courses do not cover specific technologies or business models, but rather development frameworks like Agile and Scrum.

These programs were designed to help banks take advantage of the downtime caused by the pandemic in 2020 and 2021. MAS granted FTS up to S$ 90 million (NT$ 1.8 billion) in support. Furthermore, both programs were designed to include older workers as well as those earlier in their career progression, with Singapore citizens aged 40 and above receiving 90% of the subsidy of younger people.

MAS also recognizes that one of the most important ways to future-proof jobs is not technical knowledge, but simply the experience of having lived and done business in another country. Towards this end, its Finance Associate Management Scheme reimburses financial institutions up to S$ 5,000 a month to send young Singaporean talent on overseas rotations.

Fintech goes against the grain

On the other end of the world, the UK is also relying on fintech to ensure the overall competitiveness of its overall financial sector. In that case, however, traditional finance is under genuine threat. Brexit has ended the regulatory equivalence that made London an attractive proposition as a financial center. A scheme called “passporting” which would have allowed firms to move frictionlessly across the English Channel also fell through, resulting in an effective “no-deal” Brexit for financial services.

The UK is now in open competition for financial business with mainland Europe, and one of its most important strategies is to promote its existing strengths in technology. In fact, one of the original motivations for Brexit was to free the UK from the more restrictive investment environment of the EU. Blockchain proponents, for instance, look at EU proposals to potentially severely restrict cryptocurrency anonymity and hope that the UK can go in a different direction, perhaps by becoming a hub for decentralized finance (DeFi).

“While Brexit brings considerable uncertainty to the UK financial industry,” said Stani Kulechov, founder and CEO of the London-based open source DeFi protocol company Aave, as quoted by S&P Global, “such uncertainty is nothing new for the crypto and DeFi space. Brexit can also be an opportunity for the fintech community and policymakers to create further innovation-friendly policies and lead in DeFi and digital assets as well.”

The UK previously had a strong fintech ecosystem. It was a world leader in open banking, and 44% of ‘unicorns’ in the sector based in Europe are located in the UK. With the combined impact of Brexit and the COVID crisis, which hit the UK hard, it is now looking at the sector as a way out. A widely noted report called the Kalifa Review of UK Fintech noted, “due to covid, around 700,000 young people have left education into an extremely difficult jobs market. Fintech can provide young people with access to employment opportunities in an exciting and expanding sector.”

The report, produced in conjunction with the City of London, also proposed a new visa stream for fintech, noting that foreign talent make up 42% of the UK fintech workforce. Shortly after its release, UK Finance minister Rishi Sunak announced the creation of a new visa system for fintech talent, which will become active in March 2022. Given that one of the main effects of Brexit has been to make immigration from the EU more difficult, this policy goes against the stream.

Furthermore, the report also had some ideas for education and training. It recommended investment in low-cost educational courses, especially for staff of SME fintech firms, as well as work placements and relevant higher education courses.

Flexible talent

Clearly, the wider ecosystem has a strong influence on the potential of the industry to upskill its workforce. Still, banks can take actions without depending on others, or without requiring deep insights into the future. Menron of MAS recommends that banks hire graduates and mid-career professionals from the technology sector and STEM fields. Gartner also recommends that financial institutions don’t try to plan too far into the future, but rather to concentrate on general aptitude and flexibility as they build up their own talent pools.

That last point is particularly relevant in an environment of increased geopolitical uncertainty. It would be very difficult to predict the direction of regulation five years from now. Instead, it’s more important to be able to think logically through problems and apply the solutions to automated systems. Many, but by no means all employees who are able to do this are good in traditional technological disciplines.