The Taiwan Banker

New technologies bring exciting change, but through their transformative impact they also challenge the very foundations of how our societies operate. As every aspect of our lives starts looking and feeling different, there is little choice but to search for ways to adapt to the new reality. This is particularly relevant in conversations about future of workforce and what needs to be done to ensure that workers are prepared to evolve with their jobs.Tomorrow will be better than today. The extent to which you agree with this statement depends of course on whether you are an optimist or a pessimist. One thing is certain, however: tomorrow will be different from today. With the advance of technology and increased adoption of automation and artificial intelligence (AI) in all aspects of our lives, observers are united in agreeing that the world is on a transformative journey. With this fundamental change, the number and nature of future jobs will change too.In his latest book 21 Lessons for the 21st Century, Israeli historian Yuval Noah Harari points out that it will not be just the idea of ‘jobs for life’ – a career approach widely practised in some countries, such as Japan – that will be outdated by the year 2050, but that ‘profession for life’ will no longer stand the test of times. As the job market is changing, workers will have to be flexible and keen to acquire new skills.The key concern of course is the reduction of jobs available as an increasing number of tasks is being automated. In its report Jobs Lost, Jobs Gained, McKinsey Global Institute estimates that between 400 million and 800 million workers will be displaced by automation worldwide in the period leading to 2030. The good news is that up to 890 million jobs might be created in the same time. The challenge? New roles will require new skills which the displaced workforce might not necessarily have. The same report estimates that about 75 million to 375 million people might have to retrain and change their occupation. As a result, training and reskilling workforce becomes a political and business imperative to ensure a smooth transition between old and emerging types of jobs. The banking industry will be profoundly affected by this change across all of its different lines of business. Citigroup estimated in its 2016 report Digital Disruption that up to 30% of banking jobs might disappear over 10 years, largely due to automation. Its former CEO Vikram Pandit was even more pessimistic in 2017: He said that those jobs would disappear in just five years. At the same time, according to The Banker, one in four jobs advertised by banks in 2017 had ‘engineer’ in the title, indicating the direction of travel for the banking job market. The nature of the industry is truly changing.A task for the nationWhen Singapore left its union with Malaysia in August 1965, Prime Minister Lee Kuan Yew spoke about his ‘moment of anguish’: The future looked uncertain, if not grim, for the city-state. Fast forward fifty-four years and Singapore is an established regional and global powerhouse. One of the key elements of its success is the continuous investment in its reinvention which allowed Singapore to progress from a manufacturing centre to the financial hub it is today. Yet Singapore does not rest on its laurels. There is a clear consensus among policymakers and the industry that Singapore’s future success will largely depend on how ready its people are for the new technology-driven world. Training policies and upskilling programmes are viewed as essential to maintaining a competitive edge on the international stage and every research or policy paper you read about workforce reskilling strategies in different countries includes a case-study of SkillsFuture Singapore (SSG). SSG’s primary objective is to promote a culture of lifelong learning by providing Singaporeans with the opportunities to develop their potential throughout lives. Modern day Singapore is an attractive place to live and work. It could choose to rely on inviting overseas workers already expert in their respective fields rather than investing in reskilling its own workforce. However, as Ng Cher Pong, SSG’s Chief Executive, pointed out in his interview with The Straits Times, there is already a global shortage of talent and expertise in some areas, such as robotics, AI and data analytics. Even paying a premium would not deliver an army of specialists with up-to-date skills. As a result, Singapore’s government takes an active role in ensuring the economy has adequate resource to support its future development. There is a centralised database of courses on a variety of subjects covering a wide range of industries. SSG’s SkillsFuture Series, for instance, is a framework for short and industry-relevant courses that focus on emerging skills in eight categories, including data analytics, finance, tech-enable services, cyber security, digital media and others. Participants can choose between basic, intermediate and advanced levels of proficiency depending on their own expertise. Furthermore, Singapore introduced SkillsFuture Credit in January 2016 whereby all Singaporeans over 25 years old receive an opening credit of S$500 which they can spend on their training needs. The credit has no expiry date and the government intends to make periodic top-ups. The idea is to change mindset by encouraging individuals to take responsibility for their skills development: Over 285,000 people used their SkillsFuture Credit in the first two years of the scheme. Singapore is perhaps a leading example for applying a centralised approach to educating the national workforce. The concept of lifelong learning is not new or unique, however. Scandinavian countries stand out as far as education and unemployment support is concerned. Denmark, which prides itself on a long history of advocating lifelong learning, reached a tripartite agreement between the government, employers and trade unions in 2017 that provides funding to those looking for upskilling or reskilling opportunities. In Sweden, there is a robust safety net for employees that face collective redundancies as they benefit from the assistance provided by job security councils, non-profit organisations that help displaced workers to find new employment through career counselling and training. In a 2017 article by The New York Times, the Swedish Minister for Employment and Integration Ylva Johansson was quoted as saying: ‘We won’t protect jobs. But we will protect workers’. Analysts observe that the scheme facilitates more flexibility in the market as trade unions are less likely to obstruct redundancies. It is no surprise then that Swedish employees are least concerned by the ongoing wave of automation and 80% of the population express positive views about robots and AI. On the other side of Europe, the United Kingdom launched the Institute of Coding in 2018 as a platform for co-operation between academia, professional bodies and businesses to address the UK’s digital skills gap. Its website says that the programme is developing industry-accredited degree schemes and short courses for professionals and industries that undergo digital transformation and where jobs are under threat as a result. Banking on new skillsGovernment-led reskilling programmes address gaps in technology and digital skills in overall society and often lack a focus on specific industries, such as financial services. A lot of them assist the manufacturing sector, although this is changing fast as the technological wave continues to consume the services industry. To keep up with the times, banks are busy developing their own strategies for managing the workforce transformation.Singapore appears to be leading the way in the banking sector. DBS, which increasingly describes itself as a Digital Bank of Singapore, announced in August 2017 its intention to invest S$20m over five years to transform its employees into ‘digital workforce’. The bank’s ambition is to train its 10,000 Singapore-based employees in digital banking and emerging technologies through e-learning, experiential learning (e.g. hackathons where employees work on practical issues to produce a digital solution), or delivering training through learning spaces, such as DBS Academy, that offers talks and trainings on a wide range of innovation topics.As DBS adapts to the digital age, it recognises that its workforce must evolve too. The bank’s CEO Piyush Gupta explained in an interview with Bloomberg that the bank is vulnerable to competition from Chinese technology companies operating in the financial industry. The situation is more urgent for DBS and other regional banks than for their European or the US counterparts because Google and Apple have been slower to enter internet finance. DBS’s main competitors in its domestic market pursue similar strategies. When announcing its plans to reduce teller jobs by half within two years, OCBC Bank explained in July 2018 that affected employees will be converted to digital ambassadors and advisors with no associated job losses. This followed the bank’s commitment to spend S$20 million on the digital upskilling programme for its employees around the world. Similarly, UOB said in November 2017 it will strengthen its employees’ digital skills through the Professional Conversion Programme developed jointly by Workforce Singapore, the Monetary Authority of Singapore (MAS) and the Institute of Banking and Finance. All this neatly fits with MAS’s vision for Singapore as a leading global financial centre in Asia which was announced in October 2017 as part of the industry transformation map process and where preparing the workforce for demands of the future plays a crucial role. Instrumental to this are steps to build a local pool of specialised talent, reskilling programmes and enhanced career services.Other banks around the world are also looking to enhance the digital capabilities of their staff. For example, JPMorgan now teaches its new staff how to code with programmes on data science, machine learning and cloud computing expected to start in 2019. In an FT interview, Mary Callahan Erdoes, head of JPMorgan Asset Management, explained that this enables business and technology teams to speak the same language and, as a result, develop better solutions for clients. It all starts with the kindergartenIt is clear that financial services and technology will continue to be closely interlinked in the future and the overall approach to education needs to change to make this marriage a success. Whilst the focus has so far been on lower skilled positions, the reality is that advances in AI will soon make some specialist roles redundant. A widely quoted example is Goldman Sachs reducing its headcount in the cash equities trading room from 600 to two people only since 2002 as machines are taking over more and more functionality. Training policies need to reflect this shift in focus. World Economic Forum’s report Future of Jobs quotes an estimate by which 65% of children entering primary schools now will ultimately work in jobs and functions that don’t exist at the moment. It is nearly impossible to prepare for a future you cannot predict, but policymakers around the world are racing against time to ensure that the future workforce is given some kind of head start, such as problem-solving and computational thinking skills, to survive and thrive in the digital age. Estonia made headlines in 2012 when its schools started teaching coding to primary students. By 2014, at least 15 countries in the EU introduced coding to their curriculum in one shape or form in recognition that it helps children develop logical reasoning, creativity and technical skills. Other countries around the world have introduced a similar approach or are considering their implementation options.When SSG’s Chief Executive Ng Cher Pong was asked how Singapore’s skilling programme was devised, he referred to the apprenticeship system operating in Germany and Switzerland. It allows (mostly) young adults to learn on the job and earn relevant qualifications at the same time. The model is widely adopted in the UK too: JPMorgan now runs a four-year technology degree apprenticeship in which successful applicants pursue a degree in Digital and Technology Solutions and at the same get on-the-job training, learning how technology operates in the financial services industry. After a year of general studies, participants specialise in software engineering, hardware engineering, cybersecurity or data analytics sectors. Skills and knowledge that will make a successful banker tomorrow will differ significantly from today.