The impact of digital transformation on the financial services sector

Digital transformation is shaping every sector – from FMCG to Finance, and every industry is being influenced by emerging technologies. So, what role does digital transformation play in financial services in particular, and how does this affect the hiring landscape? We explore the impact of digital transformation on the sector, its influence on recruitment strategies, the growing importance of data within the industry, and how companies can adapt to evolving technological advancements. Let's get into it:

The role of digital transformation in shaping recruitment strategies within financial services
Digital transformation is driving programs of work in financial services and is calling for professionals who can be banked on to lead these projects to success. This is shaping the financial services IT recruitment landscape and calling for companies to adapt their hiring strategies to cash in on this pool of top talent.

-The impact of AI
Artificial Intelligence is revolutionising the Financial Services sector, enhancing the customer experience and driving efficiencies. AI-powered chatbots alone increased in use within the financial sector by 3,150% between 2019 and 2023, highlighting just how rapidly this tech is being adopted. AI, however, is not only being leveraged to improve the customer experience – it is also being used to attract top-tier talent and streamline the recruitment process. From chatbots being utilised to connect with candidates and answer questions about the recruitment process, through to AI-powered Applicant Tracking Systems (ATS) which use algorithms to match candidate skills to relevant jobs, AI is revolutionising the recruitment space.

-The role of intelligent automation
The use of Intelligent Automation, which sits at the intersection of AI and automation, is being used within financial services to drive efficiencies and provide an enhanced experience for customers. This includes the use of AI chatbots to answer customer questions, automation to detect fraud through identifying any unusual financial activity, and leveraging the technology to extract insights from complex data stores. So, what does this look like for recruitment activities? From using automation to enhance the candidate experience by creating automated touchpoints, through to automating the screening of CVs and scheduling in interviews, it all works to streamline and improve the hiring process.

-The benefits of cloud technologies
Cloud data allows financial institutions to develop an understanding of customer behaviour, enabling them to develop products and services that will meet customer needs, as well as allows banking customers to access services wherever they are, enhancing the customer experience. When it comes to how this shapes recruitment strategies, cloud technologies digitise the hiring process and allow for the streamlining of activities. Candidates can keep track of their job application process and upload relevant documents via platforms such as Workday and Dayforce. Hiring managers can also access all the information they need in one place, and use cloud platforms to search for and source relevant candidates, and process applications at speed.

Beyond the impact of tech on recruitment strategies, how else is it impacting financial services? We look into the growing use of data within the sector.

The importance of data and analytics skills
Data is critical in the financial services space. From helping to prevent fraud through to enhancing the customer experience, it's a key area of focus for institutions across the globe.

What are data & analytics used for in Financial Services?

1. Fraud detection & prevention – Data can build picture of customers' spending patterns and detect if anything is out of the norm, helping to prevent fraudulent activity.
2. Risk management – Financial institutions can analyse historical data to determine where risks may lie and put measures in place to shore up systems and processes.
3. Compliance – Data helps to monitor compliance and allows for accurate regulatory reporting.
4. Providing customer insights – Financial institutions can use data to paint a picture of their customer and understand their behaviours and interests. This all assists in… 
5. Enhancing the customer experience – Using data, financial services companies can segment their customers, offering personalised product recommendations and engaging in tailored marketing activities, all helping to provide an enhanced experience. Research reveals that banks could achieve a 27.5% growth rate by lifting their customer experience scores by only 10%.
6. Driving efficiencies – Through data analysis, companies can gain an understanding of where their systems and processes may be inefficient, and can use this information to streamline processes and save time, for example, through leveraging automation, AI, and other emerging tech.
7. Accurate financial forecasting – Data allows for financial services institutions to analyse historical performance and use this for future forecasting. This assists with budgeting and determining where investments should be made.

Uncover more about the importance of data in the finance sector in our blog "Data management in financial services: Why tech talent matters". 

Why are data & analytics skills important?
There are a number of risks that the Financial Services sector faces, making the need for data & analytics skills stronger than ever.

1. Growing cyber and data breach risks
Handling vast stores of sensitive customer data, Financial Services institutions are a prime target for cybercriminals. Research reveals that in 2022, the global rate of ransomware attacks in the sector sat at 55%, and this increased to 64% in 2023 - a significant jump from the 34% reported in 2021. As a result, ensuring this information remains secure is essential. Financial institutions must establish a number of measures to ensure data is protected – including implementing intrusion detection systems, encryption methods, and multi-factor authentication, alongside running regular security audits to identify and rectify any vulnerabilities – and they need the right people with the relevant tech skills on board to do so.

2. Compliance & regulatory changes
To ensure data within the financial services sector is handled correctly and remains protected, there are comprehensive regulations in place to govern its management, for example, Australia's Privacy Act 1988 and Europe's General Data Protection Regulation (GDPR). Failure to comply with regulations not only carries financial consequences, but can also cause reputational damage. As regulations evolve, financial institutions must keep up to ensure they're compliant – this can involve ensuring consent management is in place, data is only stored for a set period of time, and there are stringent data access controls in place. This means professionals with both technical competencies as well as a strong understanding of the regulatory environment are needed.

3. Fraudulent activity
As the financial services sector is a prime target for fraudulent activity, ensuring processes are in place to identify and mitigate any risks are essential. Through leveraging historic data to understand customers' spending behaviour and using automation to flag unexpected activity, financial institutions can get on the front foot to stop fraudulent behaviour in its tracks. However, as Artificial Intelligence continues evolve and presents new risks, such as cyber criminals leveraging AI to generate convincing phishing emails, or the potential of using these tools to generate automated malware, financial institutions need to remain a step ahead to ensure their systems remain secure and fraud is mitigated.

Uncover more about the cybersecurity risks impacting the Financial Services sector in our Cybersecurity Hiring Market Snapshot.

Adapting to evolving technological advancements
As technology only continues to evolve, financial services companies need to remain ahead of the curve to ensure they're not only meeting customers' expectations, but are also protected against growing risks from emerging tech. This calls for tech professionals who not only understand the regulatory environment the sector operates in, but also have the technical skills to help companies innovate and evolve.

So, what skills should you look out for when hiring financial services talent? We look into it:

1. Cybersecurity
As cyber threats only increase in prominence, financial services companies require professionals with cybersecurity skills to protect against attack. These professionals should have a strong knowledge of the latest threats and vulnerabilities, be proficient in encryption techniques to secure sensitive data during storage and transmission and be knowledgeable in deploying intrusion detection systems (IDS) to detect suspicious activity and mitigate risks.

2. Data
Data is king, and this is especially true in the financial services space. The sector requires tech candidates who are well versed in data analysis, management and compliance, to ensure sensitive customer information is protected, the customer experience is enhanced, and regulations are adhered to.

3. Cloud
With financial services companies migrating to cloud-based platforms and offering a digital experience to customers – think, online banking and mobile apps – professionals skilled in cloud technologies are essential to manage this digital ecosystem.

4. AI
With the explosion of ChatGPT and other AI tools comes a whole new ball game of cyber threats for the financial services sector – think the creation of AI-generated malware and increasingly sophisticated vishing attacks. Professionals with AI and machine learning competencies can help financial institutions get on the front foot to shore up systems and protect against these increasing threats.

Read our Financial Services Tech Hiring Snapshot for more insights on the latest tech shaping the Financial Services space.

Ready to embark on a digital transformation project?
As technology continues to evolve, the opportunities for the financial services sector only grow, however, so do the risks. To ensure financial companies get on the front foot of digital transformation, they need the right people on board to lead the way - professionals who understand the complex regulatory environment and have the technical skills to transform the sector.

If you're about to embark on a digital transformation project and are seeking first-class finance professionals to get you there, we can help. 

At Talent, we work with leading talent in tech, transformation, and beyond, and can find you exactly the right people you need. Whether it's a stellar data analyst, a leading cybersecurity specialist, or a world-class chief risk officer, you can count on us to deliver. Get in touch.