'Banks need to drastically re-skill, reform for new normal'

To hire the skilled or to re-skill? This is one of the crucial questions the banking industry prepares for in the 'new normal' in a post-pandemic world.

However, as the need for skills evolves, hiring cannot alone close the gap fast enough. Not only is re-skilling critical from an organizational standpoint, if done right, it also has a life-changing effect on employees, says a new book, "Transformational Leadership in Banking: Challenges of Governance, Leadership and HR in a Digital and Disruptive World" (SAGE), edited by Anil K. Khandelwal, a former CMD of Bank of Baroda and Dena Bank.

"Not only is re-skilling critical from an organizational standpoint, if done right, it also has a transformative effect on employees," Nishchae Suri, President, Asia Pacific, the Middle East and Africa at EdCast Inc., a global platform for Unified Discovery, Knowledge Management, and Personalized Learning, writes in a chapter titled "Skilling Is a New Currency Are You a Learning Organization?"

He points out that in one case, McKinsey has documented that employee satisfaction rose from 70 per cent to 80 per cent during the re-skilling process "which is a significant finding because 40 per cent of transformations fail because employees do not buy into the new approach. Institutions need to refine, and redesign job skill sets to equip individuals for higher-order work requiring intuitive, creative, interpretive, and problem-solving skills".

The new "super jobs" that would be created due to the redesign "will seek talent that can connect the dots between technology and business. Augmented by tech solutions, the banker of tomorrow will epitomize "less doing, but more thinking" with a blend of composite skills and capabilities which span across complex finance, coding, and behavioural skills, Suri writes.

He also points out that as per McKinsey, 43 per cent of all working hours in banking activities will be automated in the future -- a massive shift from basic cognitive skills to socio-economic and technological ones awaits us.

"Re-skilling is also recognized by 75 per cent of executives as being critical to adapting to the digital age, however, only about 10 per cent of roles are likely to be obviated, with the remaining majority likely to be modified to varying degrees by automation and digitization, allowing for up-skilling and redeployment. What is it that the organizations plan to do to bridge the skills gap?"

Suri also draws attention to a PwC Banking and Capital Markets Trends report that reveals that globally, 40 per cent of organizations plan to invest in up-skilling their internal talent pool, 23 per cent on hiring from firms in the same industry, 16 per cent plan to hire from outside, 16 per cent plan to bring in fresh talent through affiliations with higher educational institutions and only five per cent of organizations report changing the composition of the workforce by bringing in contingent workers to fill the gap.

Thus, it is clear that as the functioning and delivery of banking services evolve, it is equally essential for the workforce to transform itself to cope with these changes. Learning and development needs to play a key role in enabling employees to re-skill and up-skill themselves in keeping up with the changing times and transformational needs of the Industry.

Reinforcing this is a chapter titled "Strategic Human Capital Management and Banking Governance An Unexplored Symbiotic Relationship in PSBs" by Anil Khandelwal and Anujayesh Krishna, a board advisor with Institute for Advanced Studies in Complex Choices, Hyderabad who state that the role of human capital..."is an asset class in itself (in terms of skill set availability, performance delivery, etc.) and an asset that manages and controls other assets, particularly technology and multi-generational employees".

"This role and distinction were not crucial in the legacy context because capital and physical assets played a primary role in banking performance. In the emerging future of banking, intangible assets, which are more prone to human interventions, will play an influential role.

"It, therefore, follows that building effective governance requires a recognition of the important, and changed, role of human assets as a source of banks' strengths and potential vulnerabilities. The core idea that HR reporting will lead to more accountability towards human capital utilization, and therefore, better overall governance has some peripheral support to it," Khandelwal and Krishna write.

"However, the greater shift is likely to be the emphasis on behaviours and motives versus competences and experience. To be agile and effective in a customer-centric world, for example, it will be increasingly important to have intellectual curiosity and be comfortable with ambiguity. Future needs for motives and behaviours are often innate and not learned or educated for raising the question of how to attract, motivate and retain talent in the digital age.

"One thing is for sure that previous paradigms of looking solely at academic qualifications and experience are likely to be insufficient for many roles," Khandelwal and Krishna maintain.

Taking the debate further, Sushil Saluja, a senior international business leader and a government advisor based in London, with over 30 years' experience at Accenture in Europe, Asia and the US, writes in "Banking on Change: The Digital Revolution Is Now Here": "The traditional paradigm of banks owning customers is under threat: expectations changing and financial services being part of a broader transaction or lifestyle event. Furthermore, other industries are able to transact and offer banking services now."

"Herein, the implications for the workforce are equally important. The number of people required to deliver services to the customer will undoubtedly reduce over time, at varying speeds, depending on geography. Process automation and the introduction of AI will increasingly help financial services institutions move from functional orientation (e.g., for processing) to customer-centric processes with far greater emphasis on helping customers through their 'journeys', providing moments of delight at key points," Saluja maintains.

To this end, the edited essays and interviews in the book provide practitioners a deep appreciation of the role and nature of transformational leadership in disruptive banking environments.

The book encounters existing strategies and discusses the need for reforms and effective governance for creating robust banking institutions. It delves deep into the HR transformation journeys of some of the biggest PSBs and includes case studies of SBI, Bank of Baroda, ICICI Bank, and Union Bank of India. The book also talks about trade unionism in the digital environment, includes insights from chairpersons and experts, and charts out a new manifesto for HR and leadership in crisis -- post-pandemic.

Whether you are a financial practitioner, an academic, a student or just a reader wondering what the banking sector has in store, this is a one-stop book you can't afford to miss.