Financial Services Occupational Futures at Risk
AI is here to stay, but compliance, analyst, and advisory roles are quickly leaving.
The financial services industry urgently needs younger workers skilled in compliance as employees in these roles retire, and to continuously upskill AI capabilities to compete with the tech sector to evolve financial service delivery. Globalization, and automation are viable levers in some roles, but this industry’s specialized roles require upskilling and retention strategies among rapid regulatory and technological shifts.
Risk Factors
1.88
Occupation Risk Score
Despite having four means of alleviating labor market pressures, the future of critical occupations in the financial services industry are much riskier. Key roles, such as financial managers, accountants and auditors, underwriters, and investment analysts are filled by those over 55-years old, creating risk of complex regulatory skills aging out of the industry, because there are not enough younger workers to replace them. For example, personal financial advisors, financial analysts and advisors, and insurance sales agents are all within the top 100 occupations—across all industries—that are retiring at a much greater percentage than new entrants, at 43%, 39%, and 38%, respectively. Unless organizations prioritize significant upskilling and certification, critical skills and knowledge will disappear from the workforce.
2.39
Market Risk Score
There are two factors driving a higher demographic risk outlook. Many financial institutions operate in major metropolitan areas, like New York City, N.Y., Chicago, Ill., Atlanta, Ga., and Dallas-Fort Worth, Tex. These regions are witnessing far more prime-age workforce exits than entrances, at losses of 21%, 19%, 17%, and 16%, respectively—New York City itself has a market supply risk of 3.7, and considering the competition among not just financial service companies but also with technology, real estate, and professional services, the implications for sustaining this sector’s workforce in this metro are huge. At the same time, many banks and insurance brokers operate in regional offices, where the prime-age workforce is dwindling and retirees, who will still need services, are increasing.
1.00
Industry Risk Score
Organizations that employ bank tellers, insurance agents, and other face-to-face customer service professionals as the majority of their workforce must rely solely on local workforce development. Simultaneously, the industry has made significant progress in remote work, enabling offshoring options, and AI and automation advancements to deliver services. Financial services has also relied on foreign-born workers to fill talent gaps—at present, 14% of the workforce is foreign-born. With the industry able to rely on all four ways that work can get done, its risk in obtaining and sustaining its workforce is lower. Notably, the skills overlap with the technology sector means that as fintech becomes more ingrained in financial operations, organizations will have tighter competition for workers pursuing the tech industry.
1.56
AI Skills Gap Score
The prevalence of AI skills growth in the financial services industry is comparable to the technology, media, and communications sector, and rapidly increasing. Job postings for roles such as financial specialists, risk specialists, examiners, and investment analysts are among the top 100 positions among 767 with increasing requirements for AI skills. Insurance roles, like underwriters, appraisers and assessors, and claims adjusters, examiners, and investigators, are still keeping pace with incorporating AI skills into their jobs, but slightly less so than the aforementioned banking and finance roles. AI and automated systems are a sustainable means for ensuring a stable financial services workforce, but organizations should remain vigilant in benchmarking these skills and continuing to develop their workforce.
Financial Services Organizations in the Fortune 1000
In the Workforce Risk Outlook, Lightcast found little correlation between workforce risk exposure and their Fortune 1000 ranking. C-suite leaders must align their workforce strategies with their quadrant position, as opposed to assuming their revenue makes them immune.
High Risk/High Scale to Address: Organizations in this quadrant face significant risk of being disrupted in their industry, but also have the financial resources to reduce their risk if they are proactive. These organizations should invest in AI-driven risk management, expand digital upskilling initiatives, and develop strategic talent pipelines to attract and retain top financial and technology professionals.
High Risk/Lower Scale to Address: Organizations within the riskiest quadrant are lower on the competitive ladder and have less resources to address their incoming risk. These organizations must automate routine processes and cultivate partnerships with fintech firms to enhance service offerings without excessive labor expansion.
Lower Risk/High Scale to Address: Organizations in this quadrant may not face immediate workforce shortages, but should remain proactive to maintain and reduce their exposure to risk. These organizations should focus on developing skills in predictive analytics and cybersecurity, and foster a culture of continuous learning to future-proof their workforce against digital and regulatory disruptions.
Lower Risk/Lower Scale to Address: Organizations in this quadrant, if they are proactive, have a chance to be the disruptors. Specifically, they can disrupt industry competitors in the High Risk/High Scale quadrant. These organizations should expand digital-first financial services and build a strong brand around tech-enabled customer experiences to attract both clients and top talent.
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Solving Financial Services Workforce Management
Talent Analyst
Strategies to Compete in Tight Labor Markets
Competing in markets like New York City and Dallas, where skills bottlenecks and workforce retirements challenge growth, requires banking companies to focus on skills. Standardizing job architectures, identifying critical capabilities, and mapping roles to comprehensive skills taxonomies ensure precise hiring and development initiatives aligned to real-time labor market trends. Job posting analytics and compensation benchmarking allows banks to tailor their recruitment efforts to specific markets, offering competitive salaries and benefits while highlighting clear career progression paths to entice top talent.
How Banks Are Leveraging External Market Insights
A global banking company needed to address workforce planning, internal mobility, and employee development initiatives. Lightcast insights unlocked skills-based strategies by highlighting skill overlaps across roles, benchmarked against the external market. Talent Analyst enabled detailed insights on talent supply and demand, compensation, and diversity metrics across global markets, including India and the EU. By leveraging Lightcast’s skill-centric data, the organization transformed its skills-based hiring, workforce planning, and internal mobility, ensuring agility in a dynamic labor market.
Talent Transform
Strategies to Effectively Bridge Skills Gaps
To deliver on both technology demands and regulatory requirements, leaders need to address the skills mismatch in fintech, data science, and cybersecurity, as well as compliance, risk management, and regulatory technology. Detailed role and skill profiles within the context of the broader market enable upskilling strategies both for critical tech and regulatory roles, while aligning learning paths to pace ahead of competition in disruptive skills. Competitive benchmarking of compensation and skill demand in both this industry and adjacent industries better target, attract, and retain talent.
How Enterprises are Fortifying the Employee Lifecycle with Skills
A leading financial services enterprise is using Talent Transform to identify and solve skills gaps across the employee lifecycle. By aligning its internal talent data with Lightcast’s skills taxonomy, leveraging integration with Workday, the company has built skill profiles to create career pathways, incorporate upskilling plans into its learning and development platform, and accelerate internal mobility. An external view of talent pools, compensation trends, and competitor insights unlocked benchmarking against the broader market, advancing skills-based hiring and lowering recruiting costs.
