Guest comment: Skills in the City
City employers are looking for more than just numeracy to future-proof their businesses, says Roy Leighton, chairman of the Financial Services Skills Council.
As the rollercoaster ride of the international financial markets continues, you might be forgiven for thinking that skills shortages are low on the City's agenda.
In fact, the need to attract talent of global quality, and to plan for skills shortages, remains important both to the City and other major financial centres worldwide. Since 2006, the Chancellor has convened a group of City leaders who meet regularly to look at issues of City competitiveness.
Skills research undertaken for the group, including interviews with City figures at the top of their game, suggests that the challenges are wide-ranging.
Let's start with the good news. Skills deficiencies are less common in the wholesale sector than in any other financial services sector in the UK. We are, broadly speaking, able to attract a very high calibre of applicants. But the pool of skilled people is finite and is not growing fast enough to keep up with demand.
There's a particular difficulty in "growing our own": home-grown talent is diminishing as our educational system produces ever-fewer highly numerate people. Engineers and science graduates, a popular source of talent for the financial sector, are in increasingly short supply. At any rate, as demand for the industry's services grows, driven by global demand, the UK's home-grown pool cannot possibly suffice. One interviewee explicitly stated: "It is a shame, but there isn't enough home-grown talent in the UK."
At the same time, the field of finance is becoming progressively more specialised. Ever more complex products and services require an increasing use of quantitative methods. The proliferation of new financial products requires an increasingly numerate workforce - if you want to improve your prospects, quantitative skills are on every employer's wish list.
There is therefore an increasing premium on quantitative skills for both back and front-office roles. Financial modelling is a prime area of skills shortage. Employers are reporting a shortage of such skills for risk, pricing and underwriting, and insurers are particularly hard hit.
Employers certainly recognise the economic value of higher-level skills, demanding degrees as a minimum, with high premiums placed on Masters degrees and PhDs. In addition to this, there are professional qualifications. The UK has a well-deserved international reputation that has lasted in some cases for well over a century for the development of professional vocational qualifications and training.
But there is another dimension to skills other than simple technical ability. This industry, like many others, requires the development of increasingly sophisticated 'soft' skills, such as communication, team working, customer service, client and relationship management skills, as well as management and leadership. These skills issues dominate the list of the most common skills gaps identified by industry practitioners.
Some of the areas most regularly cited by employers include interpersonal competence (understanding of client needs, communication skills and co-operation); cultural fit with the industry (employers need workers with flexibility, an inbuilt resilience to stress, criticism and setbacks, and the ability to exercise judgement and initiative); and operational effectiveness (industry and product knowledge, along with people and project management skills).
Soft skills is, perhaps, a bit of a misnomer: relationship management skills among senior staff, seen as a skills shortfall, requires genuinely good skills of building and segmenting customers, supported by rigorous application of relationship management techniques.
Finally, we've found that operations and the back office are significant concerns for employers, and we also need to address some perceived lack of prestige and professionalism in these areas.
Regulatory changes, such as the need to comply with MiFID or Basel II, offshoring and cyclical surges in demand, all have an impact. Senior-level operations staff are hard to source, and good compliance, IT and legal staff, as well as claims professionals in insurance, are also in short supply.
The government is certainly giving increasing attention to skills supply, and employers are getting involved in key areas, such as the design of higher education. Meanwhile, if you are looking at a career in the City or abroad, and have - for starters - high-level quantitative skills, language skills, cultural awareness and a superior work ethic, I suspect you'll be in demand for some time to come.
Roy Leighton is chairman of the Financial Services Skills Council, which provides strategic leadership for education, training and skills development for the financial services industry across the UK, and a member of the Chancellor's High Level Group.
