AI triggers biggest financial services skills crunch in 15 years
The UK financial services sector is facing its most significant technology skills shortage in over 15 years, driven by the rapid adoption of artificial intelligence.
According to the latest Harvey Nash digital leadership report, AI has surged from the seventh to the most scarce technology skill in just 18 months – a 260 per cent increase in reported shortages.
Rhodri Hughes, executive director for financial services at Harvey Nash, warned that if the UK fails to address this AI talent gap within the next 12 to 18 months, it risks losing its status as a leading global financial hub.
“The UK has always been seen as a leading global financial hub”, Hughes told CityAM. “If we don’t address this skills challenge, this could come under threat, and we could lose our status along with that of being the number one financial tech hub”.
Investment outpaces upskilling
The report revealed that 89 per cent of technology leaders in the financial services sector are now investing in AI, up from 43 per cent in the previous year.
Yet this surge in investment is not matched by efforts to up-skill the workforce.
Over half of the companies surveyed are not providing training in generative AI, leaving a significant gap between technological advancement and employee capabilities.
Despite the overall skill shortage, larger organisations with technology budgets exceeding $500m are faring better.
Nearly half, or 44 per cent, of these firms report measurable returns on their AI investments, compared to just 27 per cent across the sector.
This disparity highlights the advantage that well-resourced companies have in navigating the AI landscape.
Businesses seek AI talent
The competition for AI talent is intensifying at a rapid rate, with financial institutions increasingly recruiting from big tech companies that have already invested heavily in AI projects.
But, Hughes noted that there is also a trend of internal development emerging, with software engineers within banks seeking to gain experience in AI to advance their careers.
“Generally, the talent we’re placing is from other big tech organisations”, Hughes said. “There is also an element of talent emerging from banks themselves, with software engineers wanting to gain experience in the area of progress their career in this direction”.
What’s more, the report found that engaging with Gen Z is proving beneficial for firms aiming to turbocharge AI.
Firms that attract and incorporate the viewpoints of younger employees are as much as twice as likely to be prepared for the demands of AI, and 56 per cent more likely to report a measurable return on investment.
Looking ahead, Hughes predicted that by 2030, the tech teams within top UK banks will be leaner, but more adept in AI.
“We’ll likely see the size of software engineering teams reduced, but the engineers being employed will be adept in working alongside AI tools and specific AI engineers, to provide the most value to the business”, he told CityAM.
Regulatory lag
The rapid pace of AI adoption has outstripped the development of regulatory frameworks.
Only nine per cent of UK financial services execs believe their firm is prepared for incoming AI regulation, and 14 per cent do not have an AI regulatory risk framework in place.
This regulatory lag poses a risk to the sector’s ability and effectively implement AI technologies.
“Yes, there are regulations coming through – the AI act and ISO42001 – but these aren’t coming quick enough”, Hughes said to CityAM. “Many organisations are having to put their own controls in place and govern AI themselves”.