Traditional financial institutions will no longer exist in 2030

Jean-Philippe Thirion Blue Chip Boutique Leader Financial Institutions Connect on Linkedin
Careers in banking and insurance will shift from execution and selling to data analytics and advice.

#1: Impact of digitization and automation on careers in FIs

#2: Role and importance of ‘phygital advisors’

#3: Anticipation as a crucial, non-automatable skill

Careers in banking and insurance are going to change radically. Today, many financial institutions are selling financial services like loans, insurance products. In 10 years time, traditional financial institutions as we know them will no longer exist. GAFA-like companies are taking over part of their activities and digitization is a real game-changer. Banks and insurers are now part of a new financial ecosystem that has been emerging for a couple of decades. We notice that Artificial Intelligence (AI) and 'virtual advisors' will gradually be taking over more and more tasks. Humans and robots will work together as ‘phygital advisors’ - physical and digital. In order to survive, financial institutions need to become advisors rather than mere sellers of services. As a result, people's soft skills will become even more important.

The impact on careers

Take the example of a typical bank employee who is responsible for reporting the financial performance of loans within the Operations department of a financial institution. Today, he spends most of his time collecting data, structuring it, validating it, controlling it and transforming it into information. Tomorrow, intelligent automation or Artificial Intelligence should take over these tasks in a matter of seconds.

We estimate that this type of jobs represents 25% of the tasks carried out in the Operations departments of banks. In the Finance departments, this type of tasks represents even up to 50% (!) of the overall number. Tomorrow, all these manual jobs will disappear. On the other hand, we will need a lot more analytical skills to transform information into insights and insights into decisions of which the impact will also have to be analyzed more frequently and quickly.

In the Finance departments, manual tasks represent up to 50% of the overall number. Tomorrow, all these manual jobs will disappear.

New skills for banking and insurance employees

Financial institutions will have a much broader scope than banks or insurance companies as we know them today. This means that other types of careers will emerge within financial institutions. And therefore also other skills. Of course, people with strong technical skills will always be valued, but it is also crucial that other (soft) skills will be obtained and maintained.

Employees in the financial world have to convert from service provider to thoroughbred advisors, to butlers and stewards of the client's daily financial affairs. This is already the case today at banks such as Belfius where customers can take advantage of an ever-increasing number of integrated and sometimes non-financial services within its banking app. These services such as the purchase of bus tickets, service vouchers and mobile payments for parking, go far beyond traditional banking and insurance services.

Analytical and interpersonal skills on top of technical skills

Data will remain important, but will no longer be the exclusive domain of the traditional financial institution. The added value no longer lies in the possession of that data but in the right algorithms and the development of the appropriate artificial intelligence.

The technological revolution - including its algorithms, AI and machine learning - increases this need for new competencies. AI becomes mainstream and anticipates the wishes of the client. It records these demands even before they are explicitly expressed. Basic knowledge of the new technological language is obviously becoming a must, but it is not enough to be effective. Competencies such as analytical and empathic ability, anticipation and critical attitude can become equally indispensable, precisely because they are difficult to automate.

Competencies such as analytical and empathic ability, anticipation and critical attitude can become equally indispensable, precisely because they are difficult to automate.

In the new ecosystem, 'phygital' partnerships will emerge

The financial world will have to open up and offer platforms that serve people. In that new ecosystem, 'phygital' partnerships will emerge: combinations of 'physical/real-life' and 'digital'. Banks and insurers will cooperate with other stakeholders, both within and outside their sector.

Faster decision-making

The fact that people have virtual colleagues speeds up the decision-making process. Employees should form autonomous, self-managing teams that can complete a project in a shorter period of time. Faster decision-making sometimes means making choices based on incomplete information. This is nothing less than a revolution for bankers and insurers, who want to know all the details before making decisions.

Organizations need to adapt, train and coach employees to be able to function in the new framework with robots that are responsible for data collection and structuring and help with research that leads to insights and ultimately to decisions. People are expected to have a different mix of competencies: to be able to work with the insights instead of being trained in collecting and processing information.

Acting instead of reacting

It is no longer enough to react appropriately to events such as the organizational consequences of market developments or system failures. It is a question of detecting possible events at an early stage and taking action on the basis of available and incomplete information. You have to prepare the organization and the people for this so that they can make analyses based on just a few clues. Apart from these anticipating, or leading indicating skills we observe increasingly important competencies: being able to encourage and challenge people, being resilient, being able to adapt, being able to make quick decisions, being critical and empathic. Thanks to robots, which take over repetitive and numbing work, humans can be more enterprising.

From 'what' to 'why'

The successful financial institution in 2030 does not define itself by 'what' it does, but by 'why' it operates. The cultural change that is needed puts the emphasis on people and the way in which they lead. Banks and insurance companies must put the growth of their people first. This will increase the involvement of employees and customers, who are strongly intertwined.

The focus on the 'why' contributes substantially to solutions for several dangers that threaten the survival of financial institutions: the decline in income from traditional facilitating services, the heavy cultural and technological legacies, the damage to reputation caused by the financial crisis, the range of services that no longer meet the needs and wishes of the client.a

Platform business model

Since its beginning in 2002, TriFinance has emphasized the 'why' of its action and not the 'what' it does. The reason for its existence is the growth of the people it works with. Our model starts from the platform idea. In the platform business model, all those involved can play a creative role and create value. Part of the value of a service lies in the interaction between the people involved.

In our international flat network organisation where knowledge sharing is the rule, we do everything we can to ensure that employees move forward in their careers. First and foremost by offering them interesting projects. The company links their ambitions to the challenges of customers. The palette of experience that our Project Consultants gain as a result guarantees their employability in the longer term.

Our campaign 'leave your mark' - with the roadshow around our book 'How to make your career in finance - CFOs talk' - fits into that context. There is a lot to learn from those who have achieved top positions in their careers.