The Indian banking sector is expected to become the third-largest in the world by 2050, but the growth will largely be driven by emerging technologies. The race to improve operational efficiency and cut costs is forcing banks to adopt automation whole-heartedly. Digitization could render some traditional job profiles in the sector redundant, however, it could simultaneously fuel demand for employees armed with new skill sets.
According to a joint report by FICCI and NASSCOM, around 25 percent of the existing jobs in the BFSI sector may face an existential crisis in the next three years. However, another report by a human resources company paints a starkly different picture. As per a report by TeamLease Services, the BFSI sector is expected to create 9 lakh new jobs by 2022.
While the report seems to be contradictory, it is not, as the new jobs will be technology-focused, and the jobs facing an existential crisis are the legacy jobs.
The peculiar situation of skills mismatch in the sector has risen after financial institutions chose to automate several core operations like risk modelling, debt management, trade financing and equity analysis. Artificial Intelligence is being widely used for risk assessment and debt management. The technology has completely eliminated human interference and is able to predict the risk profile of a customer within minutes. It has drastically cut down the administrative and processing costs, along with the time taken for loan disbursals. Similarly, digitization has transformed trade finance. Exporting companies, the primary recipients of trade finance, used to wait for days for the process to be completed as it involved a lot of paperwork between different countries. With the emergence of innovative financial technology companies, the process has been truncated, resulting in shorter turnaround times and lower costs.
Risk assessment and trade finance are just the tip of the iceberg, entire departments in banks are becoming redundant due to digitization. The technological advancement has spawned a new set of job profiles. Rapid technological adoption has led to a shortage of process modeller experts, data scientists, enterprise architect, client engagement managers, cybersecurity experts and blockchain architects in the BFSI sector. Blockchain is another technology that holds immense promise for the sector. It is being used by the leading players to speed up settlements and secure transactions, boosting the demand for blockchain experts.
The Rise of the Gig Economy
The gap in demand and supply for BFSI-focused jobs has coincided with another significant shift in the job market. The demand for independent freelance professionals with domain expertise has boomed in the country. In 2018-19, nearly 72 percent of all gig projects in the country were given by large corporates as compared to 50 percent two years ago. Large companies in the organized sector are showing a preference for freelance professionals to fill up the gap in technical skills. Independent talent is being hired largely in the marketing, finance and strategy verticals.
Companies in the BFSI sector, especially financial technology startups, are utilising independent professionals in roles such as data analytics, designing growth strategy, and financial modelling, and cybersecurity. However, the requirements of the banking and finance sector are unique and cannot be fulfilled entirely by the gig economy.
If the internal movement within the sector is taken into consideration, the BFSI sector is likely to hire 4-5 lakh people every year for the next five years, with the highest demand expected to be for sales and distribution roles. However, a variety of factors has constrained the supply of suitable employees. Even though a large supply pool of employees is available, a lack of awareness, low interest in the BFSI sector and inadequate skills are the major factors that are inhibiting the hiring process. The skill gap is more apparent in niche roles like data analytics, data scientist, risk management and industrial relations. The technology-fueled uncertainty and the resultant skill gap is deterring probable employees from entering the sector.
Rapidly rising demand for specialised job roles coupled with an equally short supply of employees with the relevant skills is going to expand the demand-supply gap. To avoid the impending crisis, financial institutions, employees and leading education service providers will have to collaborate on a large scale. A seamless collaboration can produce an adequate number of professionals with the relevant skill sets to drive the Indian BFSI sector into the future.