Accompany banking digital transformation with a people strategy

18 May 2021 6 min. read

The new digital-first ways of conducting business in the banking industry create a knowledge gap that must be bridged. Marketa Simkova, a partner at KPMG Lower Gulf, makes the case for why the adoption of new, innovative business models should be accompanied by a focused people strategy.

The global economy is witnessing profound change as digital platforms and technologies recast the relationships between customers, employees and employers. Digital transformation has become an integral feature for banks. Banks in the UAE have responded by remolding themselves and accelerating the adoption of digital technology. 

In the future, the banks will likely continue to focus on AI and robotic process automation (RPA), leading to minimal human intervention. In front-office functions, banks are leveraging AI algorithms to enhance customer experience and deepen partnerships with internal and external stakeholders through chatbots and voice assistants to provide personalized insights and recommendations.

Marketa Simkova, Partner People & Change, KPMG

Various AI strategies across banks’ business lines are being implemented within middle-office functions to assess risks, detect and prevent payments fraud, improve processes for anti-money laundering (AML), and perform know-your-customer (KYC) regulatory checks. Back-office operations may benefit the most from process automation, in areas such as transaction processing, wire transfers and account openings.

The impact of automation

As banking models evolve, job roles and skill requirements have also changed. Employees are likely to focus more on value-adding tasks like capitalizing on data sciences and improving algorithms, leaving potentially monotonous and tedious operational tasks to be implemented by bots. 

Internally, the employee experience offered by HR is set to undergo radical change. In the future, banks are projected to accelerate their reliance on RPA technologies to conduct HR functions such as onboarding, talent acquisition, compensation and benefits among others.

RPA will likely take over tasks such as gathering employee documents and making new employee records, as well as autonomous updating of payroll inputs. Instead of spending hours on filing paperwork, HR employees may be able to engage in the more satisfying aspects of their jobs. 

At KPMG, we have also observed banks increasingly investing in workforce analytics. These changes can pave the way to a more interactive job domain for HR individuals where the function can be more “strategic”, and contribute positively towards the organization’s goals, leading to great job satisfaction amongst employees. 

Investing in people

Yet with opportunities, come challenges. To successfully transition into a desired future state, it is not enough to have a bold vision and an impressive budget. The UAE banking sector is embarking on an exciting journey of innovation and transformation, though this must be a combined with a focus on upskilling and reskilling employees, as well as drawing in new talent to bridge the knowledge gap. 

This challenge is not unique to the UAE banking industry, but a global phenomenon, with banking CEOs around the world identifying talent shortage as one of the main threats to their growth prospects.

To address this challenge, banks around the world are investing in talent development initiatives to focus on the upskilling and reskilling of their employees. For example, Canada’s BMO has approached the reskilling of its employees as a journey, rather than an event. BMO provides employees with ongoing training, with several flexible and informal learning options. These development initiatives have helped the bank stay competitive despite the pandemic. 

Locally, increasing the percentage of Emirati talent in the banking sector is a key component of the national strategy and an ongoing aim for banks. However, as banks shift away from serving customers face to face and expand their online platforms, the types of roles available for Emiratis have also changed.

Adequate focus on building analytical skills will be necessary as data mining continues to remain important. This will probably require partnerships between banking players, regulatory bodies and academia, to ensure that Emirati fresh graduates are well equipped to address the changing needs of the banking sector.

Does digitalization pose a threat?

Another concern that inevitably comes to mind is the fear of job losses due to AI and other technologies. While CEOs might view automation as a vehicle to reduce time and increase efficiency, employees may view AI-related initiatives as threatening. Such concerns are generally not without merit.

A study by Citibank revealed that “30% of bank jobs could be lost between 2015 and 2025, mainly due to retail banking automation.” Industry experts expect this trend to keep growing in the future with lay-offs happening at a significant scale, as AI replaces the tasks of employees. However, digital transformation in the banking sector need not be disruptive to an employee’s job security, nor hamper their drive to perform. 

If left unattended, these concerns can create an environment of uncertainty for existing employees, fueling fear and resistance which can harm the bottom line, break trust and hamper innovation efforts.

If managed well, employers can promote digitalization and obtain buy-in from employees. It is crucial for banks to proactively develop a clear ‘case for change,’ articulate why the change is happening, how it will impact those involved and how it will benefit them. A well-crafted change policy, including communication and stakeholder engagement strategies, can be a powerful tool to create alignment between business objectives and employees’ passions, and enhance transparency.

Putting together a sound change management plan is essential to a successful transition to new ways of working with minimal disruption.

Developing a change roadmap

An effective change strategy can mitigate risk such as loss of talent, widespread panic, low morale and toxic rumors. For example, employees whose roles are becoming redundant can be provided with a development plan to support an effective transition to other roles and opportunities. 

In other instances, technology may translate to an adjustment of specific tasks an employee is undertaking. A retraining program can communicate to employees how automation can support them in attending to a wider array of customers than they could otherwise cater to. 

Digital transformation unlocks an array of opportunities for the banking industry as traditional relationships between consumers, financial institutions and employees continue to be redefined. To capitalize on the opportunities of tomorrow, it is crucial for banking institutions to have a clear and well thought-out strategy to engage existing employees through effective communication, training and upskilling, while concurrently attracting diverse talent to support their vision.