Technology, Talent, and the Future of Banking in China
With the recent launch of the Hong Kong Monetary Authority’s Banking Talent Program, Radar explores the likely impact on the region’s banking industry.
The Hong Kong Monetary Authority (HKMA), in conjunction with the Hong Kong Association of Banks and the Hong Kong Institute of Bankers, launched the Banking Talent Program in June 2020, to supplement the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). The rapid adoption of technology and expansion of business in the GBA has created new opportunities for the banking sector that demand a fresh set of skills from the workforce. The HKMA foresaw this innovation driving a strong need to assess the skill gaps in its industry to better prepare banks for the challenges ahead.
The Program aims to nurture incoming talent by targeting recent graduates from local universities and offering them six-month work opportunities with industry-specific training. Based on the 2019 “Capacity Building for Future Banking” exercise, the HKMA identified three key avenues of focus for its Program:
- Banking industry’s medium-term business expansion plans, including cross-border businesses, climate-related risk management, and sustainable finance
- Major skill gaps during 2021-2025, consisting of technological and data skills, banking knowledge, and specific soft skills
- Sound practices in talent management, involving reskilling and redeploying banking practitioners, as well as recruiting required staffing resources
Banking Industry’s Medium-Term Business Expansion Plans
The HKMA’s review of banks’ business plans for the next five years found that successful development depends on new financial technologies and the increasing global economic importance of mainland China. As the GBA becomes more connected globally, the banking industry intends to reduce cross-border financial crime, with particular emphasis on anti-money laundering/counter-financing of terrorism challenges.
Banks have also identified the need to meet the HKMA’s “Greenness Baseline” to promote climate-related risk management and the sustainable development of the sector. While these will benefit the GBA, digital banking has been determined as the main priority to drive innovation and enhance the competitiveness of the banking industry in the future.
To do so, the sector plans to increase its adoption of artificial intelligence technologies, such as machine learning and predictive analytics, to better streamline business processes. Given the rise in digital data, banks will need stable data architecture to drive governance around data management, ownership, and privacy. Similarly, data analytics can offer more precise insights that enable real-time risk monitoring to help banks analyze customer behavior and deliver optimal financial services. To protect data, the industry will continue to devote significant resources to enhancing cybersecurity, while adjusting to meet heightened compliance requirements.
Major Skill Gaps During 2021-2025
The bankers’ medium-term business plans revealed a substantial skills gap preventing existing talent from navigating the GBA expansion as effectively as expected by the HKMA’s adaptive workforce. As a banking hub, new businesses will require talent with core banking knowledge, particularly on cross-border customer needs and regulatory regimes, specialized bank services, and ESG product innovation. Banks remain on the lookout for professionals who can add value through their soft skills, including adept problem-solving, industry networking, and language and customer communication. Technological and data skills remain the top priority for banks who seek those with a grasp of the effective application of technology in the sector.
To facilitate digital banking initiatives, incoming practitioners need data skills to help generate insights, make informed decisions, and deliver a better customer experience. Banks will target those that can use artificial intelligence to automate mundane human tasks, such as regulator interactions or customer service. Human-machine/data communication skills also make prospects appealing for their ability to apply technology to work procedures through machine-generated analyses. Applicants with data architecture and engineering skills will be highly sought after to build databases, maintain data quality, and facilitate secure data maintenance.
Data analytics will have a major impact on banks’ progression as any insights can be leveraged to analyze customer behavior, identify business opportunities, or formulate business strategies. Knowledge of proper data governance is becoming essential to the industry because it allows banks to ensure their data is usable, secure, and of high quality. On a basic level, quantitative and algorithmic thinking skills are required to effectively conceptualize and solve problems beyond simple computation. Lastly, cybersecurity skills will be critical to perform many advanced banking functions, as well as being vital to protection against digital threats.
Sound Practices in Talent Management
The future of banking is dependent on the retention, development, and attraction of the right talent, which means banks in the GBA need to improve both their business models and human resources policies. More than anything, improving talent management practices will be critical to the success of the GBA’s development. The HKMA believes that all key aspects of talent management, reskilling, redeployment, recruitment, and retrenchment, need to be optimized for survival in the rapidly evolving banking sector.
Proper reskilling allows bankers to build experience and update their technical skills to better support the growth of the banking sector while maintaining the stability of the larger financial system.
During periods of change, such as the GBA expansion, banks need to formulate clear redeployment policies to provide sufficient staff support for those embracing a career transition. For recruitment to be effective, banks must fill talent gaps by attracting, cultivating, and expanding the pool of prospects both within and outside the industry. Banks may consider a retrenchment of existing staff, which must be transparent, respectful, and equitable in manner.
Hong Kong’s success as an international financial center, whose services account for 20%of its GDP, depends on the continued supply of prolific talent. The HKMA launched the Banking Talent Program to attract prospects capable of combating the economic effects of the COVID-19 outbreak while developing the GBA.
“As the Chinese saying goes, it takes ten years to grow a tree but a hundred years to nurture a person,” said Eddie Yue, Chief Executive at the Hong Kong Monetary Authority. When the economy recovers, financial talent will only be in greater demand, but the market for this talent will be even more competitive.
For more stories, download the full edition of Radar 9 here.