A Workforce Transformed: A walkthrough of our AI report — Transcript

I'm Mark Hoben. I chair the Financial Services Skills Commission. Welcome to our webinar this afternoon, which seeks to go through, in a degree of detail, the report we published last month on the impact of AI and other disruptive technologies on financial services. For those of you who aren't familiar with the commission, we're a membership organization. We've been in existence for just over six years. We have 50 corporate members drawn from across the financial services sector, representing about a third of the FS workforce. Our goal is to support our members in upskilling and reskilling the million people who work in financial services.

other descriptive technologies on financial services. Uh for those of you who aren't familiar with the with the commission, uh we're a membership uh organization. We've been in existence for just over six years. Uh we have 50 corporate members drawn from across the

The report we're discussing today was commissioned by the Treasury last year. It seeks to understand in more depth, given the growing adoption of AI and the emergence of other technologies, what the consequences of that are for the sector as a whole, but particularly around the workforce. The work has been supported by Lloyd's Banking Group and PWC, as well as by TheCityUK and the City of London Corporation. We've had quite widespread engagement to produce this report. We've talked to 190 people at roundtables. We've got interviews from 113 organizations, and colleagues at KPMG and EY provided us with original data.

And the report we're discussing today was commissioned by the Treasury uh last year. And what it seeks to understand in more depth is given the growing adoption of AI and the emergence of other technologies what's the consequences of

I think this report is both important and timely. AI is a topic you can't dodge in conversation, but people are now getting into the nitty-gritty. What does this mean for the sector? How does it affect the skills that we need? This report is the first of two. This very much sets the backdrop and context for our work. We're going to move later this year into a more detailed set of recommendations for the Treasury, for the industry, for education, and for our firms. So what we'll do today is talk through the key findings of the research and then have a panel discussion to look at some of the findings in detail. There is an opportunity for you to ask questions. Put them in the Q&A box. I think that's right. We'll move on to those questions as part of the panel discussion. So let me introduce you to Cla Tunnley, who's the CEO of the Financial Services Skills Commission, and she'll talk through the findings. Cla.

widespread engagement uh to produce this report. Uh we've talked to 190 people at roundts. We've got interviews from 113 organizations and colleagues at uh KPMG and EY provide us with uh original data.

Thank you, Mark. And hello, everyone. Just as Mark says, I'm the chief executive at the Financial Services Skills Commission. I'm going to walk you through the key findings of the report. The QR code was on the screen. You can look at it on our website, and it's pretty easy to find there. We can also put a link into the chat. As Mark said, the report that we published a few weeks ago is the culmination of a lot of extensive work. We were supported by Lloyd's Banking Group, PWC, the City of London Corporation, and TheCityUK. We interviewed a wide range of people from different senior reps in firms. We analyzed over 200 sources in desk research, held roundtables across the UK, drawing in a lot of insights. We were also supported with data provided by EY and KPMG. So it's a really quite a broad feat, and we do feel that this breadth of input allows us to present the views from across the sector. We're uniquely positioned to do that.

report is the first of two. This very much sets the backdrop and context for our work. And we're going to move later this year into a more detailed set of recommendations uh for the treasury, for the industry, for education and for our

The findings are extensive. It is quite a long report, and I can't cover all of the detail today, but I'll give you an overview, and there may be areas that you want to dive into in more detail in your own time. The findings can be grouped into broadly three buckets, and I'm going to walk you through each of those. The three buckets are the disruptive technologies in play and how they're being used; the second one is how work and skills are being and will be transformed; and the last bucket is the impact and the approach to skills and talent.

questions. Put them in the u Q&A box. I think that's I think that's right. Uh and we'll move on to those questions as part of the panel discussion. So let me uh introduce you to Cla Tunnley who's the CEO of the Financial Services Skills

Starting with the first one, the key findings around how technologies are driving change in the sector. We looked at a range of technologies. We included quantum computing, bitcoin, etc., but AI in all its forms is really the most pervasive in terms of driving change and systemwide change across the sector. The impact should not be underestimated. It gives significant opportunities for growth and productivity, but it also presents challenges that we must respond to.

Just as Mark says I'm the chief executive at the Financial Services Skills Commission. Um and I'm going to walk you through the key findings of the report. Um the QR code was on the screen. You can look at it on our

Use of AI is expanding rapidly. Most firms are implementing some form of Gen AI and exploring Agentic AI at pace. But we found in the report that although adoption is enthusiastic, it is also cautious. There are concerns around impact on customer outcomes and customers being comfortable with that. Also, some of the unusual outcomes that AI can sometimes produce and making sure that it's sensible and within regulatory and other guardrails. But there is a lot of enthusiasm. There are a lot of everyday use cases: admin tasks, summarization of information, customer interactions, fraud detection, claims handling. We heard a lot of examples of these. There is potential for hyper-personalized agents who can search and transact on behalf of the owner, whether that's in a firm or whether customers are using their own personal agents as well. As I said, we also looked at other technologies which will impact in the medium to longer term. We don't want to ignore bitcoin, quantum, tokenization. They're the key ones that came out through our work, but they are very much seen as something impacting in the future. AI is here and now, and it's all-encompassing.

extensive work. Um we were supported by Lloyd's Banking Group, PWC, the City of London Corporation and the City UK. Um we interviewed a wide range of people from um different uh senior reps in firms. We analyzed over 200 sources um

We did find clearly that success depends on execution. There's very much a clear need to have good data, good systems, effective governance, confident leadership, clear strategy, consumer confidence, and a focus on workforce skills to make the transformation a success. It is not as simple as plug and play. The foundations within a firm are critical to success. The second area that we looked at is impact on work and skills.

input allows us to sort of present the views from across the sector. Um, and we're uniquely positioned to do that.

We found that work is actually being redesigned. It's not being eliminated. I think there was quite a lot of concern when we started the work about numbers of people in work within the workforce, etc., but we didn't find that there's going to be a huge scale shift at the moment. It's very much around the content of what people do in their roles. To some extent, we think that's been underestimated in terms of the transformation in roles. We know that most roles are likely to see a gradual but significant automation of between 30 and 50% of the tasks that make up those roles. Tasks that involve manual, repeatable processes are more likely to be automated, whereas the ones that require more interpersonal and strategic thinking are likely to remain human-led. We do have detail in the report on the kinds of tasks and the kind of job roles and the automation potential for those tasks, skills, and job functions. We can pretty much confidently say that no role is going to be untouched by this transformation, and a human remaining in the loop will be essential for most work that is done by the sector. We heard a lot from firms about high-priority skills, and you can see on that wheel diagram some of those skills that people have mentioned to us as remaining critically important. When we say domain skills, that means financial services-specific knowledge and expertise, and that is something that came out as a key area. Knowing financial services and being able to apply that knowledge of the structures, the processes, the customer journeys, the regulations will remain key as the sector undergoes its AI transformation. It is very much up to firms to decide what gets automated and where humans remain in the loop. But there is the potential to reassemble tasks, reassemble roles with a different perspective of how things are carried out by...

you want to dive into in more detail in your own time. So the findings can be grouped into broadly three buckets and I'm going to walk you through each of those. Uh, the three buckets are the disruptive technologies in play and how they're

being used. The second one is how work and skills are being and will be transformed. And the last bucket is the impact and the approach uh to skills and talent.

So starting with the first one, the the key findings around how technologies are driving change in the sector.

We looked at a range of technologies. Um we included uh quantum computing, bitcoin, etc. But AI in all its forms is really most pervasive in terms of driving change and systemwide change across the sector. And the impact should

not be underestimated. Um it gives significant opportunities for growth and productivity but it's also challenges um that we must respond to.

Use of AI is expanding rapidly. Most firms are implementing um some form of Gen AI um and exploring Agentic AI at pace. But we found in the report that although adoption is enthusiastic, it is also cautious. Um there's concerns

around impact on uh customer outcomes and customer being comfortable with that. Also some of the um uh unusual outcomes that that AI can sometimes come out with and making sure that it's sensible and it's within regulatory and other guard rails. But there is a lot of

enthusiasm. There's a lot of everyday use cases um admin tasks, summarization of of information, etc. in customer interactions, fraud detection, claims handling. Uh we heard a lot of examples of there. Um and the potential for hyperpersonalized agents who can search

and transact on behalf of the owner, whether that's in a firm or whether customers are using their own personal agents as well. Um, as I said, we also looked at other technologies which will impact in the medium to longer term. So,

we don't want to ignore Bitcoin quantum tokenization. They're the key ones that came out through our work, but they are very much seen as a something impacting in the future. AI is here and now and it's all-encompassing.

We did find clearly that success depends on execution. There's very much a clear need to have good data, good systems, effective governance, confident leadership, clear strategy, consumer confidence, and a focus on workforce skills to make the transformation a success. It is not as

simple as plugandplay. The foundations within a firm are critical to success. The second area that we looked at is impact on work and skills.

So we found that work is actually being redesigned. It's not being eliminated. Um I think there's quite a lot when we started the work about people concerned about numbers of people in work within the workforce etc. But we didn't find

that there's going to be a huge scale shift at the moment. It's very much around the content of what people do in their roles. And to some extent we think that's been underestimated in terms of the transformation in roles. We know

that most roles are likely to see a gradual but significant automation of between 30 and 50% of the tasks that make up those roles. And those tasks that involve manual repeatable processes are more likely to be automated where

the ones that require more interpersonal and strategic thinking are likely to remain human-led. And we do have detail in the report on the kinds of tasks and the kind of job roles and the automation potential for those either tasks and

skills and job functions. We can pretty much confidently say that no role is going to be untouched by this transformation and a human remaining in the loop will be essential for most work that is done by the sector. And we can

see here we've heard uh a lot from firms about high priority skills and you can see on that wheel diagram some of those skills that people have mentioned to us um the remaining critically important and where we say domain skills that

means financial services specific um knowledge and expertise and that is something that came out as a key um area where knowing financial services and being able to apply that knowledge of of the the structures, the processes, the customer journeys, the regulations will

remain key as the sector unos underos its AI transformation. Um it is very much up to firms to decide what gets automated and where human remains in the loop. But there is the potential to reassemble tasks, reassemble roles with a different

perspective of how what things are carried out by technology, by agents and what's carried out by humans.

What that means is there's even a greater shift toward towards a highly skilled workforce. And the bars on the right hand side show us the evolution of a highly skilled workforce in financial services over the last 20 years. So in

2020 uh 2005 around half of roles in the sector are highly skilled. We're now at 3/4 of roles. That means we've been increasing the number of highly skilled roles in our sector by about 10,000 a year with a corresponding drop in medium

and lowskilled roles. The overall workforce size for the sector has remained at about a million people for the last 40 odd years. So that hasn't fluctuated much. But the composition of work and the skill demand has changed significantly. And there's nothing to

indicate that that increasing demand for highly skilled roles will stop. We expect it to continue.

Finally, what does this mean for our approach to skills and talent? Um we are likely to see significant changes to how we approach workforce planning. Um we go into detail in the report about pressure on entry- level pathways. Um how

workforce shapes might change, offshoring, onshoring, specific incre impacts across our regions and nations. There are nuances there. Um and the impact on different groups in the workforce, particularly on women, for example. We looked at one thing we did

look at is workforce shape. Um there was lots of discussion around moving from a pyramid shaped workforce to a diamond shaped workforce. But as you can see in the graph here, and there's more detail in the report, we are already a diamond

shaped workforce. And this transition has been going on for about 20 years. So we already need to think about how we bring people through the more junior roles and and uh uh tasks and functions in our in our industry and bring them

onto the more senior roles for future pipelines. We also know that by 2035 we are going to have to recruit an additional 450,000 people and this is to make up for the highly skilled workers that will will leave through just naturally moving to

another sector. Quite a lot through retirement. You can see in the the chart on the right hand side um people that leaving workforce for other reasons.

That's a big number. Um and we need to think about all the sources we can find to recruit that talent in. These aren't jobs lost. This is natural churn within the sector but we do need to replace those numbers and we know that that sort

of shift in our workforce is very much coming. To do this we need to look at strategic workforce planning. How we uh support people to learn and develop how we collaborate as employers across the sector to do this. work with government,

work with education providers to redesign those pathways, that learning that upskilling so that people have the experience and expertise um to take on the roles that we need them to do now and in the future.

So all of these themes I've mentioned lead us nicely onto the next phase of the research. Um so we've set out some key challenges that we will respond to in phase two of this work as Mark said.

So we have um we need to increase the upskilling reskilling across the whole workforce. This needs to take place at scale and as I mentioned earlier we think there's an element of this being underestimated at the scale of the

challenge of reskilling and upskilling an entire workforce with the technical skills and abilities the behaviors and the financial services specific knowledge um that's required to keep pace with all of this change and increasing demand for high level skills.

We do also need to redesign entry routes into the sector for early careers as some of those more routine tasks are automated. The the pathways in the sector must keep keep pace with this and build those pathways in for the required

talent and enable people to learn how they do the job and what's relevant for financial services and we make sure we effectively don't remove uh some rungs at the bottom of the ladder for one of a better a phrase to enable people to be

there for the future. Um we know that graduate apprenticeship routes are very sensitive to economic changes and and pressures um in our recent um annual skills report published in March. We know that actually early career entry into the sector has remained pretty

steady. It hasn't changed much um in the last 12 months. So we need to be proactive in redesigning those routes in and making sure they remain strong pathways.

And related to that is the growing time to competence gap. As skill requirements increase, the the distance between where new entrance come in and when they can be fully competent in their role extends and grows and widens. So we need to

understand how capabilities and requirements are training and they can be addressed so we can reduce that time to competence um ensure we get the skills we need faster.

We also need to look at how we can uh draw talent in from other sectors. Um we're a highly skilled economy and there may be talent in other sectors that we can draw in. Um and with securing those

skills will need us to think about transferable skills and capabilities as opposed to sector specific knowledge.

Can we teach the sector specific knowledge but draw in the skills? So we need to create those pathways and those entry routes for people transitioning from other sectors into financial services and giving them the knowledge that they need um and filling the gaps

in their their abilities. And further finally we deepen the pool of talent in the UK. Um the whole UK workforce whatever sector they in they're in must increase. There is increasing demand for high level skills not just in financial services um but

other sectors as well. The competition for talent will continue to to grow um as technology accelerates. So the action between government, employers and other stakeholders is going to be crucial to deliver that coordinated change. So if we want to build talent getting in

talent from outside in all these different routes so we can get talent in we need to work together and think about it as a bit of a UK issue and challenge not just financial services as well.

So those are the key findings um and the key challenges and as Mark said we'll pick those up in the uh final phase of the report. Um but now back to Mark and the panel.

Great. Thanks very much Claire for taking us uh through those uh findings. Uh we've got uh four panelists all of whom have been very closely involved in the preparations report. Uh Sarah Underh Hill uh who's a people director at

Lloyd's Banking Group. Saffna Patel a partner at PWC and a commission board member. uh Caroline Haynes who's a common counselor from the city of London Corporation and again board member and John Godfrey who's the managing director for public affairs at the city of Lond

at the city UK. So let's move into uh the panel discussion and please do put your questions in the Q&A box and we'll try and cover as many of those as possible uh in the time uh that we have

and perhaps um I turn to uh Sapna first. The report talks about the adoption of AI driving a structural uh shift. Can you give us a sense of what you're seeing in the sector at the moment and how that might change over the next uh

sort of two to five years? Yeah, thanks Mark. Two to five years. Blind me that's that's quite a mandate, isn't it? Um so I guess a few things from the report. I mean it it's quite clear right that organizations at the

moment are embracing Gen AI. I think we've got a a lovely stat in there.

Something like 83% of organizations have gen AI embedded um already. So I think that's a good sign that there is a lot of appetite to really understand what's possible organizationally.

So there's a bit of a here and now trying to understand you know the possibilities particularly with AI. I think there is also a separate point to that which is whilst we have those that that technology embedded um there is a

usage point here. So um one of the one of the stats that we often site is around daily usage of some of these tools from employees. It's from the PWC hopes and fear survey right and and that's still showing that daily usage is

still only about 14% from an employee perspective. So the here and now is a bit of a mixed picture I would say. Lots of tools available. Um lots of individuals and organizations and there's some fantastic use cases in the

report of how these are being used um and embedded particularly with customer customer complaints, claims processing.

There's lots of examples in there but I think where the step change if we look ahead is going to be is probably twofold. Um the first being around you know really understanding and building on the skills needed. So from a

workforce perspective, ensuring that individuals have the analytics capabilities, have the critical judgment capabilities, have the ability to communicate AI um effectively, you know, all of these pieces that we we probably quite used to seeing um and have been

explained really carefully in the report, but really there's an opportunity now to to build on that and give people the tools that they need to be successful. So that's kind of piece one. And the second is of course we

can't ignore that you know agentic AI is here you know you've got lots of live cases so use cases being deployed um particularly back office around you know endto-end workflows um and managing multi-step processes through AI now that

you know when that gets properly embedded and when that is being used across the the piece I think that does really structurally change the game right so yes from a skills perspective but also from an ability to understand

the the shape the structure of the work the workplace um and the organization. So I think that's going to be quite an interesting journey that we'll go on over the next few years as to how does agentic really play into um

organizational design strategic workforce planning and also then what does the individual and the role of the individual in in you know in in this end to end process and the skills needed for that. So I think that's there some of

the the big kind of changes I can see happening over the next you know at least medium term. I'm not going to predict the fiveyear game for now. You disappoint me. Um so Sarah just thinking you sat gave a very wide view there. I

mean Lloyd's banking group uh has you know been a definitely an enthusiastic adopter of AI. How do you see this playing out within within your firm?

Yeah. Yeah. So, building on what Satna said, I think the thing that's different about this revolution is the pace it's hitting us at. So, I I would say Aentic is very much with us right now. Um, and and and what comes next is to be seen.

And so, I think for us, the pace means that this isn't optional. And so, we've tried really hard to systematize expectations across the organization.

So, we're about 85,000 people. Um, about 40,000 colleagues have their full co-pilot license. Everyone has access to it. And to Satna's point, we can see everyone's using it, but not everybody's using it every day. So, how do we take

colleagues from the journey to being, you know, from from curious about AI to being fluent in AI and then to native.

So, the way we're trying to do that is by sending some very clear structural signals. Number one, we have redefined what we mean by performance this year.

So, performance is not just what you do, it's how you show up, but it's also the skills you acquire. And that is very, very clearly in the definition of what performance means. We've then cascaded to everybody a development goal around

their AI skills and what they're doing to acquire and grow those skills, deepen them, make them um from the point before actually to get to native with AI. And then the third thing that we've done is launched an AI academy. So everybody now

has very clear um expectations and then access to the academy where they can go and grow those skills both in their own time but also then we create an hour a week for everybody. We call it time to

grow where our colleagues can go in and explore that. So I think because of the pace we feel if we don't keep really really making sure this is embedded across the organization very quickly the gap is going to grow and it's going to

be so enormous it will be impossible to catch up. So that's why we've taken that approach this year.

That's really helpful. I I like the this um spectrum from uh literate fluent to native.

Yeah. Uh which I think very much talked about a journey that we probably all will need to go on. John, the conversations has been quite internally focused. I just wonder from a um looking at the sector as a whole and you know where do we

think the the benefits will be for our customers, the people who use financial services from this this AI revolution that we're going through?

Um yes, thanks Mark. I mean I think the first point I would make is that two to five years um is probably a little on the slow side and what the hyperscalers are saying certainly uh is we should be

looking at 18 months to three years. So we'll need to move even faster than perhaps you know we're we're saying on this call but um uh from the firm's perspective I mean 75% or so of firms last year reported that they're already

using AI. they are of course using it um generally speaking in back office and administrative functions. I think the next piece will be to take those business cases and move them into not cost-saving uh cases but revenue enhancing cases.

uh and uh that means moving into uh Agentic and Gen AI and for example providing uh better advice and guidance to customers the hyperpersonalized customer journeys enabling customers to make better informed choices and reducing the friction of interactions

with customers. So I think those uh are all uh positives. Um just to pick a few more examples of what that might mean in practice. I mean product life cycle management with a customer. Um more active wealth management which responds in real time

to uh to market and and and other events. You know better credit scoring in in the loan space uh advanced and more real-time underwriting in the insurance space and and generally real time insights to optimize financial decisions. So I think you know the these

um are topline and value creating functions for firms and that's an obvious advantage and I think that advantage is is leveraged further uh when we uh imagine that AI will be deployed alongside other financial technologies probably first and most

particularly uh DT related technologies and tokenization. So I think there are opportunities for competitiveness as well as for better service for for UK companies.

That's really helpful. Thanks John. I wonder whether um I might just pick up on a phrase that CLA used which I rather like which is about sort of the adoption being enthusiastic uh but cautious. And I just wonder what

is it that is driving that caution. Do you think I might ask um might ask Sappler first on that one?

So I think that there's um I think enthusiasm is is right. There is a lot of that. I suppose what what causes the caution just from what I've observed is just this whole um debate around trust, right? So um from a public pers

perspective um perception you know we don't really still in the UK massively trust AI that is going to be able to make decisions for us right so that is there there's a piece around general trust in in the UK from an employment

perspective an employer perspective you know there is a piece here around first of all making sure that got employees upskilled sufficiently to be able to use and understand um the art of the possible for AI, but secondly really

being able to trust that the answers being given are usable um that the decisions being made can be interrogated and actually feel like they fit within the governance framework that there is you know a responsible framework and responsible AI framework in place and

those those pieces do make a difference. So even if I think about it from um our perspective, a PBC perspective, you know, we've done an awful lot of training and upskilling of people to be able to use all of these tools to do

that. There has been a lot of thought and rigor on guard rails, on governance, on what does AI really mean and when should you be interrogating and and opening it up a bit more. And I think that level of real investment in in some

of these bigger I would call them uh more tricky issues to to overcome but ones that we're very used to in FS. Um if if you can get to the root of of some of those issues and put into put

together a framework and really acknowledge that I think that starts to unpick that trust um issue a little bit further. And I think once we can unpick that that I believe gets to a point of being able to really see the

acceleration of of AI in the workplace. That's really helpful. I just want to one of the questions we had is from uh John Heaps who asked about the importance of ethics and trust developmental frameworks for AI. And I

just wonder um John if if you got any reflections on on that as a wider societal uh piece because if we thinking about customer uh facing applications of AI, how do we how do we make sure people are confident about the

outputs and the outcomes of those processes? Well, uh it it really is a hugely important topic and I I absolutely agree with John Heaps uh in in the sort of premise of the question. It it sort of gets us a little bit into the uh the

subject of of governance and regulation and um to try to combine the trust piece and the competitiveness piece. you know, regulation is absolutely key to this and and when we interviewed 300 or so uh execs for for our no time to lose

report, there was a huge amount of support from them uh for the UK principles-based approach to regulation compared with the EU's more prescriptive approach. You know, we also have a collaborative set of regulators in the FCA and the Bank of England around

sandboxes, the AI lab and so on. But the quid proquo for this more principles-based approach is that firms have to um make super efforts to ensure their own processes and governance are up to the highest standards. And there

are a few things we need to sort and the AI champions are doing this uh for our sector and one of those is where the regulatory perimeter sits when you know there's a aentic AI uh interactions or transactions. Uh there's a question also

about um what do we what do we need in terms of resilience and sovereign AI capability and what does that actually mean in practice given there's a relatively small number of hyperscalers and and I think Mark there's a there's a

role here also in in helping to grow trust for the political class because the regulators and indeed the firms need to have some political air cover as as AI gets scaled you know it's we will all struggle to keep pace with the

technology. There will inevitably be some bumps in the road and we need to accept some risk here in the political world and the business world and and not get ourselves into a position where uh there is uh either a piling on of

regulations and costs or a blame culture. So I think all those things matter but the culture of this is absolutely crucial the tr the building that trust absolutely that's that's really helpful.

Thank you. And I want to um move on to sort of the skills component of of this debate um because as as CLA said in in her presentation, there's definitely a skills consequence of this and the workforce consequence and you know in

the report we talked about 450,000 people uh leaving the sector from sort of highskilled uh workforce. So I think that presents us a challenge about how do we replace those people? Where do we get them from? Aspects of careers, how

we upskill people with low or medium level skills. And I just wonder Caroline, you you're you're a great educator uh by by background and current interest. How do you think about the role of the education system in creating

that pipeline of people into the sector? Oh gosh. Um I mean the these are huge issues and I think there's a number of steps we need to take. some at um national framework level and and some sector level. And I think the ones that

I'm going to pick out that are also referenced in the report are really interconnected.

I think the danger at the moment is short-term panic. We've already mentioned 18 months, 3 years. Um whenever we respond to things in terms of skills and learning and education in terms of a short-term panic, it never ends very well. So I think one of the

key things referenced in the report where FSSC is well placed to help with is the development of a strategy to support skills now and into the future that that remains sustainable. So I think that's critical. Um but the second

step with that is that we've got to connect that skills framework to the transformed um job architecture which has already been talked about by the panel. And it's it's quite tricky to take into account um the future automation of of lower skill tasks and

moving towards building higher um level competencies and and that's going to need a road map and and I think the report pulls out really three categories which I would say we need to particularly redesign and future proof for the skills challenge. So those three

categories I would say are are behaviors which are we've already mentioned things like creativity, critical thinking, communication and so on. Um the secondary is technical skills. So digital literacy, AI fluency, cyber resilience in a sense across a lot of

sectors. Um but then the third becomes the FPS uh sector specific skills. So your underwriting, your actarial product development etc. So I think those are all critical but again already mentioned I think there's two huge contextual uh issues here around the skills challenge

and uh the future um talent pipeline which is we must learn the lessons of the past and be continually um assessing the effectiveness of skills developments initiatives. We have to be agile. um there's not a set of skills now today

which in six months time it may be the set of skills which are ready to move us forward and I think that's what's utterly unique here um where where we really need you know um specialists to to get together and really work that out

um but also also mentioned is that um we have to integrate AI by developing the whole c culture that embraces it. It's not a business plus AI. So everybody moving into that area of expertise um is absorbed by the culture and um is

encouraged and given the confidence to be responsive to that to the changing market demands and so on.

That's really helpful. I think that you that sense Caroline that you draw out there the dynamic nature of this challenge uh and you know the the the shifting skills needs I think it's worth just picking up on I just wonder Sarah just

how you think about this from Lloyds you the old idea of work of planning and sort of fiveyear plans production of number of tractors seems rather outdated in this AI world but how do you create some strategic framework work to address

some of the challenges that Caroline talked about about the changing nature of these these skills.

Yes, I mean I totally agree with that. The last time I did a a full strategy period strategic workforce plan was the end of 2022 and it did not feature AI.

So since then I've had AI generative AI agent AI they've all come through they weren't in the plan. So the plan needed updating. So I think there's something about cycle time. I think we've all got to accept that there is no such thing as

a three-year plan anymore. We can have a three-ear direction. we can have a three-year strategy, but we have to be really adapted to that. And so, actually, one of the things that we're trying to systematize again is to

support our leaders unlearn the things that have made them successful in the past because doing the same thing that you've always done as a leader is absolutely guaranteeing that we're not going to get to where we need to get to.

So, we've taken all 300 of our very most senior leaders and put them through a course with Cambridge Sparks at Cambridge Dutch Business School. And it was fascinating for them to ask the world experts on a what will happen next

year and for them to say we don't know. And I think that's like a really crazy lesson in how as a leader you have got to commit and you have got to role model to continuous learning to continuous

behavioral agility and to a high degree of humility. So what we then did when they came back was pair them with one of our recent data science graduates. So this is as native as you possibly can be in a world where the half-life of a

scale is two years. So, so we paired them and they're called AI ninjas. So, we have our very most senior leaders and our absolute brand new to Lloyd's Banking Group um graduates and we pair them together and they are able in a

safe space to say, you know, how do you get the best out of your perplexity subscription? Which model do you use for which thing? How do you vibe code? What does that really mean? So, so we're trying to create a shared language and

to sort of flatten the hierarchy. I think that's been really important. And then the other thing that we do particularly in what we call our AI builders. So these are the people who are actually creating agents rather than

the workforce that might be using a co-pilot license or benefiting from um generative AI supporting them in trolling through lots of documents and so on. These are the builders. We developed a really really clear learning pathway for them and every year at the

moment we might move to six monthly but every year we get them to do a skills capture exercise so we can understand what are the new skills we think they need which are the skills that are now redundant largely and how do they bench

against each of those skills so that at an individual level they can see where they are compared to our expectations and at an organizational level I can then step back and say where can I see that I have a gap I've got 4,000

software engineers where are my gaps in that 4,000 team and what do I need to invest in? So, I think there there's different ways of approaching it, but the key lesson is it cannot be a threeyear life cycle now. It has to be

far more agile. And Sarah, that that point that you made about uh taking your successful leaders, your top 300, and getting to unlearn what has made them successful. That requires a high degree of trust, doesn't it?

It really does. does and and so practically speaking, we've had them in sort of focus groups with um with a a tutor. My my own has been fascinating.

So, we're doing a use case around retirement journeys and how you help a customer to think about retirement based on if they're 18, largely don't care versus if they're 53 and think they can just phone up on the day they want to

retire and take the money. Also not going to happen. And what we've been able to do using voicep powered agents to run focus groups where the agents are the customers and so we can just shortcut enormous waves of effort and

time to give us a 90% view from which we can then baseline a prototype. A group of very very senior leaders are able to do that in an hour. And and so seeing everyone's like a dawning realization about what is possible today never mind

what is coming tomorrow. It's been beautiful to watch it coming to life. That sounds fascinating. Can I ask you a couple of detailed questions that have come through on the chat?

Sure. So tell me a bit about the uh uptake. These are detailed questions on the AI Academy. Uh you know to what extent have people naturally drawn to it and what extent are people encouraged?

Oh well, I think that by systematizing this, you all have an AI goal for learning and your performance will be measured as much about what you learn as it will be about what you deliver for today. So I think it's it's not really a

natural environment where it's like the people who always learn learn and the people who never do don't. Everyone is is sort of slightly more compelled to do that. And so we launched in January, we went live with our MVP. We've done 2.0

and 3.0 is coming soon. We've had 400,000 courses um taken so far in the first five months of the year. So I would say across a team of of 85,000.

That's pretty high take up. What we are seeing though is that um particularly some of our engineers, for those of you who are familiar with engineers, they tend not to want to just sit and do a course, right? They love to play with

with the work. So we're still seeing that sort of natural 70% of learning is on the job learning. And what we're creating is sort of sandbox environments where they can really put the skills to play. And then what we're demonstrating

is when we can see them showing up in the work with new skills, we're giving them an accreditation which we can then say right, you've now moved forwards in your um particularly agentic skill set.

That's how how we're tracking in. That's really helpful. So I think it is is trying to then match that learning people's individual learning styles with the material that's that's there that there.

Yeah. I wonder uh Sapna just a couple of questions for you. um that what are you seeing in terms of your clients around that strategic thinking in a very dynamic environment?

What what other tools are people applying? And then perhaps also a question about build versus buy for for skills as well be quite helpful I think to that that's come through in the chat as well.

Yeah. If I take that one first, I guess in terms of build versus buy, I think this is probably the topic that we talk to just all of the all of our clients about a lot. I think there's a general

of leaning towards build, right, ahead of buy. Why would that be the case? I think it's it's predominantly the case because of just the scarcity that we of skills that we operate in at the moment, right? And just the sheer um competition

that we all know about for the same skills. So a PWC will compete with a Lloyd's banking group for the same skills, right? That's that's going to happen, right? And that is that is a difficult environment to be in when

you're looking for similar similar capabilities. Now what is interesting about the build is build actually requires quite a different muscle um organizationally. So we've just heard from Sarah about the great things right that Lloyds are doing. I mean this is

happening across the piece. different FS organizations are just putting a lot of kind of time and effort and energy in differentiated learning programs. you and and you'll see some of those in in the report as well, which can range

between giving people the capability to learn AI tooling all the way through to just almost respraying and giving them the foundational knowledge to change their job into something else because actually the job that they're doing currently has got a high risk of of

those tasks being automated and so need to do something differently. And actually that granted it's happening um in it's not it's happening in different organizations at different scales and rates and it's not totally scalable across the piece yet but that is

actually quite exciting and that just shows you the opportunity that is available to organizations that in a slightly different differentiated way thinking about learning and development in a slightly different way. actually you can fundamentally change you know the foundations and the fabric of of the

people within that or within your organization and that level of like real impetus to to change I think is is is a great place to be um and we're at the precipice of it. I think the second question and I am going to admit I have

forgotten it is about how how you're seeing your clients think strategically about skills development in that dynamic landscape.

Yeah. And and so so that Mark talks to this this point that we've heard a little bit around strategic workforce planning. And I think what what we're hearing is it's quite difficult actually to do a workforce plan 3 to 5 years out.

Really this this what what we're seeing more of is trying to tie the business strategy of what is it organizationally that you're trying to achieve top line down through to then operationally? How do you actually execute that? and the

the people and the workforce agenda really kind of tying in better to that that business kind of landscape and what's needed and what that's really requiring is a little bit of modeling right so what are the skills so what's

the data that organizationally you have some organizations have better data than others fine um we're seeing a lot of data being brought in particularly around skills taxonomies and understanding that so buying that that skills landscape and matching it to your

organization we're seeing a lot of that um and trying then to say right if we're going to try and scenario plan or we're trying to model out in the next year or next two years where do we think

disruption is going to be that's where I think we're seeing agile workforce planning rather than you know let's call it strategic if you want but it's it's really agile scenario based workforce planning that is a slightly different way of looking at workforce planning

than the traditional which is here is my budget here is my cost here is the headcount here are the gaps this mix this and this and that's my workforce plan. This is a very different way of doing it because it's requiring a

lot of different data sets and a lot of just applying external macro factors to your own judgment to understanding your organization and then trying to think about where could you land in in that.

So I think that that does require a little bit of extra thinking a lot of um extra conversations more at board level than kind of at the operational level.

It's interesting to that that reference you made there Satna to the board level conversation because there there's something here about what's the strategic direction of your business.

Yeah. how about your customers, your employees, you know, the general shift you want to make around technology and then how does that cascade down to that that that people planning.

Yeah. And there are some organizations where that is exactly and that is exactly what's happening and that is the ambition clearly and you'll see it in the report as well. There are some organizations that are happy to um just

look at what they're doing currently and be fast followers, right? And that that's inevitable and I think that that works. So there's there's definitely um two approaches to it.

Okay, that's super. Now let me um just move on to a slightly different set of themes here and CLA in her presentation talk about some of the demographics uh around skills. We've talked about the requirement to um recruit up 50,000

people into the sector. Uh but I wonder also though about and it's come out in some of the questions about the impact on on women in the workforce and Caroline you led a really good piece of work on women pivoting to to digital. I

just want want you to reflect on that and how you see that fitting into this AI journey.

Yes, thank you Mark. And in a sense I guess the work that we've done here is a subsection a model for um how people might uh set about some of the other issues that around this in the workforce. Uh

actually the the city of London corporation recognized a few years ago that uh workforce data was showing that particularly in the FPS sector agent AI was uh very likely to threaten traditional female gender roles. Um so our solution was to convene the women

pivoting to digital task force which was targeted focused and datadriven around this issue. um and the the knock on effect that was going to be had on the workforce with disruptive technologies.

Um but I think the outcomes do offer a model of how firms and policy makers could prepare for this across uh the FPS sector as a whole. And uh just a very very quick summary, the untapped digital talent 3 billion pound opportunity

report which which I'm I'm sure people will be given the link to um really focused in around three areas that first of all current hiring practices risk costing the UK billions if mid-career women are sidelined from digital roles

in the FPS sector. So that's quite specific. Um but the second that AI is already disrupting present recruitment practices and the nature of work. Um but digital roles are growing faster than skilled supply. So somehow we need to

match those um and without reskilling stakeholder firms could face up to 750 odd million pounds in avoidable seance costs. So putting those together, um the solution and again very briefly but the solution that that we're now putting together and will be made public

fairly soon is that um if companies can scale up internal reskilling programs um then that does much to help protect against AI displacement. Um so taking people with a level of skill dealing with the public interface already digitally literate to some extent um

certainly protects against the displacement. There's a whole piece of work to do right across the industry on developing career changer and returner programs. And at the moment touching on something we said at the beginning, businesses tend to be doing this in

their own way rather than in a framework that is across the FPS sector. So, so we're very much looking at that. Um, but also looking at hiring women from non-traditional routes and from nonsaturated talent pools. um where employer competition is less intense and

I think that's critical across the sector and in fact across any sector that we have got a bit fixated by going back to our same usual recruitment alternatives to try to feed into the system where whereas if we can hire from

non-traditional roots where women are particularly skilled then we may or or our data shows that we should have a supply um potential supply coming into the workforce.

That's super. Thanks, Caroline. Sarah, I just wonder how you're practically approaching this question. Well, I've worked very closely with Caroline for a start. So, the reskilling program is launching at Lloyds next Friday and I'm launching it. So, so as

in the the City of London one. So, so upskilling is the thing that we're totally committed to at Lloyds. Um we've had some really really successful reskilling programs in the past. We've had some brilliant personal assistants reskilled to be software engineers.

We've had frontline colleagues res-kill from branches to be amazing software engineers. So, so we we definitely have a track record of of reskilling. But we think this is now an upskill story. And to the question of buy versus borrow.

It's fascinating. Nobody has the skills. So, you know, it's new. So, therefore, where are you going to buy them from?

Um, and also our purpose is helping Britain prosper. So to help Britain prosper, we have to really help our people to be as employable as possible and and if we keep them at the front of the queue of a kind of upscale journey,

then even if it isn't at Lloyds, we really hope that they'll then be able to go off and be employable somewhere else.

So I think um we don't see it as as optional. We see it as core to the mission of the organization.

That that's that's kind of where we are on it, Mark. That's super. Thank you very much, John.

I'm conscious that time is marching on. I just want to uh pick up with you just given your um distinctive perspective having worked in financial services and white hall uh there's been a sort of emphasis in the questions about

the impact of what we're seeing in financial services in border society. Uh we talked about impact on women. there's a a re potentially regional impact.

Yeah. If you were uh back in number 10, what would you be thinking that the FS sector should off be offering up or thinking about as we embrace this AI revolution?

Josh, well, let me try to be quick uh on on on on this one, Mark, and I'll just pick one facet of it, which is uh really about what can the public sector do and the broader government machine to step

up to the AI challenge and and this ties you back to the regional point because there is a there is a difference in pace of AI adoption across regions. you know some regions are are extremely good at it not necessarily in the FS space but

you in manufacturing and even agriculture and energy and so on um but London is leading in in the you know rapid adoption in the FS space but I think there is a huge role that um could be delivered by government through

bringing for example local councils and regional governments uh up to the level of of of the best in AI at the moment you know it's it's quite a kind of mixed ability group in terms of AI adoption.

So that would be one thing that could be done. And then the other thing which is a sort of perennial ask of government is that um we do try to to join up properly and connect across all facets of

government but particularly to make sure that the school curriculum, higher education, the entry points into the workforce look at this in a kind of very holistic way to ensure that people get on the right pathways as they're starting out in life. I'll leave it

there Mark in the interest that's very helpful. a neat short to the point answer and what I'm going to do now is because I squeezed Claire a bit who was talk about the second phase is hand over to CLA talk about the second

phase of report and also and she will thank everyone for participating. Cla over to you.

Thanks Mark and fascinating and I know thanks everyone for submitting your questions because I was watching them and there's way more in there than um I think we had time for. Um so the next phase of the report um as we said will

look at how do we get the skilled people that we need. We've set out the nature of the skills challenge. So, we're now moving on to how do we get how do we get the people? So, what um what are the

options? Where are the different talent pools? Looking at upskilling and reskilling in the sector, other um workers in other uh industries, people that are maybe out of work, how can we provide pathways in there? And also those that are ill in education but are

future employees, what those pathways look like. So we're looking at all of that, engaging with stakeholders um in the pale blue box here as you can see across the landscape um including governments of all types and sizes. So

um skills as people will realize is a devolved matter. So um engaging with Scotland, Northern Ireland and Wales as well as the combined authorities etc.

um because they do have different approaches um and there may need to be a different uh response depending on on where people are and where the roles are. Um so we're looking at all of those things. We're starting this work now. Um

the the field work will run um for a few months and we're probably looking to have a uh the second and final report of this work um in early 2027. Um, if you want to be kept up to date with what's

going on, um, we're we're just building the research program now, so um, there may well be opportunities to engage and input, do go on to our website and if you go on to the homepage and scroll to the bottom, you can sign up to our

newsletter and you will then get updates and opportunities to engage through that. Um, so please do do sign up there.

The second thing I want to talk to you about going forward is the skills compact. Um and we have uh been creating this with with government uh around a commitment that the whole sector can put uh to can sign and show their commitment

to um a number of things. Now we have it's not launched yet but it is open for financial services employers to to sign and show their commitment. The commitments are that firms commit to um upskill um all of their workforce over a

rolling three-year period. They also commit to maintain and grow roots into the sector um for new talent. There's also commitments about public reporting and and senior um sort of sponsorship of this this work. Um but this is something

we're we're taking forward. If you're interested in finding out more, do email us on compactfinancial serviceservices.org.

Um but this will likely be launched um next month as part of the uh mansion house speech that the chancellor gives.

Um so you can find out more there. So there will be opportunity to sign later in the year. But if you want to be first or you want to be early um do drop us a line and we can have a conversation. Um

but I just want to say a huge thank you to all of the panelists um and for the discussion today and thank you for for joining. Um it's been really interesting to hear the panel. You can have a look

at the report at your leisure um and do get in touch with us um at the commission if you're interested in hearing more or thinking about joining.

Mark, I don't know if you want to add anything. No, just a a big thank you to all the team for putting this together and for to our great panelists uh but also the over 100 people who joined us uh today.

It's a huge topic. There's more we will return to cleanly in phase two of the report, but as CLA said, if you want to know more about our work, the AI work and particularly compact, do get in touch. Thanks very much everybody. Have

a good afternoon and we'll see you all again