Emma O’Dell, Skills and Capability Director at BPP
The UK’s finance sector stands at a pivotal moment. Skills England’s 2025 assessment found that 69% of the financial services workforce are in jobs experiencing elevated or critical demand – higher than all other UK industry sectors. Facing its most acute skills shortage on record, the industry needs over 994,000 workers, with financial services and insurance accounting for the highest proportion of demand, nearly 70% of the total workforce. The Financial Services Skills Commission’s (FSSC) Future Skills Report 2025 alsohighlights a persistent and growing gap between the skills employers need and those available in the market. This gap is being driven by rapid technological change, particularly the rise of AI, and evolving customer expectations.
Yet, amid these challenges lies a significant opportunity. Many financial organisations are already embracing a skills-based organisation (SBO) model, placing skills, rather than roles, at the centre of workforce strategy. This shift is not only timely but essential. Over half (51%) of financial services leaders cite skills shortages as one of their most pressing talent concerns.
This new approach is already generating momentum, particularly in areas like reskilling, internal mobility, and learning innovation. The economic case is compelling: closing the skills gap could add up to £555 million annually to the UK economy which is equivalent to £3,340 per employee with a skills proficiency gap.
With the UK financial services sector projected to grow at a 24% CAGR and reach a market volume of $127.3 million by 2029, the question is no longer if businesses should act but how they can accelerate progress.
The Skills-Based Revolution
SBOs are redefining how work gets done. Rather than hiring for fixed job titles, skills-based organisations break work down into specific capabilities.
This approach helps firms better understand and utilise the expertise they already have. A credit analyst, for instance, might possess valuable skills in data interpretation and regulatory compliance that could benefit other teams facing similar challenges.
The key benefits of skills awareness include:
- Knowing who has specific capabilities when urgent projects arise
- Identifying exact skill gaps rather than assuming broad training needs
- Connecting people with complementary expertise across departments
- Understanding which critical skills might be at risk if key people leave
Rather than changing what people do day-to-day, this approach makes the most of existing expertise whilst ensuring organisations know precisely what capabilities they have available and where gaps might emerge, while enabling them to respond more quickly to market shifts, deploy talent more flexibly, and create clearer development pathways for employees.
According to Deloitte, 77% of business and HR leaders believe that the ability to move skills to where they’re needed is critical for navigating future disruptions. This is especially relevant in finance, where agility and adaptability are key to staying competitive.
The World Economic Forum’s Future of Jobs Report 2025 reinforces this, highlighting the need for businesses to prioritise upskilling (85%), plan for new skill hiring (70%), reduce outdated roles (40%), and transition workers into adjacent or emerging roles (50%).
The Evolving Role of AI
AI is reshaping the financial landscape more than any other sector. The FSSC’s report, Unlocking AI’s Potential: The Skills That Matter, estimates that 160,000 professionals in UK finance urgently need upskilling. Already, 75% of firms are using AI, with another 10% planning to adopt it within three years, a sharp rise from earlier figures reported by the Bank of England and FCA.
To keep pace, SBOs must implement AI capability frameworks and deliver scalable, accessible training tailored to different roles from AI Workers to AI Leaders. These programmes should focus not only on technical proficiency but also on understanding AI’s limitations and ethical considerations. Doing so will boost productivity and help mitigate the risks associated with AI adoption.
This skills-focused approach becomes even more critical as AI transforms how work gets done. Modern fraud detection systems, for example, don’t just run simple algorithms. They cross-reference customer data, network behaviour, and even device biometrics like voice or typing patterns to spot suspicious activity. This means fraud analysts need skills that bridge traditional investigation techniques with an understanding of how AI models work and what their outputs actually mean.
Similarly, while AI chatbots now handle millions of customer queries, customer service staff increasingly need skills in managing AI-assisted interactions and handling the complex cases that algorithms can’t resolve. The skill isn’t necessarily building the AI, it’s knowing how to work effectively alongside it.
The challenge goes beyond simple recruitment. Skills England found that 7.7% of financial services employees are not yet fully proficient in their roles, often due to the introduction of new technologies. Data analytics roles, for instance, now require candidates to work with and ensure the outputs of machine learning models on top of traditional data processing, yet education and training pipelines are failing to produce qualified professionals with this rare blend of technical skills and regulatory understanding.
Don’t Overlook Workplace Readiness Skills
Foundational skills such as critical thinking, creativity, analytical reasoning, and learning agility are essential for AI proficiency and broader workforce adaptability. Leading SBOs embed these capabilities into their job architecture, performance reviews, and learning strategies.
These “fungible” skills enhance internal mobility and drive innovation. According to Deloitte’s 2022 Skills-Based Organisation Survey, companies that prioritise these skills are 98% more likely to retain high performers and 52% more likely to foster innovation through cross-functional collaboration.
Building a Skills-First Future
While many financial organisations have made meaningful strides toward adopting a skills-based approach, there’s still work to be done to close the skills gap. Leaders must take a proactive, future-focused stance anticipating where new capabilities will be needed.
Access to tailored, high-quality training programmes will be essential. These must be flexible enough to meet the unique needs of each organisation while equipping employees with both technical and foundational skills. By embedding continuous learning into the fabric of their workforce strategies, financial institutions can build a more agile, innovative, and resilient talent base.
The UK finance sector has already proven its ability to adapt through periods of disruption from Brexit to the pandemic to inflationary pressures. Now, as economic recovery gains momentum, skills-based organisations are well-positioned to lead the next wave of growth. Those that invest in identifying, developing, and deploying skills effectively will keep pace with change and shape the future of the industry.
