The fintech factor: How new skillsets are changing finance recruitment

The financial sector is evolving fast, and finance recruitment practices are adapting to keep pace. 92% of finance employers are satisfied with the hires they’ve made in the last 12 months – 8 percentage points higher than the industry-wide average of 84%. This tells us that finance employers are adjusting well to rapid technological advancements that demand employers hire for or develop new skills within their workforces.

Due to the rise of fintech, the financial sector is seeing an increased demand for workers who can blend financial expertise with technical know-how. Candidates who can navigate this intersection well will be sought after in 2024: According to a report from the Financial Services Skills Commission (FSSC), 1 in 8 roles in financial services is now a tech role, and 95% of firms identified data analytics as an in-demand skill. [1]

38% of finance employers say it’s harder to find great talent in 2024 than it was in 2023 compared to the industry average of 51%. In finance, 46% say it’s easier, and 16% say it’s unchanged.

The fact that fewer finance employers are struggling to find great talent could relate to the fact that more of them are using skills-based hiring. In particular, there’s a higher usage of multi-measure testing (an approach that involves combining skills-based tests and assignments to measure multiple job-relevant skills) for recruitment in finance than in other industries. More on this later on.

For candidates, 56% of finance employees say it’s harder to find a job in 2024 than it was in 2023. 30% say it’s easier, and 14% say it’s not changed.

Hiring bias is slightly lower in finance than it is in other industries, with 29% experiencing unconscious or conscious bias during recruitment for finance sector roles. This is 2 percentage points lower than the industry-wide average (31%).

87% of finance companies are using skills-based hiring in 2024. This is 6 percentage points higher than the industry-wide average of 81%.

1. There’s a long tail of jobs within the financial industry that are generic and not specific to the sector – roles such as project managers, salespeople, and software developers. A recent analysis by TheCityUK found that roughly one third of the roles within financial services are specific to that industry. [2] This means that transferable skills are really relevant for this industry, and it makes sense for finance employers to hire for skills over experience.

2. The median pay for those in financial and business occupations is far higher than the overall average. The Bureau of Labor Statistics reports that the median annual wage for this group was $79,050 in May 2023, and the median across occupations was $48,060. [3] This means that the cost of a mis-hire will be greater, on average, for a finance employer. Skills-based hiring has emerged as an effective way to reduce mis-hires, hence its appeal to finance employers.

Cognitive ability tests are most popular among finance employers, with 59% using them to hire in 2024.

50% of tech employers are using multi-measure testing – 25% higher than the industry-wide average (40%).

This is significant since the industry-wide data we’ve collected also shows that employers see better benefits when they take a multi-measure approach to skills-based hiring. Employers see higher retention, fewer mis-hires, and a lower cost and time-to-hire when they use multi-measure testing, and assessment scientists recommend that testing for multiple measures during skills-based hiring is the best way to predict job success. [4]

According to oft-cited research by Dr. Bradford Smart, the cost of a mis-hire ranges from 5 to 27 times the amount of that hire’s salary. [5] Generally, finance salaries are high – the median finance salary in the US is $79,050 according to the Bureau of Labor Statistics. By that logic, one finance mis-hire alone costs a US employer between $395,250 and $2,134,350. [3]

Since 90% of finance employers reduce mis-hires when they switch to skills-based hiring (53% of them report reducing mis-hires by over 25% and 28% reduced them by more than half), transforming finance recruitment processes and embracing skills-based models could lead to hundreds of thousands, if not millions, of dollars saved.

Andrew Kyriacou, the assistant financial controller for Ocean Outdoor UK’s finance department, recently made the switch from a lengthy recruitment process involving external recruiters and manual sifting processes to a data-driven recruitment approach that includes a skills-based talent assessment.

When we asked finance employees why they prefer a hiring process that includes skills-based assessments, the top 3 reasons were:

When we asked finance employers about the challenges and concerns they encounter when trying to implement skills-based hiring, there were 3 common answers:

The Financial Services Skills Commission (FSSC) has flagged 13 future skills in its most recent future skills report, [1] and they’re almost evenly split between tech-related and soft skills:

FINANCE'S FUTURE TECH SKILLS:

• Data analysis and insights

• Digital literacy

• Software development

• Cyber security

• User experience

• Machine learning and AI

FINANCE'S FUTURE SOFT SKILLS:

• Adaptability

• Coaching

• Relationship management

• Creativity

• Agility

• Teamwork

• Empathy

Across all industries, our data shows that 84% of employers are taking steps to prepare their workforces for the rise of AI, with 52% hiring for AI-related skills. Additionally, 89% of employers think it’s more important for candidates to have soft skills than it was five years ago. .

As finance worker skillsets continue to diversify, multi-measure testing will remain crucial. Finance employers are already ahead of the curve here, with 50% of them using multi-measure testing. But uptake must increase if finance employers want to fully embrace the advantages of skills-based hiring.

Our data shows that employers see better results when they: