(Credit: Timon – stock.adobe.com)

Commissioned by the UK government, the A Workforce Transformed report, by the Financial Services Skills Commission (FSSC), says accelerating adoption of AI is heavily restructuring the sector.

While the technology improves productivity and customer outcomes, its impact on the workforce has likely been understated. As advanced agentic AI reduces the need for traditional entry-level positions, firms must establish new career pathways to secure future talent.

The report highlights an impending skills crisis, forecasting that the sector could lose up to 450,000 of its 780,000 highly skilled workers to turnover or retirement by 2035. Replacing this talent will be increasingly difficult and costly due to intense cross-economy competition for specialized capabilities.

Future demand will shift sharply toward data, governance, software engineering, interpretation, and product design, alongside soft skills like adaptability and critical thinking.

FSSC chief executive Claire Tunley said: “Artificial intelligence and other disruptive technologies are ushering in a period of profound change for financial services.

“While the opportunities for innovation and growth are clear, realising them will depend on strong leadership, robust governance, high-quality data, continued focus on customer outcomes and, crucially, prioritisation of skills.”

The report, which received backing from major institutions including Lloyds Banking Group and PwC, will be followed next year by practical recommendations for firms and policymakers.

The findings coincide with mounting anxiety over AI-driven job losses, a sentiment recently acknowledged by global banking leaders.

HSBC chief executive Georges Elhedery urged staff not to resist the transition, admitting that generative AI will inevitably destroy certain roles while creating others. Similarly, JPMorgan Chase’s Jamie Dimon predicted that while AI will ultimately reduce overall headcount, it will simultaneously boost individual productivity and spark targeted hiring for AI specialists over traditional banking roles.