The report, titled Reskilling: A business case for financial services organisations, provides evidence on the cost savings financial services firms can benefit from when they reskill an employee; versus hiring someone new with the relevant skills. Reskilling a financial services employee costs on average £31,800 compared to the redundancy and rehire approach which carries an average cost of £80,900.

The research shows over a four-year period a company with 30,000 employees could potentially save between £75 million and £115 million by upskilling current employees into the roles they need filled.

The need for reskilling across financial services has never been greater as the industry faces a significant shift in the skills requirements for its workforce, increasing skills gaps across the UK and a greater demand for talent. Research by The World Economic Forum (WEF) estimates that by 2025, 85 million existing roles, globally, will be displaced due to factors such as technology and automation. However, the report published today shows there is a clear business case in favour of reskilling and strategic workforce planning.

Given demographic trends, including an increase in life expectancy and retirement age, the scale of the change needed in the sector and digitisation elsewhere in the economy mean that the skills gaps in financial services cannot be met through recruitment alone. The report published today is designed to help businesses address the difficult challenge of regularly upskilling existing staff to meet emerging skills gaps, and to equip them for roles that may not yet exist, ultimately encouraging firms to undertake a robust forecasting of future skills needs.

Claire Tunley, CEO of Financial Services Skills Commission, said: “Recruitment alone will not address the existing skills challenges across our industry. That is why the FSSC is today calling for firms to prioritise reskilling, so it becomes an essential component of an organisation’s workforce and planning strategy. Our business case clearly demonstrates that reskilling can generate a real return on investment, boosting productivity and competitiveness, mitigating operational and reputational risk, and positively impacting the wider economy and society.”

Christopher Box, financial services HR consulting lead at PwC UK, added: “The financial sector has a major presence across the country and employs people at every stage of their career journeys, from school leavers to experienced hires. However, we know regions and nations where business activity is concentrated in relatively smaller or fewer hubs have the greatest challenges recruiting and accessing skills. For these areas especially, reskilling current workers will make a big difference to their business models. To remain competitive, financial services companies need to prioritise building programmes that can deliver skills training to their people at scale across multiple levels of experience, expertise, regions and, crucially, programmes that can be delivered across the virtual and in-person divide.”

Isabelle Jenkins, head of financial services at PwC UK, commented: “The report proves what we’ve been hearing on the ground - reskilling and retraining can make a fundamental difference both to the critical bottom line but also to a firms’ business models. We also know that constant recruitment can drive up expenses, drive down productivity, and erode culture and corporate memory.

“Therefore it follows that to really address the needs of tomorrow, the sector will need to ensure its workforce is up to the task, but this is wider than simply ensuring that everyone can code, rather staff will need to be equipped to think, act and thrive in a digital world.”