Why more financial services companies are taking a skills-first look at tech talent
Financial services has an innovation problem. For the past decade-plus, that problem has often been pinned on fintech disruptors, who move fast and deliver digital experiences that meet customer expectations and win them over from traditional finance.
But the problem goes deeper than that. The financial services industry often stands in its own way, being slow to modernize its tech platforms, as well as its digital culture. Without the culture and eyes on the innovation prize, many financial services companies have found themselves in a digital skills gap that limits their ability to innovate, keep up with competition or even maintain the integrity of their data and security of their systems.
Diversity impacts innovation in financial services
It’s no secret that diversity, inclusion and fresh perspectives drive innovation. Research has found firms with higher levels of diversity are 45% more likely to grow market share and 70% more likely to capture a new market.
Outside-the-box ideas are more likely to be heard; experimentation is more likely to embraced. Failure isn’t considered a failure the way it used to. But more traditional industries have been slow to change.
Tech jobs, especially in financial services, have long required four-year college degrees and years of experience, which signaled candidates were capable of performing certain jobs. For decades, that formula has been the standard for hiring managers.
But over those years, unconscious bias in tech job descriptions and hiring processes has led not only to a lack of diversity in tech jobs, but made underrepresented job candidates feel unwelcomed to even apply.
The outcome of these hiring practices wasn’t surprising: lack of diversity in tech roles, lack of innovation. It wasn’t until recently that they adjusted one aspect they hadn’t yet — their talent profile.
A new trend in the way financial services companies think about, recruit and consider tech talent works flips that approach on its head. And it’s catching steam.
Why skills-based hiring is trending
Skills-based hiring is an approach to recruiting and evaluating job candidates based on their skills, instead of their education or work experience. It asks candidates to show what they can do, not tell where they’ve been. It opens opportunities for qualified people who might not have the right (or any) college degrees, but have the aptitude and experience to excel in a job.
Nearly 60% of tech companies are now considering removing college degree requirements to fill critical tech roles. Organizations are taking a more holistic approach: they have stopped limiting the assessment of applicants to academic backgrounds and are considering candidates’ overall skills and achievements.
Tech giants are embracing skills-based hiring, too. Only 43% of Accenture’s IT job postings and 29% of IBM’s required a degree. Apple and Google followed suit, as over 20% of their combined job postings did not require a college degree.
The key reason more companies are adopting this approach is the results. Employers who prioritize demonstrated skill over the perfect resume see these types of outcomes:
- 92% experienced fewer wrong-hires
- 82% report a cut in cost-per-hire
- 25% decrease in wrong-hires
- 91% decrease in time-to-hire
The tech industry is embracing skills-based hiring. Skilled trades have always relied on skills training and assessments to hire the right people to do important jobs. But it’s only (relatively) recently that financial services companies have begun to consider changing the traditions of how they recruit and vet talent, especially for tech roles.
Benefits of skills-based hiring in financial services
More diverse tech talent pools
Skills-based hiring opens opportunities to more people (with or without a degree). It can also remove unconscious bias that has historically made underrepresented candidates feel unwelcomed to apply to tech jobs in financial services.
Simply by shifting your mindset, you’re giving candidates a chance to showcase their skills and capabilities, not simply some pedigree.
Nearly 30% of companies implementing skills-based hiring report access to more diverse talent pools. With this holistic, talent-first approach, more candidates gain access to opportunities because recruiters must more closely consider candidates’ skills, not just their degrees.
Improved screening of the right talent
On average, financial services recruiters spend 6 seconds looking at a resume. A skills-based assessment allows recruiters to go beyond resumes and see a candidate’s capabilities.
With skills-based hiring, recruiters see applicants in action and discover if they have the skills required for the role. By testing candidates’ tech skills, recruitment teams effectively filter many unqualified applicants and bring only the most viable and qualified to the interview process.
Faster time-to-hire, lower cost-per-hire
Hiring tech employees based on their skills reduces time-to-hire by 50%. Thorough evaluation of candidates’ tech competencies at the initial stages saves companies 87% of their recruitment costs.
Moreover, 70% of candidates who pass competency assessment tests get hired.
Why? Skills-based assessments show whether candidates are fully acquainted with the necessary technology, tools and framework to do the job. It’s like a performance preview. These candidates require less time for onboarding and training. Faster time to deployment translates to improved business agility and faster time to value for the company.
The way forward for skills-based hiring in financial services
The modern workplace has evolved, especially in tech. We are now in a talent market where a candidate’s potential pulls more weight than their credentials.
Digital transformation, emerging technologies, and shifting workplace expectations have driven the demand for top-quality tech talent. Organizations need to innovate their hiring strategies to attract and onboard employees to fill crucial roles.
Companies that can quickly adapt to the talent market demands and utilize skill-based hiring will gain a competitive edge while diversifying their workforce. This method of recruiting has helped many businesses balance their workforce needs, expand their candidate pools, and make swift hiring decisions.
For employers that are struggling in this area, start by assessing job descriptions for skills necessary for the role and then work to build a system that focuses on these to bring in the most qualified candidates possible.
Skills-based hiring is a mindset that your organization can apply across your talent strategy and the methods you use to refine your job requirements, recruit talent, screen applications and hire the right people for your jobs.
Another prong of that strategy might be to develop those skills, specifically for the jobs you need to fill. Learn how a model called Hire-Train-Deploy can help.