Skills-Based Talent Management in Financial Services

Executive Summary

Financial services organisations face a talent paradox. Demand for skilled people has never been greater, yet the traditional tools for understanding, developing and deploying that talent (job descriptions, annual appraisals, siloed learning programmes) are no longer equal to the task. In a sector impacted by artificial intelligence, tightening regulation and a shrinking domestic talent pool, knowing precisely what your people can do is now a strategic imperative.

This white paper makes the case for skills-based talent management in financial services, an approach that anchors performance, development, and workforce planning to demonstrable, validated capability rather than tenure or job title. It draws on research from Randstad Enterprise, the Financial Services Skills Council, Deloitte, McKinsey, the World Economic Forum, the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the New Zealand Financial Markets Authority (FMA), and Ringa Hora, New Zealand’s Workforce Development Council for the service industries.

Five pressures are converging to make this shift urgent for financial services organisations:

• A rapidly evolving skills landscape, driven by AI adoption and digital transformation across banking, insurance, investment management, and financial advice.
• A tightening regulatory environment that requires demonstrable, documented competence and compliance from both frontline and senior staff.
• Persistent talent shortages, compounded by global reductions in net migration flows and fierce competition for specialist capability.
• Growing employee expectations around career transparency, development pathways, and meaningful performance conversations.
• The need to surface and deploy hidden capability, those skills that already exist in the workforce but are invisible to decision-makers.

TalentJam is a skills-first performance management platform purpose-built for mid-market organisations. This paper outlines why financial services firms can’t afford to wait, and what a skills-based approach looks like in practice.

1. The Talent Landscape Has Changed

Skills demands are shifting faster than traditional HR can track

The financial services sector is experiencing skills disruption on a scale not seen since the post-GFC regulatory wave. Artificial intelligence, changing customer expectations, sustainability disclosure requirements, and intensifying financial crime controls are together reshaping what it means to be competent in almost every role, from relationship managers and risk analysts to compliance officers and operations leads.

A 2025 report by the Financial Services Skills Council (FSSC), drawing on member survey data from 17 firms, found that skills demand continues to outstrip supply across the board. While the number of people reskilled in the sample increased for three consecutive years, with twice as many people reskilled in 2024 as in 2022, the cohort size (averaging 223 people per firm) remains modest relative to the overall size of these workforces. The conclusion is striking: reskilling activity is accelerating, but it is not yet sufficient to keep pace with evolving requirements.

The World Economic Forum’s Future of Jobs Report 2025 reinforces this. Reskilling and upskilling is the primary mechanism financial services firms say they plan to use to address talent availability, not hiring, not outsourcing, but developing the people they already have. That ambition requires something most organisations currently lack: a reliable, granular view of what skills their people already have.

AI is both the disruptor and part of the solution

By late 2025, over 70% of financial institutions were using AI at scale, up from just 30% in 2023, according to Gartner. Yet Deloitte’s 2024 Financial AI Adoption Report found that only 38% of AI projects in finance met or exceeded ROI expectations. The primary reason for underperformance is not technology, it is talent. EY’s Financial Services CTO Survey (2024) found that 65% of financial institutions experienced implementation delays averaging 14 months, driven predominantly by shortages in AI-capable staff who understand the specifics of the sector.

McKinsey research on asset managers goes further: domain-experienced AI specialists achieve implementation nearly 80% faster than generalist counterparts. The implication is clear, the quality and relevance of the skills organisations can deploy, not the sophistication of their technology investments, will determine which firms extract value from AI transformation.

At the same time, the CFA Institute (2025) notes that HSBC and other global financial institutions are using skills-matching technology to surface internal candidates for roles they would not have identified through traditional job-title searches. The technology is already here. What most organisations lack is the underlying skills data to make it work.

The Trans-Tasman context sharpens the pressure

The New Zealand financial services sector employs approximately 75,000 people in its core financial and advisory workforce, according to Ringa Hora’s 2024 Financial Services Industry Action Plan. The sector is characterised by complex regulation, an ongoing shift away from fixed-branch models, and a requirement for qualification-based licensing that creates genuine barriers to entry. Across the Tasman, Australia’s financial services workforce is considerably larger (employing over 450,000 people directly) but faces structurally similar pressures: a post-Royal Commission regulatory reset, APRA’s intensifying focus on governance and accountability, and persistent capability gaps in risk, compliance, and digital roles.

Both markets are experiencing sustained pressure on skilled talent availability. New Zealand recorded a net migration loss of 30,000 people to Australia in 2024, the largest calendar-year loss in more than a decade, according to Beyond Recruitment’s 2025 analysis of Stats NZ data, with professional and corporate services workers among those most likely to be weighing up offshore opportunities. In Australia, the Australian Banking Association’s 2024 Workforce Report identified critical shortages in risk management, data analytics, and financial crime compliance roles, with average time-to-fill for specialist positions exceeding 90 days in major metropolitan markets. For financial services employers across both countries, the case for developing and retaining existing talent has never been stronger.

The FMA’s March 2026 report on access to financial advice in New Zealand identified skills gaps and capability shortfalls as one of the key constraints limiting the sector’s ability to adopt technology effectively. Information security, system integration, and skills development were cited by participants in the FANZ Connect Tour as priority areas requiring additional support. In Australia, APRA’s Prudential Standard CPS 520 (Fit and Proper) and the parallel obligations under ASIC’s RG 146 continue to require documented evidence of competence across a wide range of financial services roles, obligations that have become materially harder to satisfy through informal or paper-based approaches as workforces grow more complex and distributed.

2. The Regulatory Case for Skills Visibility

Compliance is a skills problem

Financial services is among the most heavily regulated sectors in any economy, and the direction of regulatory travel is consistently toward greater accountability, more granular oversight, and stronger demonstration of competence. In New Zealand, the Financial Markets Conduct Act, the Financial Advisers Act, and the Anti-Money Laundering and Countering Financing of Terrorism Act each impose requirements that are fundamentally about whether the right people, with the right skills, are doing the right work. In Australia, the post-Royal Commission environment has produced a comparable set of obligations: APRA’s CPS 520 (Fit and Proper), ASIC’s strengthened conduct expectations, and the Financial Accountability Regime (FAR), which came into full effect in 2024. All require organisations to demonstrate that individuals in accountable positions have the competence their role demands, and to show their working.

Ringa Hora notes that regulatory change in the financial advisory sector drove a 45% surge in qualification enrolments between 2020 and 2022, as firms scrambled to ensure their workforces met new licensing requirements. That surge is a symptom of a reactive model: organisations responding to regulatory mandates rather than maintaining a continuous, accurate picture of workforce competence.

In the UK, where many New Zealand and Australian regulatory frameworks draw their inspiration, the consequences of inadequate skills management are now impacting the bottom line. In 2025, the FCA fined Barclays £42 million for failing to adequately manage financial crime risks, one of the largest enforcement actions of the year. The FCA’s multi-firm review, published in late 2025, found that many firms still fail to create risk assessment frameworks that reflect their size, complexity, and business model. The regulator’s core finding: weaknesses are not primarily technical; they reflect gaps in human accountability and capability.

The FCA has also reported a 23% increase in enforcement actions in early 2025 compared to the same period in 2024, signalling a regulatory environment that is more assertive, more data-driven, and less tolerant of controls that cannot be evidenced. Firms that invest in dynamic, documented capability frameworks are better placed to demonstrate compliance during supervisory reviews.

Consumer Duty and conduct risk require capability evidence

In line with developments in other jurisdictions, New Zealand’s Financial Services Legislation Amendment Act (2019) and ongoing FMA conduct expectations place obligations on licensed financial advice providers (FAPs) to ensure that individuals providing advice have the requisite knowledge, skills, and experience. In Australia, ASIC’s Regulatory Guide 146 (RG 146) and the related training standards for financial product advisers create equivalent obligations, with ASIC signalling through its 2024–2025 enforcement priorities that capability evidence for advice roles remains an active area of review. The FMA’s 2025/26 Financial Conduct Report explicitly names improved access to products and services as an outcome it is seeking, and the March 2026 access to advice report identifies capability constraints as a barrier to achieving it.

Organisations that maintain current, validated skills profiles for their regulated roles are better positioned to respond to supervisory queries, demonstrate compliance in themed reviews, and provide assurance to their own boards. Those that cannot demonstrate what their people know, and at what level, face material regulatory and reputational risk.

3. Five Benefits of a Skills-Based Approach for Financial Services

Benefit 1: Surface and deploy hidden capability

Most financial services organisations know considerably less about their workforce’s capabilities than they think they do. Job titles indicate hierarchy, not skill. Performance ratings indicate relative performance, not transferable capability. When a risk team needs to stand up a new AML workstream, or a wealth management practice needs to pivot toward pension advice, the question ‘who do we have who can do this?’ is typically answered by word of mouth, manager instinct, or time-consuming HR review.

A skills-based platform answers that question in seconds. More importantly, it routinely surfaces capability that managers didn’t know existed, the operations analyst with strong data skills who could join an AI project team, or the customer-facing adviser with compliance knowledge that qualifies her for a technical supervision role.

The FSSC’s 2025 data shows that 63% of member firms increased their share of roles filled internally in 2024, with internal mobility reaching an average of 51% across the sample. Firms that build skills visibility are better placed to make internal hiring fast, fair and defensible, thereby reducing time-to-fill, lowering recruitment costs, and increasing retention among high performers who can see a genuine pathway within the organisation.

Benefit 2: Make performance management fair and development-linked

The financial services sector has long relied on performance rating systems that conflate output with capability, and that are subject to well-documented bias effects including recency bias, affinity bias, and halo effects. These are not merely ethical problems; they are also operational risks. Biased performance data leads to poor promotion decisions, high-performer attrition, and skills gaps that accumulate invisibly until they become crises.

Skills-based performance management shifts the conversation from subjective rating to calibrated, evidence-based assessment of what an individual can do against defined expectations. A robust 360-degree review process triangulates self-assessment, manager moderation, and peer input, producing a performance profile that is more accurate, more transparent, and more useful for development planning than a single manager’s subjective numerical rating.

Deloitte’s 2024 focus group with 38 senior executives from major financial institutions found that proactive, AI-enabled performance analytics (moving from reactive to predictive approaches) is among the most significant near-term applications of skills data in talent management. Participants noted that organisations often invest heavily in well-being and retention programmes without understanding the root causes of disengagement. Skills transparency, clear expectations, visible development pathways, and objective assessment address those root causes directly.

Benefit 3: Support AI and digital transformation with the right talent

Financial institutions that are investing in AI face a version of the chicken-and-egg problem: they need skilled people to implement AI, but they also need AI to help identify, develop, and deploy skilled people. The organisations breaking through this impasse are those that have invested in skills visibility first.

McKinsey’s 2024 research on upskilling and reskilling for generative AI found that companies adopting AI earlier than their peers place significantly greater emphasis on talent development, with two-thirds already having a strategic approach to their future skills requirements. Organisations without that strategic foundation, those that cannot map current capability to future needs, are dependent on expensive external hiring in a market where AI-capable talent commands significant premiums.

For Australasian financial services organisations, where the local talent pool for specialised AI roles is limited and offshore competition is fierce, internal development is not just strategically attractive, it is often the only viable path. A skills-based platform makes that development systematic: identifying who has adjacent skills that could be developed, tracking progress, and connecting learning to visible career opportunities.

Benefit 4: Enable faster, smarter workforce planning

Workforce planning in financial services has historically been a lagging discipline, a response to headcount losses, regulatory changes, or strategic pivots, rather than a proactive capability-building exercise. In a sector where regulatory requirements can shift rapidly (as they did with the FSLAA, AML reforms, and evolving FMA expectations), the cost of lagging is high.

A skills-based talent management platform converts workforce planning from an art into a data-informed practice. When an organisation can see, at any level of aggregation, what skills exist and at what proficiency, it can answer the questions that drive strategic decisions: Do we have the AML expertise to enter a new market segment? Do we have enough advisers qualified at the level required by our Class 2 FAP licence? If we lost three senior risk managers tomorrow, where is the coverage?

The FSSC’s 2025 report highlights that firms investing significantly in upskilling and reskilling are seeing higher satisfaction with career development across both small and large firms. Internal mobility is not correlated with firm size; it is correlated with investment in skills infrastructure. This is significant for mid-market financial services organisations, which have often assumed that structured talent development is the province of larger organsiations.

Benefit 5: Attract and retain the talent that exists

Across the financial services sector, PwC research found that 70% of FS CEOs see limited skills availability as a threat to growth. That concern is well-founded. ManpowerGroup’s global survey found that three-quarters of employers were struggling to find the talent they need, a rate that has roughly doubled over the past decade.

Yet the response to talent scarcity is not solely a recruitment problem. LinkedIn’s 2025 Workplace Learning Report found that organisations classified as ‘career development champions’ – those with clear skills frameworks, transparent career pathways, and visible opportunity-to-skill linkages – are significantly more likely to retain qualified talent (67% vs 50% confidence), attract qualified talent (71% vs 58%), and be profitable (75% vs 64%), compared to organisations that do not invest in this way.

In New Zealand’s financial advice sector, the FMA’s 2026 report notes that the number of financial advisers grew by 8.4% in 2025, rising to 9,184. In Australia, the adviser numbers story is more sobering: ASIC’s Financial Advisers Register shows the sector contracted significantly through the post-Royal Commission period, from over 28,000 advisers in 2019 to around 15,600 by 2024, before stabilising as improved licensing and education pathways began to attract new entrants. In both markets, the pipeline is growing but retaining it requires more than competitive remuneration. Professionals at every stage of their career are increasingly drawn to organisations where they can see what ‘good’ looks like, understand what they need to develop, and trust that progression decisions are fair.

4. What Skills-Based Looks Like in Practice

From aspiration to implementation

The gap between aspiration and execution in skills-based talent management is well documented. Deloitte (2022) found that while 84% of organisations recognise skills-based practices as important, fewer than 18% have implemented them at scale. The barriers are real: taxonomy complexity, data quality, change management, and system fragmentation all create friction.

For financial services organisations, the most practical path forward is a structured pilot: starting with one or two critical talent populations (such as regulated advice roles, risk and compliance, or technology teams), establishing a baseline skills profile, running a structured review cycle, and using the resulting data to demonstrate value before expanding. This is precisely the model TalentJam uses in its implementation approach.

The TalentJam approach for financial services

TalentJam is a skills-first performance management platform purpose-built for mid-market organisations. It integrates skills management, performance review, and development planning into a single continuous loop, avoiding the data fragmentation that characterises most HR technology stacks. At its core is TalentJam’s proven Financial Services Capability Framework: a structured, field-tested competency model covering the roles, skills, and proficiency levels that matter most in banking, insurance, wealth management, and financial advice. The platform is also SFIA-accredited and designed to incorporate any existing competency framework a client already uses (be they proprietary models, regulator-specified frameworks, or industry standards) so organisations are not forced to abandon prior investment in their own taxonomy.

For financial services clients, TalentJam provides:

• A proven Financial Services Capability Framework: A field-tested competency model covering the skills, behaviours, and proficiency levels that matter across banking, insurance, wealth management, and financial advice ,ready to deploy from day one, with no framework-build overhead. Clients can also bring their own competency frameworks, which TalentJam configures alongside or in place of the standard model. SFIA (Skills Framework for the Information Age) is supported as a recognised option for technology-intensive roles, and TalentJam’s SFIA accreditation ensures that integration is rigorous and standards-compliant.
• 360-degree calibrated review: A managed process that triangulates self-assessment, manager moderation, and peer input to produce defensible skills profiles that support both performance conversations and regulatory evidence.
• Career pathway visibility: Clear ‘what good looks like’ benchmarks linked to role expectations, enabling individuals to understand their development focus and managers to have higher-quality, objective conversations.
• Organisational capability analytics: Aggregated skills data at team, division, and enterprise level, answering the workforce planning questions that matter most.
• L&D investment alignment: The ability to direct learning spend toward actual skills gaps rather than assumed ones, and to track development progress in real time.

5. Conclusion

The financial services sector is at an inflection point. Regulatory expectations are rising. AI is reshaping roles faster than traditional development programmes can respond. The domestic talent pool is under pressure from global competition and migration outflows. And employee expectations (particularly among the growing financial adviser workforce and technology-capable younger professionals) are shifting toward transparency, fairness, and targeted career development.

Skills-based talent management addresses each of these pressures directly. It is not a technology project or a HR initiative, it is an organisational capability that, when built correctly, delivers sustained competitive advantage: faster talent deployment, better regulatory compliance evidence, more effective use of L&D investment, and higher retention of people who might otherwise leave for markets where their skills are better recognised.

The evidence for urgency is clear. Randstad Enterprise found that 77% of financial services talent leaders are already prioritising the shift to skills-based organisations. The question for financial services firms is not whether to make this shift, but how quickly and how well.

References

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