Skills development as a real catalyst for business model innovation in the banking sector

By Narasimha Nagaraja Prasad, Senior Director, Product Management and Strategy Group, Infosys Finacle

When we look at the scale of change sweeping through the banking industry, we often focus on how the landscape is changing and what kind of infrastructure is needed to scale up and operate in this dynamic environment. However, one of the key aspects of this change is access to the right skills. The bank must have the will and ability to lead the kind of talent, capabilities and teams needed to meet new challenges.

Jay B Barney in his book “Gaining and sustaining competition advantage” offers an interesting framework called “VRIO” for looking at resources and capabilities. He recommends looking at resources from the perspective of value (V), rarity (R), imitability (I), and organization (O). If we apply this to a human perspective, it means asking questions such as “What is the value of the skills available within the organization? How many competing companies already have these valuable resources and capabilities? Do companies without resources or capacity face a financial disadvantage in acquiring these skills compared to companies that already have them? Is the company organized to exploit the full competitive potential of its resources and capabilities?

Of course, this is not a static exercise. On the contrary, the answers will change over time. Resources and capabilities that were valuable in the past may no longer be needed. Changes in customer expectations, industry structure, competition, and new-age technology can make an organization’s resources and capabilities less valuable.

When it comes to ensuring a workforce equipped to effectively support a bank’s strategy and aspirations, the following process can be helpful.

Step 1: Review and Evaluate

The first step is to understand the skill sets needed for the job at hand and compare them with what is available within the organization. This can help assess the gap between the skill sets that the particular job requires versus the existing skill set within the organization. Once this is clear, the organization can consider various options available to close this gap and take action accordingly. Organizations need to take a holistic picture by considering the skills offered by employees, the skills offered by machines, such as through automation and AI, and the skills offered by the gig economy.

Step 2: Renew the learning infrastructure

In the book “The Live Enterprise” by Jeff Kavanaugh and Rafee Tarafdar, the authors mention a quote from Nandan Nilekani which says, “The only friction between an employee and their learning should be their motivation. And the organization should take care of the rest. Lack of learning opportunities need not be a deterrent. That’s why organizations need to invest in a variety of learning modes that provide opportunities for anytime, anywhere learning, byte-sized learning, and on-demand learning.

Step 3: Bring in the reinforcements

Banks can look at skills from two angles. One is to develop new and valuable resources and capabilities. Banks may consider a buy/build/partner model to add new capabilities/skills. In the “purchase” approach, both organic and inorganic ways of acquiring skills can be considered. Acquisition could be explored to acquire the teams and skills rather than the intellectual property of the organization. In a “construction” approach, it is a question of improving and requalifying the existing capacities of the organization. In the “partner” approach, it is about working with partners who can increase skills and capacities.

The other point of view is apply traditional strengths in new ways. For example, building the banking industry can be broadly categorized into product management and customer experience management. Banks can choose to leverage product management capabilities with the existing available skill set and offer banking-like offerings as a service. He can work with a specialized organization for customer experience management.

Banks can also adopt a hybrid approach combining these options.

Step 4: Delete irrelevant skills

It is important to step back and evaluate operations and processes holistically rather than blindly performing a facelift and shift with new technologies. For example, does the process have to be performed entirely by humans or can it be performed by a machine or a human plus machine combination? From a resource perspective, then, it is essential to hire people who have the necessary critical skills and the ability to think differently and explore those options. The World Health Organization (WHO) defines life skills as behaviors that enable individuals to adapt and cope effectively with the demands and challenges of life. This means that while learning new software tools is necessary, it is not enough. Instead, learning to learn is the most important skill in an ever-changing world. If we apply this in an organizational context, it boils down to the ability of the organization to learn new skills on an ongoing basis and adapt as needed.

For banking organisations, building an organization that has the skills to deal with changing realities means building a culture of continuous learning, providing the support system required for learning and focusing on overall profile development within organisation.