The UK's financial sector, which accounts for around 11% of the country's total economic output and employs approximately 2.5 million people, is bracing itself for the impact of artificial intelligence (AI) on its workforce. With AI set to transform the industry at an unprecedented rate, Chancellor Rachel Reeves is poised to unveil a government-backed 'skills compact' aimed at upskilling thousands of employees in key skills – including mandatory training in AI.
The proposed initiative has secured close to 20 initial signatories from prominent financial institutions such as Barclays and Lloyds, which will develop rolling three-year plans to train and certify their UK staff in up to five critical areas. This includes a focus on acquiring essential skills for the rapidly changing technological landscape, with AI being a mandatory component of these programmes.
According to industry body TheCityUK, the financial and related professional services sector provides vital economic output and is a key component of the nation's industrial strategy. Rapid technological advancements, driven by AI, have raised concerns about potential widespread job displacements within the sector – prompting this initiative to maintain global competitiveness. The compact will commit participating firms to regular progress reports to the Treasury and the Financial Services Skills Commission, with senior executives overseeing internal efforts.
Clare Tunley, Chief Executive of the Financial Services Skills Commission, describes the compact as a significant sector-wide skills strategy, akin to the construction industry's training board in the 1960s. While skills gaps are not new to the City, the current pace and scale of change present unprecedented challenges for employers. Research from Morgan Stanley last year projected that AI could put over 200,000 European banking jobs at risk by 2030 – around 10% of industry roles across the continent.
Standard Chartered, which has already announced 7,000 job cuts partly attributed to AI, is among the founding signatories, alongside Yorkshire Building Society and online bank Zopa. The commitments within the compact are exclusively for UK-based employees. Although the initiative may help mitigate some AI-related job losses, Tunley stresses that firms' primary driver is building new capabilities through investing in their existing workforce – crucial for innovation, growth, and competitiveness.