“Most Organizations Know More about the Chairs in the Company Headquarters than They do about the People Occupying those Chairs”
Why Every Bank’s AI strategy Needs to Evolve to also Become a People Strategy
The head of HR, the Chief Technology Officer and an executive from the operations team walk into a room. No, it’s not a setup for some elaborate workplace joke. As our digital transformation experts discuss below, it’s the precursor to building a lasting competitive advantage.
Through the efforts of Sandra Loughlin, Chief Learning Scientist and Global Head of EPAM’s Talent Enablement and Transformation Practice, EPAM has been able to transform itself into a skills-based organization (SBO). But what exactly is an SBO? “An SBO is really just a variant of data-driven decision making, but it involves data on your organization’s people,” says Loughlin.
Skills-based transformation is the next swell in the data-driven AI wave currently sweeping over the financial services industry. And for those organizations willing to pioneer the practice, compelling rewards await.
What are those rewards and how are SBOs different from their peers? To find out, Chris Tapley, VP of the Financial Services Consulting Practice in North America, joined Loughlin for an in-depth conversation on skills-based transformation.
Chris Tapley
When I think about the financial services industry, I see a lot of change being driven by generative AI (GenAI) and agentic AI, not to mention return to office policies influencing employees. As we focus on how the financial services industry is transforming and the ways we get work done, what are the opportunities I'm creating when I start to think about skills-based transformation?
Sandra Loughlin
An SBO is just a variant on data-driven decision making, but it involves people. In an SBO, you’re essentially collecting lots of data to understand the broad set of skills of your employees across the board. You can then leverage that information to drive lots of your decision-making: hiring better, driving internal mobility, upskilling the right people in the right positions and more.
From that perspective, financial services can really benefit by eliminating the inefficiencies that arise from truly failing to understand employees. Organizations might hire the wrong people, or promote people based on criteria that’s not relevant to the company’s goals. An SBO simply leverages internal data to help inform these decisions.
Chris Tapley
Imagine I’m a bank, looking out at the competitive landscape and wondering how I can get a leg up via skills-based transformation. Should my AI strategy inform how I approach this?
Sandra Loughlin
Every AI strategy is also an opportunity to implement a people strategy. Think of it this way: AI doesn’t do skills, but it does do tasks. With GenAI coming in and taking tasks from various workflows and doing the work people are doing today, your workforce is going to experience disruption.
Some people will need upskilling to leverage these AI tools. Some will be redeployed to other areas of the organization as certain tasks become automated. Others will need specific compliance training. There are so many implications when it comes to an organization’s AI strategy that it almost necessitates a people strategy. Without the right data structures around the people and skills that exist within your organization, you’re essentially making blind decisions when it comes to how you adapt to the impacts of your AI strategy.
Chris Tapley
I think that's a great point, and one that I'm sure most financial services organizations aren’t considering yet. We always talk to banks about using AI to do the mundane tasks, to free up their people to focus on higher-value work. But as an organization, once you start to explore the data to understand the skills your people have, that's when you can redeploy them in a targeted manner. As it’s being done now at most banks, employees are deployed by roles, not by skills.
Sandra Loughlin
Correct. Think about a role as a bucket of tasks, and one particular role might do 20 tasks. Now imagine you have four of those roles within the organization. If AI can do five of those tasks for each instance of that role, suddenly you have too many roles for that work. At some point you’ll have to refactor or redesign roles.
In an SBO, you have an understanding of the foundation of skills required to accomplish certain tasks. You can then say, here are the skills that we need and here are the skills that people within the organization have. Let's match the right people to that work in a data-informed way.
Chris Tapley
Having worked in a leadership capacity at five or six different banks, let me tell you this is an absolutely eye-opening way to think about people management. Most banks tend to think about people management from the lens of empathy. “We love our people. We want to make sure we do right by our people.” And that’s not a bad thing, but it almost feels like a double-edged sword. On the one hand, making decisions based on empathy isn’t exactly optimal for the bank. On the other, I can see how using data to make people decisions might not exactly be viewed as empathetic.
Sandra Loughlin
Empathy and data-based decision-making shouldn’t be exclusive. While there is incredible business value to skills-based transformation, that value only exists because you’re optimizing the business by optimizing your people.
Generally speaking, Human Resources doesn’t think or work like a data-driven enterprise, and this is a big problem. First, if your people strategy isn’t based in data and AI, then I’d wager in a handful of years you’re going to be on the receiving end of some highly negative press when you’re laying off employees because you never took the time to understand how your AI strategy changed the demand for certain skills.
In addition, you’re probably going to be scrambling to backfill positions vacated by unfulfilled employees who depart because they weren’t ever deployed effectively and are unsatisfied with their jobs. However, by understanding the skills your employees bring to the table, you’re able to nurture those employees, provide them with new opportunities, highlight their progress toward new skillsets and more.
Ultimately, you’re creating an environment where employees are happier, where they’re experiencing real growth, and where they’re more likely to stick around because they like what they’re doing. As I like to say, lay the foundations, don’t layoff.
Chris Tapley
You just described something that no bank is doing right now. Nearly every bank says, “Here’s your role, and here’s what we believe your role is going to be doing tomorrow, so train on this.” So where should a bank looking at skills-based transformation even begin? Who needs to be in that room to kickstart that conversation?
Sandra Loughlin
No one person can drive this kind of transformation. It's too big. Again, skills-based transformation is less a people problem and more a data and infrastructure problem. In my perfect world, I would have four people in the room to initiate the conversation: HR, simply because you can’t have a people conversation without them; certainly the CIO or CTO, because in most organizations the first use case for skills-based transformation is IT; and then someone from Operations, because it’s a conversation about optimization and reducing costs by improving the person-to-work fit for numerous roles.
Chris Tapley
So, we’re going with the classic two-pizza rule – If your meeting has more people than you can feed with two pizzas, nothing productive is getting done.
Sandra Loughlin
And once you have those people in the room, you need to reiterate how the bank’s AI strategy also needs to evolve to be a people strategy. Imagine a truly AI native bank – I can assure you something like that is being built in someone’s garage today. That bank will have advanced data infrastructure. They're going to have a data-based understanding of their people, and they’ll leverage the resulting efficiencies. If executives at financial services firms today aren’t thinking about these AI-native competitors, they’re in for a rude awakening in the years ahead. Remember the impacts of Amazon on retail book chains like Borders? That’s the kind of competitive advantage that’s currently up for grabs. Learn from Borders, banks!
