Firms that heavily invest in digital transformation and overhaul legacy systems must also consider the human capital aspect at each stage of the implementation process. Employees who have used the same systems for decades may not be able to adapt quickly to the transformation, while recruitment and upskilling can also bring challenges. Upgrading and overhauling legacy systems while investing in the human side of transformation can present a distinct opportunity for traditional, more established firms to embrace the change process and build a strategic differentiator for innovation and growth.
Challenges with Transformation from the Human Side
A successful transformation project must carefully consider the potential for human resistance to change, particularly from long-serving administrative employees. Historically, innovation within financial services has been slow due to strict regulatory environments. As regulatory regimes become more complex and regulations evolve at a faster pace, financial services employees are now more likely to experience rapid change environments. Digital transformation often creates skills gaps, presenting a challenge for firms as they consider whether to invest in internal upskilling initiatives for current staff or outsource technical processes to trusted third parties.
Upskilling Current Staff
Upskilling current staff requires firms to invest heavily in training and development while requiring trusted employees to take on tasks that will likely be outside of their current skill set. Some employees will rise to the challenge, while others may withdraw or refuse to engage with the process if they feel that their responsibilities are being changed significantly. Forcing current employees to learn new systems and processes can lead to errors and employee dissatisfaction. Communication must be clear and continuous, as poor communication can impact staff morale and reduce overall engagement. Senior management should be transparent with the reasons for changes, and a risk assessment must be conducted to allow for the possibility of trusted, experienced staff leaving the organisation.
Outsourcing to Third Parties
Relying on new third-party vendors will enable firms to bring in the appropriate level of experience much quicker, but can also present several key challenges. Firms are now more responsible for the integrity and output of third-party suppliers, so they must ensure that they choose carefully. Failure on the part of third parties is considered a failure of the firm and can often lead to regulatory penalties. Outsourcing also involves higher costs that might be affordable in the short-term but potentially harder to manage over a longer-term horizon. Both of these options bring their own careful considerations, and a hybrid approach is usually best for most mature organisations. This allows for the upskilling and retraining of current, trusted staff while bridging the immediate skills gap through the use of a careful procurement exercise for accredited third-party vendors.
Upskilling for the Future of Compliance
As data integrity comes under the regulatory spotlight and siloed compliance departments become a thing of the past, all staff must now be trained in the importance of data processes. The future of compliance means data literacy must be improved across the whole organisation. New reporting platforms or systems will require specialist training, while cross-functional teams need to learn new skills and understand previously siloed areas of the business. There must also be a focus on improving soft skills such as communication, collaborative problem-solving and resilience.
Developing a Culture of Compliance
As with all successful transformation projects, the cultural shift is always facilitated by a strong sense of leadership and supportive change from senior management. The “tone from the top” will inform the overall culture, and leadership must demonstrate and champion the desired attributes of a proactive workforce. Firms should establish lines of accountability and clear objectives aligned with the SM&CR, while promoting a sense of collective ownership of risk and compliance. Systems and processes should be regularly reviewed, and KPIs must be updated and refreshed to align with the new organisational objectives. Digital transformation programmes can often ignore the most important factor - the people who will be responsible for managing and operating the systems. Firms that invest in successful digital transformation programmes will build a skilled workforce for the future. As technology continues to transform the financial services industry, firms that demonstrate their agility and willingness to change will attract top global talent. And firms that handle change processes with care and invest in developing their seasoned employees will benefit from an engaged workforce committed to a culture of innovation. Regulatory transformation isn’t just technical—it’s human.
Get in touch with Novatus Global to support upskilling, strengthen governance, and lead culture change with confidence.
