Skills: A solution to the Middle East’s banking talent shortage 

One common challenge in a diverse region

The Gulf Cooperation Council (GCC) is a geopolitical and economic alliance between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Whilst the nations share some cultural, social and economic objectives, they are also remarkably different. Significant variations can be found in their geography, demographics, economic structure, and societal development.

The heterogeneity between GCC nation extends to their thriving financial institutions – a fast-growing sector that includes both local and international institutions.[1] There are approximately 150 banks currently operating in the vibrant market, though it’s difficult to determine the exact number as the sector constantly fluctuates via mergers, acquisitions, closures and launches.

Their disparate maturity levels mean banks in the GCC are grappling with a breadth of different challenges, including managing profitability in the face to fluctuating oil prices, competition from other GCC nations, finding the right balance between maximizing efficiency and providing interpersonal customer experience, cyber security threats, increasing global regulatory scrutiny, and digitalization.

But one common challenge prevails across the sector: Talent. According to Mercer’s Global Talent Trends Study 2024, a staggering 50% of HR professionals in the Middle East see skills shortages as a top threat to their businesses in the coming year. They are trying to understand, define, grow, and attract the talent they need to realise their commercial ambitions and the right skills, or lack thereof, poses a consistent hurdle.

This shortage is likely to be further exacerbated by accelerating advances in technology. In the World Economic Forum’s 2023 Future of Jobs report, employers surveyed estimate 44% of workers’ skills will be disrupted by technology in the next five years, and six in ten workers will require additional training before 2027.

GCC banking skills shortage

The GCC region has experienced rapid economic growth since the mid-20^th Century. This growth had been primarily driven by the world’s voracious demand for its vast hydrocarbon reserves. However, as the world now endeavours to transition to a carbon neutral future, the region is responding by rapidly diversifying its revenue streams across various sectors, from finance and technology to engineering and healthcare. That rapid diversification has created a persistent talent shortage, hindering the region’s economic ambitions. Other interconnected factors contributing to the skills shortage in the GCC’ financial institutions include:

• New fintech skills required: Traditionally dominated by financial experts with a foundational understanding of technology, the financial services sector now requires people with a blend of sophisticated financial acumen together with advanced technical proficiencies.
  
  Key transformations in the fintech skills landscape include a pronounced shift from traditional financial modelling to data-driven insights. This has elevated the demand for professionals adept in machine learning, artificial intelligence (AI), and big data analytics. Concurrently, the imperative to safeguard sensitive financial data has intensified the need for cybersecurity experts with a deep understanding of threat intelligence and risk mitigation[LL1] .
  
  The emergence of blockchain technology has created a new skill requirement, with expertise in blockchain development, smart contracts, and distributed ledger technology becoming highly sought after. Additionally, the proliferation of digital payments and cryptocurrencies has amplified the demand for professionals skilled in payment processing, digital wallet systems, and the complexities of cryptocurrency trading and regulation.
  
  P2P lending, a disruptive fintech innovation, has rapidly gained traction across the Middle East. This surge is driven by the region's burgeoning entrepreneurial ecosystem, coupled with a growing demand for alternative financing sources. As P2P platforms facilitate direct lending between individuals and businesses, they bypass the constraints of conventional banking systems. However, this rapid expansion – one that requires specific fintech skills - has also exacerbated the existing skills shortage in the sector.
  
  Navigating the intricate and dynamic regulatory environment demands professionals with a keen understanding of cultural nuance, financial regulations, compliance frameworks, and risk management. And as banks vie for market share, the ability to design intuitive and user-centric digital experiences has become paramount, driving the demand for UX designers and customer success specialists.*

• Expatriate reliance: The banking sector’s demand for highly specialized skills and expertise means GCC countries have relied heavily on expatriate workers across skills levels[LL1] [KH2] , leading to an over dependence on foreign talent. Moreover, the region competes with global financial hubs for top talent, compounding the  challenge of attracting and retaining skilled professionals.
  
  
• ·Generation gap: The Middle East is experiencing a demographic “youth bulge”, which occurs when young people make up a disproportionately dominant part of a population.[1] That large and hyper-connected youth population has hugely different expectations of banking capabilities from the more mature executives who are making directional decisions. Digital natives expect an engaging and seamless experience while they bank from anywhere, at any time. The younger customer’s loyalty is capricious, but the cost of acquiring them is high, so financial institutions are ever trying to meet their needs. They do so while simultaneously satisfying their more conservative older customers, who hold more wealth. Extra resources and people are needed to bridge that gap.
  
  The generation gap within financial institutions is also creating talent retention challenges. As Baby Boomers retire, Gen X and Millennials are increasingly assuming leadership roles. The transition to executive management can be demanding.
  
  And while younger generations bring fresh perspectives, technological proficiency, and more acceptance of work-life balance practices, they might find it challenging to establish organizational cultures that engage everyone – from Boomers to Gen Zs.
  Talent retention challenges [PW1] [LL2]  can also stem from generational differences in communication styles and values. The gap can create friction within the workplace, necessitating changes to employer value propositions as well as further investment in leadership and behavioral skills.
  
  
• Skill Mismatch: The skills required for financial institutions differ significantly from those developed in the oil and gas industry. It will take time to build the skills needed for a diversified economy. Additionally, the sudden and pervasive arrival of AI provokes quick reactions, but actually requires well-considered responses from organizations. Responses that balance automation with value-added in-person customer interactions. Digital processes and AI will not obviate the need for people, rather, organizations will need people with the right skills. 
  
  
• People separated from commercial strategy:  GCC Chief Human Resources Officers (CHROs) have historically been operational roles. They sat outside commercial decisions, and lacked real opportunities for influencing strategy, so talent and skills shortage responses tended to be remedial and tactical. However, there is now a shift. CHROs and their teams are increasingly defining and driving a people culture that aligns with commercial goals. 

As discussed, the origins of the talent and skills shortage in the GCC are multifaceted and requires different solutions, one of which is for organizations to shift to skills-based talent practices. 

Skills: A solution to the Middle East’s banking talent shortage

On a unique foundation of regional wealth, economic growth, and government support, the GCC banking sector is replete with opportunities. To maximize that potential, GCC banks need to solve their talent challenges. They can do so by becoming skills-powered organizations.

A skills-powered organization[LL1]  is one that systematizes work into projects, tasks, and gigs and deploys employees to opportunities based on their individual skills and experiences. It’s a much more fluid mode of work than traditional role-based approaches, and thereby enabling organizations to be truly responsive to changes in the commercial landscape.

Employees in skills-powered organizations are able to demonstrate and acquire a broader scope of experiences. They also have better and more democratic access to opportunities.

Skills-powered banks are:

1. Interpreting how the future organizational requirements translate into  future skills required e.g., digital payments, UX, customer intelligence, programming languages and cryptocurrency
2. Using skills to infuse multi-disciplinary teams that can move quickly and adapt to changing in customer demands e.g., blending product development, marketing, customer intelligence and UX skills to build and iterate financial products
3. Systematically using reskilling and upskilling pathways to facilitate core transitions e.g., retail to omni-channel, AI-enabled business processes and personalised banking financial products and services
4. Continuously re-designing jobs to ensure they maximize use of emerging technologies and are adopting skills that provide a competitive edge in the market.

Banks are an essential player in economic activity as well as a fast-moving microcosm in which we can see how skills-powered organizations can succeed.

Aside from addressing an organization’s talent needs, a skills-powered approach offers multiple benefits for both employers and employees in any sector. Employers can optimize overall labor costs and build stronger recruiting and retention capabilities while increasing workforce productivity and agility. For employees, additional upsides are more transparency around career progression requirements as well as improved training to acquire the skills needed for the future of work[LL1] .

* For a deeper dive into fintech careers: A Complete Guide to Careers in FinTech (2024) - Bankers By Day