Critical and scarce skills concerns in the financial services sector - and how the sector can support ASGISA and JIPSA

Critical and scarce skills concerns in the financial services sector - and how the sector can support ASGISA and JIPSA

3rd BANKSETA International Conference 11-12/10/20063rd BANKSETA International Conference 11-12/10/2006

13 October 2006

Andrew Paterson

AimsAims

• Critical and scarce skills concerns in financial services

• How the sector can support -• Accelerated and Shared Growth Initiative SA and • Joint Initiative on Priority Skills Acquisition

• International referencing • Financial services convergence and • Comparative international skills patterns and flows

Critical skills and generic skillsCritical skills and generic skills

• Shift from a product driven industry to a customer driven industry

• Workers with more wholistic skills sets (incl. generic and technical)

• Industry focus on securing highly qualified workers to ensure core accreditation skills in place - ad-hoc approach to other skills development needs

• Strongest demand is for generic skills: “Yet development of these skills may be left to the individual whiles the industry focuses on its accreditation and regulatory needs”

• Need to ‘update’ the accreditation system to include broad based competence

Financial sector convergenceFinancial sector convergence

• Regulation and supervision – • SA Activities overall restrictiveness 10 on a scale of 5-20,

same as average for high income countries. (lower middle =13) (/55 countries)

• Global technological - convergence new delivery channels• Distintermediation of delivery channels – non-traditional

competition

• Clients – increased expectations• Narrower margins & more emphasis on earning from fee-

based activities• Raises definition of what is a banking product where similar

financial products are offered in different financial services industries

Enterprise positioning and market strategy

Enterprise positioning and market strategy

Specialised product/services

Local

National

Global

Continental

Skills needs increase in number and complexity

Scope of product/service offerings

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‘Supermarket’ of product/services

Occupational and sector mapping of the financial services sector Sub-sectors

SOC Occupation Banking and finance

Insurance Professional services

1.1 & 1.2

Corporate proprietors managers & administrators

finance specialists insurance/ actuarial accountants/stockbrokers/fund managers

2.1 & 2.4 Professionals finance /ICT

specialists insurance/ actuarial/ ICT specialists

accountants/stockbrokers/fund managers

3.1 & 3.3

Associate professionals

ICT specialists ICT specialists ICT / technical specialists

4.1 Clerical call centre operators (ICT users)

call centre operators (ICT users)

Support (ICT users)

4.2 Secretarial support support support 7.1 & 7.2

Sales occupations

agents / brokers agents / brokers NA

9.2 Other elementary

other support other support other support

Related call centres call centres accountancy and financial intermediation

Key trends across main occupations in financial services (UK data) Sector Soc

Occupation Bank

& Fin Insur Prof

serv Change Similar driver(s) across three sectors

1.1 & 1.2

Corporate managers, proprietors & administrators

8 12 13 ↑ • Dynamic skills needs

2.1 & 2.4

Professionals 2 4 14 ↑ • Technical content increase • Risk management • Regulation • ICT

3.1 & 3.3

Associate professionals 4 18 11 ↑

• Technical content increase • Intra & Internet • Data management • Growing focus on client

4.1 Clerical and administrative 53 30 15

→ ↓

• Centralised customer service – competition and margins

• Move away from product-based approach • Call centres

4.2 Secretarial 9 8 12 ↓ • Automated systems reduce need • Cost-cutting driver

7.1 & 7.2

Sales 3 8 NA → • Internet & Call centres not substitutes for face-face

9.2 Elementary 6 3 7 → • Reductions in 4.1 & 4.2 sustain need – replacement demand

ASGISA and JIPSAASGISA and JIPSA

ASGISAASGISA• Accelerated and Shared Growth Initiative of South Africa

(ASGISA)• Initiatives to promote accelerated and shared economic

growth and labour absorbtion with the long term aim of addressing the fundamentals for sustainable growth and development.

• Heart of ASGISA - R372bn infrastructure development programme which will require particular skills. MTEF planning.

• Wide implications across entire economy, but targeted sectors have been targeted - tourism, business process outsourcing (BPO), and biofuels.

• Other sectors targeted in the medium term include: creative industries, mineral beneficiation, chemicals, agriculture and forestry

The centrality of the financial systemThe centrality of the financial system

• Prior to 1990s, view was that economic growth lead financial sector growth which responded to demand

• Recent research has focused on the possible causal connection between the development of the financial system and overall economic development (Barth Caprio Nolle, 2004)

• Industries more dependent on external financing tend to grow faster in countries with a higher level of financial system development (Rajan and Zingales,1998)

• Key indicators SA banks lower middle income economy (55 countries), • Concentration - bank assets foreign owned 5% (rank 43), government

owned 0% (51)• Competition - bank assets in top three banks 57%(22 mid); Net interest

margin as a % total assets 2.93(32) (interest rates charged against own interest expenses)

• Concentrated banking markets > less lending at higher costs to borrowers especially smaller firms > negative effect on economic growth

ASGISA – opportunities for finance sector support

ASGISA – opportunities for finance sector support

• Attention to legacy of a fragmented spatial economy & constraints on job creation and growth prospects of small enterprises, informal traders and emerging farmers

• Stepped up investment in the residential and local built environment prioritised (housing, community services, water and electricity)

• Broadening of economic participation:• Expanded public works programme - labour intensive methods -

many areas of infrastructure maintenance and public service delivery

• Community investment aimed at accelerated delivery & consolidating local development initiatives

• Strengthening of public health care and education such as:• Upgrading and revitalising hospitals, equipment and ICT• School building and facilities• Investment in facilities and equipment for the FET colleges

recapitalisation

JIPSAJIPSA• To address the question of constraints and inefficiencies in the existing

legislative and regulatory frameworks and institutional arrangements for the delivery of skills.

• Immediate short term deliverables• Intermediate skills for infrastructure development• ICT strategy• Unemployed graduates

• JIPSA has been directed to focus on five priority skills areas:• engineering and planning skills for the ‘network industries’, • city and urban and regional planning & engineering• artisanal and technical skills - infrastructure development, • management and planning in education and health• mathematics, science, ICT and language competence in public

schooling

ConsiderationsConsiderations

• SETA coordination for financial sector• Critical skills - NB• Scarce skills – less NB• Financial services ASGISA and JIPSA

• Service providers skilling sector human resources

• Targeted industry support for economic development

Thank youThank you