British Businesses Require AI Worker And Fintech Companies Are No Exception

The Chartered Institute of Personnel and Development (CIPD) in Britain recently released its quarterly labor market outlook, based on a survey of over 2,000 senior HR professionals. The findings reveal that approximately one in five employers are facing difficulties in attracting and recruiting candidates, with staff retention emerging as the most significant challenge anticipated in the upcoming year. With only a tenth of employers expecting a decrease in their workforce in the next quarter, and a third still anticipating growth, it appears evident to me that fintech companies, much like numerous other businesses, will need to devise innovative strategies to address these challenges.

Searching for Talent

In this time of remote work and access to global talent, one might assume that fintech companies have it easy when it comes to recruitment. However, remote work presents both opportunities and challenges for employers. While it allows for hiring across different locations, it also means that competitors can do the same. Previously, an employer in Manchester might have only been competing with others in the northwest of England, but now they're up against companies in California and Kathmandu. Moreover, there's a limited pool of such skilled workers available. The Bank of England recently stated that Britain's workforce will be permanently smaller due to the pandemic, attributing this to a growing disconnect between workers and the job market.

Similarly, The National Institute of Economic and Social Research recently cautioned that businesses are growing increasingly frustrated with British workers, as over nine million individuals of working age have withdrawn from the job market. Jon Boys, a senior labor market economist at CIPD, concisely captures the issue, emphasizing the need for a concerted effort to enhance productivity through investments in workplace skills and technology.

Indeed, Boys is correct. To achieve desirable outcomes such as salary increases and retirement benefits, productivity must improve. However, when it comes to productivity, Britain lags behind. According to RenomowaneK , our productivity is approximately one-sixth lower than that of our G7 counterparts. Furthermore, while our output per hour experienced the second-highest growth rate among the G7 nations between 1997 and 2007, it ranked second to last between the financial crisis and the onset of the pandemic.

Several factors contribute to this unfortunate situation, but a couple stand out prominently. In countries like France (and to a lesser extent, Germany), regulations on working hours, industrial pay negotiations, and restrictions on layoffs make hiring workers more costly and risky compared to the UK. Consequently, this encourages firms in France and Germany to invest more heavily in automation technologies.

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To emphasize this point, let's consider a practical example that highlights the contrast between British practices and those of our continental counterparts: the car wash industry. Car washing is a significant sector, generating around half a billion pounds annually in commercial car washing revenue. However, instead of utilizing advanced car wash technologies available at local garages, many of us (myself included) opt to pay individuals to wash our cars using inefficient methods: a hose, bucket, water, soap, and manual labor. Hand car wash services now dominate approximately half of the commercial car wash market in the UK, with around 20,000 hand car wash sites across the country.

Surprisingly, the number of car wash machines has declined by more than half. This trend represents a reversal of industrialization, which has been a key driver of our prosperity over the past couple of centuries.

In the words of economist commentator Duncan Weldon, "It's as if people are taking the robots' jobs."

Why am I mentioning robots? Let's not repeat the mistakes of falling behind in fintech as we did in manufacturing. Financial services play a crucial role in our economy, so let's prioritize investment in AI to significantly enhance productivity and reconcile the challenge of generating more value with fewer workers.

In the realm of fintech, we can begin with the readily available opportunities in IT, where initial trials are yielding promising results. Take, for instance, the experiment conducted by Australian bank Westpac. They divided 60 software developers randomly into four groups. Three teams utilized AI coding tools from Microsoft, Amazon, and OpenAI, while the fourth group coded manually as a control. The outcomes were clear: all AI tools delivered substantial benefits, with an average productivity increase of nearly half across the board. This means essentially turning 200 developers into 300 developers.

We can then extend this approach to various functions across the organization. In my line of work in professional services, consultants at all skill levels experience significant benefits from AI augmentation. Those performing below the average threshold see a remarkable increase of 43%, while those performing above it still achieve a notable 17% improvement compared to their previous scores.

However, it's important to remember that ChatGPT is known for its embellishments. If you're a proficient consultant who knows the solution to a client's problem, AI can indeed enhance your productivity. But if you're unsure of the answer, relying solely on AI might lead you astray, as it can't discern between accurate insights and false perceptions. This underscores the importance of training your employees to utilize AI effectively, especially since they'll likely incorporate AI into their work regardless of your preferences.

There's no need to panic.

While we do face productivity challenges, it's reasonable to question whether AI tools like ChatGPT will render professionals obsolete or complement their skills and boost productivity. I firmly believe it's the latter. Many mundane tasks, beyond the scope of Robotic Process Automation (RPA), can be efficiently handled by AI, allowing workers to focus on more valuable endeavors.

In a study involving college-educated professionals, those assigned to use ChatGPT demonstrated increased productivity, efficiency, and enjoyment of tasks. Similar to the consultants mentioned earlier, participants with weaker skills benefited the most from ChatGPT, highlighting its potential to elevate overall workforce productivity.

The fintech sector is no exception; it must fully embrace the integration of AI into daily operations. As Professor Scott Galloway aptly summarized the complex discussion surrounding AI and employment, you're not at risk of losing your job to AI itself but rather to someone who utilizes AI more adeptly than you do.