IT & Digital Skill Gap in Banking Industry

By: Mohua Sengupta


Traditionally the Banking sector has been one of the more advanced sectors, when it came to technology.  Banking industry is also the backbone of any economy and India is no exception.  And this pivot of the economy has been revolutionized by the revolution in Information Technology.  Today, technology plays a very important role in the successful functioning of the banking sector.  In the past couple of decades, the banks in India have invested heavily in technology such as tele-banking, mobile-banking, net-banking, ATMs, credit cards, debit cards, electronic or digital payments, data warehousing and data mining solutions, data science and analytics, for providing better customer service and enabling faster processing of banking operation. Heavy investments in IT have been made by the banks to improve their performance.  And with this use of technology there has been an increase in penetration, productivity and efficiency. Then came automation where certain repetitive processes are getting done by AI, ML or other technologies, thus improving efficiency of repetitive jobs.  RPA or Robotic Process Automation is a much used term now.  Overall, for creating an efficient banking system, technology has a key role to play.  But what comes with this, is the need for a technologically skilled workforce.  And it’s not just for the technology department, but for employees in general who now need to use these technologies.  There is a level of tech savviness expected of all banking employees today.   Question is are we ready?  And that is the topic of this whitepaper. 


As we all know, Indian economy is struggling with an acute skill gap and according to reports it’s 9% above the global average.  With rapid digitalization the need for a workforce that possesses skills to respond to these changes, in an effective and efficient way, has become crucial. To add to the complexity, today technologies evolve on a daily basis.  So futuristic technologies are no longer years away, they are usually a couple of months away from us.  But inspite of efforts by Government, Educational Institutions as well as Corporates, the gap not only exists, it’s actually increasing – primarily because of increasing demand and inability of supply to catch up.  This skill gap has not gone unnoticed.  In the 2020 Union Budget, there has been a 5% increase in fund allocation on education.  The pressure of IT & Digital skill gap is also higher in India, since India is an outsourcing hub to a big part of the world. 

Digitalization was progressing at a steady pace, some organizations faster than the other; some industries more focused than the others and some countries ahead of others.  And then came this pandemic and gave a huge boost to digitalization.  Every business, every industry, even every individual realized the importance of digitalization, to ensure smooth sustenance.  In the last 9 months, digitalization has progressed more than the last 9 years may be.  On a lighter note, many organizations have credited the lockdown as their Chief Digital Officer.  This rapid move towards digitalization, has further aggravated the IT/ Digital skill gap.  We are in a completely different world now, and even post-pandemic, things will not get back to where we left off 9 months back.  We will be in a new normal.  It will be a completely new world.  Many skills that were required will become redundant and many new skills which were nice to have or considered futuristic, will be the need of the hour. 

While all industries are impacted, the Banking industry is definitely one of the most impacted one, as it touches almost every individual in the society.  Hence it’s all the more imperative to study the IT/ Digital skill gap as faced by the Banking industry and understand where we are headed.

Scope of the paper

Industry Scope

If we look at the Banking industry, in India, we broadly come across a few key types of organizations.  The Public Sector Banks, the Private Sector Banks, the Small Finance Banks, the Foreign Banks, the Payment Banks, the NBFCs and the Microfinance companies.  In this paper I will focus on the first four.  When we look in terms of people, similar profiles are also hired by Banking GCCs and Banking BPOs.  I have covered both these sectors as well. 

Role Scope

While requirements of many roles and levels will get sprinkled throughout the paper, in course of discussion, the key focus of this paper are the junior or mid-level roles where the banks hire in bulk.  It can be technical staff as well as non-technical, business and relationship staff. 

Skill Scope

The skills that I have considered here are IT and Digital skills.  In common parlance IT/ Digital skills should include skills for:

  1. Using devices and handling information
  2. Creating and editing
  3. Communicating
  4. Transacting
  5. Being safe and responsible online

For the general purpose of this paper, I have considered the entire slew of skills within the broad umbrella of IT and Digital skill, and focused on identifying the key skills that most organizations in the banking industry rely on and together with the senior bankers, explored which of these are more scarce in the market. 

IT/ Digital Skill Shortage and Indian Banking Sector

Banking sector, in India, has always been a forerunner w.r.t. technology and innovation.  It was one of the earliest industries to embrace technology.  So when technology made its way into the Banking sector in India, very few people were trained in technology.  Computer Science and Computer Engineering were still in their infancy, in the college campuses.  As a result, the industry had to struggle with a skill shortage when it came to IT/ Digital skills.  While technology as a stream of education became popular very soon, the demand for Indian technical resources grew faster.  The whole world started outsourcing their technical work to India, because of arbitrage.  So the scarcity continued.  Even though Technology Institutes and Engineering Colleges started mushrooming throughout India, scarcity continued on two counts – quantity and quality.  Supply of quality technologists remained far below demand. 

Together with this, the other challenge that the Banking Industry struggled with is the tech savviness of the non-technical staff who had to use the technology.  Given the sheer number of people in this group, it soon became a bigger problem for the banks.  This problem started becoming more and more acute when almost every aspect of Banking became technology dependent.  The first decade of this century was all about this issue and every bank struggling to find their solution. 

Then the smartphone revolution happened and besides all the other impacts of smartphones, it has made common people tech usage savvy.  A big part of technology now has become intuitive. 

The key findings based on my discussions with Leaders from the Banking Industry

In order to better understand the IT/ Digital skill shortage, as is being faced by the Indian Banking industry, I spoke with multiple Banking industry stalwarts, including CEOs, CHROs, CIOs, CTOs, Business Heads, Talent Acquisition Heads, SVPs in charge of Talent Acquisition and Talent Management etc.  These leaders came from Private Sector Banks, Public Sector Banks, Small Finance Banks, Foreign Banks,  Cooperative Banks as well as GCCs and Banking BPOs.  The overall common encouraging comment is that, while supply of IT/ Digital skills was a definite challenge a decade back, it’s no longer that big an issue, when they hire for junior roles in high volume.  While different organizations have dealt with the issue differently, they all have managed to work around it, for the most part. 

Roles where most banks hire in high volume:

Based on my discussions with the leaders of the Indian Banking Industry, voluminous hiring typically happens in the following roles:

  • Relationship Managers or Customer Service Officers in the branches
  • Software Engineers and Senior Software Engineers in the IT Department
  • Roles in the Analytics & MIS Groups
  • Contact Centres or Call Centres

Of these the 2nd and 4th groups are sometimes outsourced following the organization’s core strategy.  But both first and 3rd are core to the banks.

Few skills have come up as top requirements from many banks:

Most banks have clearly stated that they don’t look for digital dexterity when they hire for junior roles, in high-volume.  The expectation is the ability to navigate on a device or a computer.  Hiring for digital dexterity happens at senior levels or specialized roles.  Some skills that have come up as important skills from most banking leaders are:

  • Advanced excel
  • Basic MIS and Analytics
  • High-end Analytics
  • Data Science
  • Java
  • .Net
  • CBS (Core Banking System for their respective banks)
  • CRM

It’s important to note that this is a list of the more commonly needed skills and not all of these are equally important to all the banks that I have spoken with.  And while this includes the skills which are more in demand, and for which the banks hire in bulk, this is by no means the comprehensive list of skills required by the banks.  This is merely a list of most commonly recurring high-demand skills as has come out from my discussions with the industry leaders.

Age demography as a determinant of tech savviness

The meteoric growth of technology, technical institutions and technologists in India, together with deep smartphone penetration, has made age demographics an important determinant of the level of tech savviness of the new hires of today.  This has come out loud and clear in all my discussions across banks.  The common response from all, is that they no longer need to worry about general tech savviness when it comes to non-technical new hires.  Familiarity with smartphones has eradicated this problem substantially.  However the situation is different when it comes to the employees who were hired before this tech boom.  Hence training those senior employees is a bigger issue in hand for all banks.

When it comes to technical staff, they do not face a major crisis with generic skills like Java or .Net where most banks hire in high numbers.  And for skills where they face a challenge, the banks tend to outsource the work to IT companies.  A couple of the relatively smaller banks mentioned that they are heavily tilted towards in-house technology staff, contrary to their larger and international counterparts, and they do not face much shortage in most of the common IT skills. 

How have banks circumvented the issue of tech-savviness of non-technical employees?

Different banks have circumvented the issue of tech-savviness of business employees in different ways. 

As a few leaders stated ‘Organizations are shying away from buying talent, but are focusing on building talent.’  Most banks have in-house training to provide necessary technology skills to their employees to bridge any gap.  This is typically done on induction as well as from time to time, to keep the employees up-to-date on newer apps, newer OTS or customized software or new features in existing packages.   It was very encouraging to hear from the CEO of a Cooperative Bank, in remote West Bengal, that there is online training for her employees that they need to mandatorily complete.  In-house training has come out as a key ammunition to bridge all kinds of skill gap in banks, including IT/ Digital skills.

Some banks have also tied up with external institutes to provide short-term training to their fresh graduates or market hires with 3/ 4 years experience.  This is more common amongst the private sector banks.  As we can see there are various institutes, classroom or online, that have focused programs to make freshers job-ready in banks.   

Another effective way of addressing the tech savviness of bank employees, is to move to an app based tab based system for most branch employees.  Most of the private banks, small finance banks, payment banks as well as a couple of PSU banks have taken this route, for all the customer relationship employees and sales staff.  These apps feed the data to their Core Banking Systems, which are accessed by operations teams and employees beyond a certain level.  This way they circumvent the CBS training needed for all employees and utilizes the device and app maneuvering skills of the digital natives.

While most banks used to require their branch employees to do simple MIS reporting, which required at least advanced excel skill, many have now moved away from that, since most branch employees used to struggle with advanced excel.  Some of them have created a thin team of MIS to support the branches, some have automated the reporting to a very large extent, requiring branch staff to only drag and drop data, while some others have completely centralised the reporting requirements and report creation.

Besides, in general, most banks, especially the Private Sector Banks, hire only graduates and today most graduates have minimum IT literacy to complete their jobs successfully. 

Coming to the question of rural-urban difference, most leaders stated that it’s not an issue.  Rural hiring focuses on people who know the local people and their properties better.  And the skill that is most important there, is not IT or any other technical skill, but connecting with the local people, who are generally not IT knowledgeable.  So it’s less important for the staff in rural branches to have IT skill and more important for them to have people skill and ability to explain the products with simple pen and paper.  And the IT that they need for record keeping is typically managed through apps or sometimes with some in-house training.  Contrary to popular belief, none of the banks stated that rural branches pose any additional problem, due to unavailability of IT/ Digital skills.

One final point to note is that in the future, when the Banking operational processes will change completely, the bigger challenge for the Banks would be to upskill and reskill their internal resources, than to hire skilled freshers for junior level roles.  Once the digital native generations start becoming veteren bankers, the challenge will automatically go away.

Futuristic View of Indian Banking

According to a recent PwC Survey, India is slated to become the third largest domestic banking sector by 2050 after China and the US.  How will this high growth banking sector look from a technology perspective?

Talking about what lies ahead, one very visible trend is the banking industry’s focus on automation, so as to minimize dependence on human skills for repetitive jobs.  But does that mean hiring will reduce.  The answer from most of the Banking Leaders is an emphatic ‘No!’  They all anticipate increased hiring in specialized jobs which needs human intelligence. 

Analytics has become a key focus area for most banks and it’s expected to drive digital transformation. Every Bank has carved out a separate group to focus on analytics.  And all of them expect it to only grow bigger and better.  BFSI entities, small to large, are pinning their growth hopes on analytics, big data and data science to create genuine customer value and customer experience.  Analytics is bringing on a paradigm shift.  It’s driving better customer value management,  better risk analysis, improved cost management and thus driving overall business growth.  The one skill that has been identified as a scarce skill, compared to its demand, is Data Scientist.  Almost every Banker I have spoken with, has identified Data Science as a clear area of skill shortage, even though no one is hiring Data Scientists in a bulk. 

AI is another technology that is revolutionizing the banking sector.  In fact, according to a joint research conducted by the National Business Research Institute and Narrative Science, globally, about 32% of financial service institutions, are already using AI technologies to improve their customer service and operations.  Indian Banks are also not lagging behind on this.  Banks today are using AI to provide better and more focused customer service, to hire people with a better fitment, to predict the future trend of the economy, to do repetitive operational activities and release employees to do more intelligent jobs, effective decision making etc.  Not every bank is in the same space when it comes to AI, but most have adopted it.  Some are taking baby steps, whereas others are a bit further ahead in their journey.  But today AI is still in the hands of technical experts and general business staff do not need to use it regularly.  But a day will come, and soon enough, when most employees would need to be an user of this technology.  Some banks are aware of this, while others still feel that this is a distance away. Today AI hiring is primarily in the Technology Department and is not voluminous.  Though there is a dearth of skill in the market. 

Cloud adoption got a major boost, thanks to the lockdown.  While most banks had already adopted cloud, partially, all banks and financial institutions have now realized the importance of cloud adoption for smooth functioning during lock down or any other disruption of regular business.  Truly speaking, cloud is the foundation level for digitalization.  And while all banks would need to have a structured strategy on cloud adoption and expansion, this is another technology skill which would remain within the Technology teams and would not warrant a voluminous hiring year on year.  But all banks will look for the cream talent in this cloud area or would outsource it to the best.

The biggest deterrent to digitalization and cloud adoption, for a bank, is the concern about data security.  With the evolution of technology the complexity of cyber attacks is evolving too.  But the banking leaders realize that there is no shying away from adopting innovative technologies, anymore and hence they would need to focus on cybersecurity.  According to PwC, “the cybersecurity market in India is set to grow from $1.97 billion in 2019 to $3.05 billion by 2022, at a compound annual growth rate (CAGR) of 15.6 percent. The growth rate is nearly 1.5 times the global growth rate of cybersecurity expenditure.”  We will see an increase in demand for skilled resources in the space of cybersecurity.   Even today there is a shortage of skilled cybersecurity experts.  But just like cloud or AI this skill will also remain within the technology group and the banks might resort to outsourcing to deal with skill shortage.

Last but not the least, is Blockchain.  While this is probably the technology where I have heard least concern from the bankers. Not only they don’t have high demand for this skill, they currently also do not foresee this picking up substantially in the near future. 

Overall most banks have fast tracked their digitalization journey, led by analytics and data science and founded on the grounding of cloud architecture.  But from a skill deficiency perspective the biggest worry seems to be with Data Scientists.

Conclusion The current pandemic has not only given a huge impetus to digitalization to smoothen the new normal for all industries, including banking, but it has also amplified the fact that people in the organization are the most important for the future of the organization.  Contrary to the worry that technology will replace people, technology will augment people’s ability to reduce costs, create customer value and most importantly, improve job satisfaction by reducing repetitive jobs that can be done by technology.  Digitalization journey, boosted by the pandemic, has also identified some talent gaps.  Certain roles where banks used to hire heavily, will not need so many people, because AI and ML and other technologies will be able to far increase the processing rate.  But many new roles will be evolving out of the new normal and the future of digitalization.  And skill shortages will evolve there.  So for individuals it would be all about upskilling, reskilling and staying relevant.  And for the banks they need to focus on upskill and reskilling their employees and more importantly to foster an environment of learning.  That’s the only way that the banks can combat the skill shortages that would evolve and still compete successfully in the market. 

About the author: Mohua Sengupta is a Senior Business Leader, with 25+ years of experience across the globe, both in the Financial Services Industry and in the IT Services Industry.  In the past decade, Mohua has focused on Digital Transformation, Digital Banking, Distributed Ledger Technologies, Application of Emerging Technologies in Banking, Insurance Healthcare to name a few.  After spending almost, a decade in Royal Bank of Canada Financial Group, Mohua shifted back to India and have worked in IT Services organisations like Wipro, Accenture, MphasiS, ITC Infotech etc.  She is also extremely passionate about Women’s issues especially in the Corporate.   She is a much published author and have published 120+ articles in business journals of repute.  Mohua is also extremely passionate about Theatre and together with her husband, co-founded Ventures, a banner for theatre enthusiasts, in 2014.  Ventures has produced 3 full act plays which have been staged in various prestigious auditoriums in Bangalore and outside.  Its also involved in Theatre Based Behavioral Learning & Theatre Workshops.  Academically Mohua is an MA in Economics, an MBA in Finance and is also a Certified General Account of Canada.  Most importantly, she is a mother of a 14-year-old daughter.