Investing in people: The power of human capital in banking’s AI era

Jan 10, 2025

The future of banking lies in a harmonious blend of human capital and AI capabilities. Image: Unsplash/Bruce Mars

Amitabh Chaudhry

Managing Director and Chief Executive Officer, Axis Bank

This article is part of: World Economic Forum Annual Meeting

AI is transforming the banking, financial services and insurance sector, driving IT investment and demand for skilled workers in technical roles.
Reskilling is crucial; banks are training staff and partnering with educators to bridge the skills gap. These efforts will ensure employees adapt to new industry demands.
Collaboration will be key: education, industry and government must work together.

Technological advancement is reshaping industries and economies globally at a very rapid pace, and the banking and financial services sector is no exception. Deploying new technologies such as artificial intelligence (AI) to streamline customer interactions through automated chatbots, customer segmentation and enhanced fraud detection has become second nature to the banking, financial services and insurance (BFSI) sector.

According to a study released by Gartner in June 2024, India’s BFSI sector is set to invest $13.2 billion in information technology in 2024, a 12.2% increase compared to 2023. Globally, IT spending is forecast to increase 8.7% to $735.6 billion in 2024.

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Technological advancements, especially AI, come with great potential for a hyper-personalized service experience. A common notion is that it poses significant challenges of job displacement. Axis Bank strongly believes that technology will automate operational aspects of various roles and augment faster delivery of banking services. However, human touch and personal connection with customers will assume greater significance, especially for the banking and financial services industry.

The Reserve Bank of India (RBI) has already signalled that digital technologies are affecting workforce composition, job quality, skill requirements, labour and regulatory policies. With the implementation of AI in financial services, roles are shifting to higher-skilled tasks and routine functions are being automated. Analyses have revealed that between 2013 and 2019, there was a contraction in financial support roles globally, concurrent with an increase in professional and technical roles. This change is also evident in India’s banking sector.

Composition of employees in Scheduled Commercial Banks (SCBs) Image: RBI

Average employee turnover rates in SCBs from 2022-2023 Image: Business Responsibility and Sustainability Reports of Banks

The sector has taken note of this rapidly changing landscape, investing in reskilling and upskilling employees. For instance, Axis Bank is rolling out ‘Adi,’ an internal chatbot that helps bank employees answer specific queries at branches. In FY24, employees of a large private bank clocked over 6.5 million learning hours acquiring a wide range of skills as well as emerging technologies. These private banks train identified employees in skill domains such as API and micro services, cyber security, intelligence and software testing, cloud computing and data engineering.

However, a more comprehensive approach is needed to thrive amid rapid change. Successful reskilling requires deep understanding of current and future company needs. For this, organizations need a strategic approach to workforce planning, starting with recruitment and evaluating openness to reskilling and upskilling programmes.

As for middle management, a Harvard study suggests these managers could contribute to designing and delivering programmes that build supportive environments and alleviate concerns. A practical, on-the-job learning experience may better equip employees with the required skills and prepare them for new roles.

Besides internal organizational changes, reskilling and upskilling initiatives require fostering collaboration among various stakeholders:

Cultivating a culture of innovation and entrepreneurship
The change can begin at educational institutions, which can encourage a culture of innovation and support entrepreneurial spirit. Such modules could be incorporated into school and college curricula. New technologies such as AI can be embedded into subjects to provide a more multidisciplinary approach. In India, many schools promote entrepreneurship-focused clubs and platforms to help students explore their interests and develop leadership skills, but making this more common will significantly prepare students with the skills required to adapt in fast-changing times. The World Economic Forum and PwC estimate that improving students’ collaborative problem-solving capacity could add an additional $2.54 trillion, thus augmenting productivity in the global economy.
Industry-academia partnerships
Closer cooperation between industry and academia is key to ensuring that educational programmes keep pace with the evolving needs of the banking sector. This allows universities and colleges to tailor their curricula to include relevant AI and fintech modules. Industry representatives can provide valuable insights into current and future skill requirements, allowing educational institutions to prepare students with the necessary skill sets. Such partnerships benefit not only the banking sector but also students, ensuring they are well-equipped to succeed in a competitive job market.
Public-private collaboration
A strong partnership between the public and private sectors is necessary to bridge the skills gap and prepare the workforce for the future. The public sector can play a pivotal role by identifying in-demand skills for the future and promoting digital literacy programmes. This can equip individuals with the foundational knowledge to adapt to evolving technologies and thrive in the digital age. On the other hand, the private sector can collaborate with educational institutions to create industry-relevant certifications.

Additionally, investing in employee training and mentorship programmes can foster a culture of continuous learning and upskilling. By working together, the public and private sectors can build a future-ready workforce well-equipped to navigate the ever-changing financial landscape. In India, the government collaborates with industry through the National Skills Development Corporation (NSDC) to develop, reskill and upskill the workforce. As of March 2024, NSDC has partnered with 62 corporations on 131 projects, benefiting over 3.1 lakh individuals, including those in 42 aspirational districts. It launched the Skill Impact Bond in 2021 to leverage a Development Impact Bond model to attract private sector funding for skill development, job placements and retention. Between November 2021 and March 2024, 29,365 candidates were enrolled with 74% female enrolments, 23,464 certified, 19,209 placed and 13,853 upskilled to retain jobs.

International co-operation and knowledge sharing
The challenges and opportunities presented by AI are global, making international co-operation and knowledge sharing essential. By collaborating with other countries and organizations, the banking sector can learn from best practices worldwide. This promotes the exchange of knowledge and expertise, paving the way for innovative solutions and tackling global challenges. Multilateral cooperation can significantly amplify the impact of human capital development initiatives, driving progress on a global scale. For example, collaborative efforts between financial institutions across borders can lead to standardized training programmes that ensure a future-proof workforce equipped to handle complex AI-driven financial systems.

The future of banking
As AI continues to reshape the BFSI sector, human capital remains the cornerstone of success. By fostering a culture of innovation, collaboration and lifelong learning, organizations can harness the power of AI while mitigating risks. Soft skills such as critical thinking, problem-solving and effective communication will become increasingly valuable as AI automates routine tasks.

Ethical considerations must be at the forefront of AI implementation, ensuring that technology serves humanity and avoids unintended consequences. It is crucial to strike a balance between technological advancement and human values. By prioritizing ethical AI practices and responsible innovation, organizations can build trust with customers and stakeholders.

Ultimately, the future of banking lies in a harmonious blend of human intelligence and AI capabilities. By embracing a human-centred approach, organizations can create a future where technology empowers individuals and organizations to reach new heights of success.

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