The financial sector is experiencing a major transformation driven by digital technology. Since the start of the digital era, automation has increasingly replaced clerical positions, leading to a significant reduction in middle and lower-end jobs. This shift is reflected in the changing ratio of officers to support staff, which has moved from 50:50 in FY11 to 74:26 in FY23. The rise of artificial intelligence (AI) is expected to further impact job availability in this sector.
In his foreword to the central bank's Report on Currency and Finance, RBI Governor Shaktikanta Das addressed the challenges posed by digital channels. He emphasized the need for financial institutions to invest in upskilling and reskilling their workforce to keep pace with these changes.
"Digitalization is decentralizing financial labor through outsourcing and remote work. The replacement of human labor by automation may exacerbate the divide between high and low-skill jobs, creating a fragmented job market where low-skill jobs are diminished and high-skill jobs are expanded," Das noted.
The report highlighted a global trend from 2013 to 2019, showing a decrease in support roles within the financial sector, while the number of professionals and technicians has risen. This trend is also visible in India. Additionally, the report observed a turnover rate exceeding 30% in private banks during FY23, partly due to the use of digital hiring platforms.
"AI-related skills are becoming increasingly important in India’s job market, with AI talent recruitment growing by 16.8% in 2023 compared to overall recruitment," the report stated.
Despite the push for upskilling, the RBI pointed out that traditional training methods are no longer adequate for the current technological advancements. Significant investments are needed to develop the necessary skills. In 2023, the central bank expressed concerns about high staff turnover, with many top private banks reporting that nearly a third of their employees, especially frontline staff, had to be replaced.
India is leading the digital revolution, with the Indian digital economy expected to grow from 10% to 20% of GDP by 2026. Governor Das highlighted that digitalization is enhancing the banking experience by making financial services more accessible and affordable. "Digitalization is shaping the future of banking and making financial services more affordable," he added.
Another pressing issue is the rising cost of data breaches in India, which has increased by 28% to reach $2 million between FY20 and FY23. Cybersecurity threats, particularly phishing attacks and compromised credentials, remain prevalent. Phishing attacks account for 22% of cyber risks, while stolen or compromised credentials make up 16%, according to the report.
The financial sector faces the challenge of adapting to digitalization, investing in workforce development, and tackling cybersecurity threats effectively.
Latest News Coverages:
EPFO Adds 62 Million Members Over Six Years: How?
PM Modi to Lead Meet on Post-Budget Vision: 'Journey Towards Viksit Bharat'
