Addressing the digital skills gap in financial services and accounting
According to recent research by the UK government, financial services has one of the lowest rates of investment in employee learning and development.
At the same time, we know that we are living in an era of rapid change, putting pressure on workers to develop new skills.
The need for digital skills, in particular, was thrown into sharp relief throughout the Covid-19 pandemic as the reliance on technology increased to support homeworking. Financial services firms – and accounting more specifically – were not exempt from this trend and are in fact experiencing a widening skills gap. According to research from UK Finance, almost a third (30%) of financial services workers said they need more digital and technological skills.
The finance industry must address the skills gaps among its employees sooner rather than later. Fortunately, the role and responsibility of the accountant is changing in a good way, thanks to the adoption of technology.
With the rise of digital payments, demand for AI-based accounting software has increased. As a result, a plethora of new solutions have entered the market, making use of emerging technologies – AI included. These new tools are set to change the face of accounting operations through automation, delivering efficiencies, reducing errors, and optimising workflows. In fact, more than half (57%) of accounting professionals predict that accountancy will become automated within the next few years, according to our research.
In this article, we explore the shortage of digital skills festering at the core of the accountancy industry, underscoring how technology can benefit firms struggling to secure the more dynamic skill sets required by new-age clients and customers and bridge this gap. But before we think about how to bridge the gap, we need to know what caused it. After all, understanding an issue is an unequivocal part of creating its solution.
Making Tax Digital for VAT – a steep learning curve
For many accountants, the single biggest driver of the need for digital skills has been Making Tax Digital, implemented by HMRC back in April 2019. Making Tax Digital for VAT, or MTD as it is commonly known, makes up one element of the government’s strategy to digitise the tax affairs of individuals and businesses in the UK.
Earlier this year, MTD requirements were extended to all VAT-registered businesses, putting significant pressure on accounting firms to ensure they have the right skills and tools in place to analyse tax data and remain compliant while reducing cumbersome paperwork. And as word on MTD continues to spread across the industry, customers will not only expect but demand that their accountancy firms have the right tools in place in order to embrace this bold step toward the digital.
Shifting client demands and the need to keep pace with the tech-savvy SME customer
With that in mind, equally important has been the shift in client demands towards a more digitalised accountancy service. The new wave of entrepreneurs, aged between 26 and 32 years old, occupy the sweet spot between understanding manual processes and knowing that technology is there to save time. As a result, this new crop of SMEs, typically at the cutting-edge of technology – will expect the same from their accountancy service, including greater levels of automation and increased efficiency.
It’s vital therefore that traditional accounting firms invest in the right technology and the digital skills required to execute that technology in order to keep pace with their SME customers. This will enable them to stay ahead of the game and proactively guide clients on the best use of these IT tools to help manage their finances more efficiently. Indeed, as digitalisation continues to spread, accountancy firms need to add skills beyond the traditional to their arsenals in order to justify their costs.
A new generation of accountants
Putting further pressure on this need to adapt is the new generation of accountants coming into the workforce. This new cohort is younger and already adept with technological tools and processes, having grown up in the digital era. In order to stay competitive in a crowded labour market, traditional accounting firms will need to ensure they appeal to their more tech-savvy new joiners.
In many cases, they will be actively seeking to work for companies with slick and streamlined processes in place and software that automates menial, time-consuming tasks, such as chasing receipts or inputting pre-accounting data. Their time can then be spent on more fulfilling tasks that add value to the business. With this, the employee experience is significantly improved, resulting in greater job satisfaction overall.
The new raft of solutions on the market that integrate seamlessly into accounting software can benefit firms not only in terms of streamlining operations, but by freeing up the time of finance professionals and replacing manual data entry with intelligent automation.