The fourth industrial revolution, commonly known as Industry 4.0, is bringing rapid technological advancements -powered by the rise of digital technologies: cloud, big data, Internet of Things, Analytics, and Machine Learning-, changing the nature of work and increasing demand for a skilled workforce. Technology’s impact on the workforce was inevitable, adding that the most important action was responding to digital developments to optimize the workforce and its talents. Hence, industry 4.0 is rapidly transforming not only IT but business in general, particularly in terms of human-technology relationships.
The demands of the employees in industry 4.0 have been slowly transformed. Technologically-skilled labor, critical thinker, and creative labor are the most preferable employee in industry 4.0. Meanwhile, basic skills are mostly not applicable in this industry. These led to the emergence of skill gap—the gap between expertise’ needs and the capacity of the workforce. Therefore, human resources contribute to the challenges towards IR4.0 that have been threatening the global business economy. As a reference, there was a survey involving 123 Human Resource senior managers, which revealed that 70% of the problem is due to incoming worker’s poor skills, 61% Baby Boomer retirements and 51% is due to the inability to retain key talents. According to the McKinsey Global Institute, it is estimated that 49 percent of the activities that people are paid to do in the global economy has the potential to be automated by adapting currently demonstrated technology.
Besides, the employee’s skills to cope with technology automation can be varied depending on the sectors and mix of activity types. Many business sectors apply the Augmented Reality Strategy, as the effort for business sectors to apply the automation for completing the working operation. The aims are to assist and support the human’s activity. The strategy will transform how we learn, make decisions, and interact with the physical world. It will also change how enterprises serve customers, train employees, design and create products, and manage their value chains, and, ultimately, how they compete.
This writing aims to elaborate best practice of talent management and skills in the case of Banking Industry. This sector is particularly important because, banks have been relying on technology for quite some time to reduce costs, optimize processes and speed up delivery time for products and services. Banks are also feeling more pressure from clients growing expectations to offer new digital options. Banking, from the perspective of industry 4.0, calls for an even greater level of digitalization. However, Banking is also an industry which relies heavily on human resources.
For instance, the US Bureau of Labor Statistics reported by McKinsey Global Institute analysis illustrated the degree of automation potential for the various industrial sector in the US. In particular, Finance and Insurance has 43% chance to be potentially automated, comprised of management (0-10%), expertise (10-20%), interface (10-20%), unpredictable physical (10-20%), collect data (40-50%), process data (60-70%), predictable physical (90-100%).
Meanwhile, the trend in the banking industry shows that in the digital era, customers tend to utilize transaction through the digital channel. In 2011, bank customers who made transactions in e-channels in Indonesia increased by about six times. Nevertheless, previously there were only 5% to 36%. Meanwhile, starting in 2017, the customers of Mandiri mobile banking reached 37%, 17% of internet banking, and 40% ATM users. Then, the customers who visited the branch offices were only around 6%. The changing pattern of business service highly depends on digital transformation, which affects the activity of human capital. However, industry 4.0 increase the level of competitiveness, and the possibility of the talent market in the global economy. For instance, globalization and issues of IR 4.0 have enabled talented employees not to limit the marketing of their skills within one region, but they can look for jobs in firms across the world with digital skill. Because of this, experts are mainly worried about the possibility of intense global competition for talents which may draw attention towards how talent is recruited, retained, developed and managed yet, the uncertainly of industrialization of 4. 0.
Despite the advancement of technology in Industry 4.0, human capital remains an important element to run the business sector. Hence, how banking creates effective talent management to ensure that employees can make use of their talent to achieve an absolute success of a business?
Besides, talent management and skill in industry 4.0 are closely linked to human-technology relationships. The idea behind talent management is built on the fact that business is run by people. Therefore, putting the right people in the right job positions is what constituted a good talent management and for future need. The employability, knowledge, and competence are indicators of talent which determine the success of a business. Talent identification and development help business in identifying employees that later been develop as a leader of the future that represents the combination of a cyber-physical system due to the diversification of Industry 4.0.
There are two main steps of mostly bank industry to manage talent management and skill in the fourth industrial revolution. Firstly, talent management should start with the business strategy and what signifies talent towards a business. Employee as a potential resource is the source of the influence of an organization because the employee moves the business. Also, vice versa, moving the business means having to move employee with competitive strategy.
The strategy is also needed to understand the know-how the business’s goals are achieved. The bank industry understands that employees move the business. Thus, in some reasons, banking sector prepares the employee candidates or newly employed to have a deep understanding regarding the business’s goal.
Secondly, it is important to enhance and maintain the skills of new and existing employees through training, career development, commitment, and rewards. The recruitment and selection of employees in finding talented employees to an appropriate position by providing an effective training program. Career development is a lifelong learning process that continuously adds work experience. The positive relationship to job satisfaction and retain employees increased productivity and performance of the business sector. Meanwhile, employee hopes to get a reward for what they have contributed to an organization; therefore rewards affect the performance of every employee and affect their commitment. Commitment is interdependent with emotions because employees need physical and emotional support.
The management of advanced technology still depends on human capital. The case of the banking industry illustrates that the significant role of human capital is to drive business move. Therefore, the competition of the global economy in Industry 4.0 relies on human’s skills and creativity to manage the digital transformation to reach organization’s success. In this regard, a certain incentive given by the business sector is significant to enhance and maintain employee’s performance. Indeed, the fourth industrial revolution does not always pose the risk of job loss. This article opens the upcoming research on how the comparison of each banking industry in Indonesia improves their performance perpetually towards Industry 4.0.
This article was written by Archita Nur Fitrian, an undergraduate student of International Relations Studies at the Universitas Gadjah Mada, while working as an intern at Center for Southeast Asian Social Studies (CESASS).
Photo by Erol Ahmed on Unsplash