From education to employment

New Apprenticeship Insights Paper calls for urgent review of banking apprenticeship standards

Simon Thompson FCIBS, Chief Executive, Chartered Banker Institute

The Chartered Banker Institute is the oldest institute of bankers in the world, founded in 1875 to enhance and sustain ethical and professional standards in banking.

During our first century, most of the young men and women gaining their banking qualifications with the Institute and going on to enjoy rewarding careers in banking in the UK and overseas were bright, hard-working school-leavers for whom joining a profession was their passport to a better life for themselves, and for their families.

With university an option only for a small minority until recently, the Institute – and other professional bodies – helped many tens of thousands of individuals develop relevant, professional knowledge and skills, and provided gateways to professional careers.  

For us, the concept of apprenticeships is not new; it is embedded in the public interest mission of the Institute, as established all those years ago.

Misaligned incentives often lead to poor outcomes

I am, therefore, a strong supporter of apprenticeships and believe there are great benefits to the banking sector, to customers, to the economy and most importantly to significant numbers of individuals from a diverse range of backgrounds from an effective and purposeful apprenticeships system.

Despite some good and thoughtful practice in some areas and the significant numbers of new apprenticeships starts in banking, which seem to be holding up well compared with other sectors, I am concerned that the current apprenticeships system, at least in banking, is not working as well as it could.

My concern is shared by many Institute members, who believe that the opportunity provided by the apprenticeship levy to further enhance and sustain banking professionalism – still vital a decade on from the Global Financial Crisis – is being lost.

To put it bluntly; the apprenticeship levy has created incentives for apprenticeship providers and organisations to seek to maximise the return on the levy paid. As we know only too well in banking, misaligned incentives often lead to poor outcomes.

Apprenticeships in the Banking Sector

Our Insights Paper, published at the Institute’s Annual Professional Banking Education Conference today sets out both the good practice being demonstrated in apprenticeships in the banking sector and, where we feel it is necessary, offers constructive criticism with the aim of improving apprenticeships in banking, and the effectiveness of the apprenticeship levy.

Where we make suggestions for improvement, this is based on data published here for the first time, and evidence collected from a wide range of interviews with banks, providers and others. It is an important contribution to the debate on apprenticeships, and its conclusions and recommendations should be studied by policymakers, regulators and by those involved in developing and delivering apprenticeships in the banking sector.

There are two key areas where we believe the banking sector, and those involved in the development and delivery of apprenticeships need to act to ensure we deliver the outcomes to individuals, organisations and society we seek. Firstly, as our Insights Paper demonstrates, there are signs of a significant shift towards the use of generic apprenticeships standards, such as those for management, administration and customer services, rather than the specific standards intended to reflect occupational competencies in banking.

Whilst generic standards may be appropriate in some circumstances, their use highlights two critical issues:

  1. A watering-down of the value of core banking skills, such as risk, credit, operations and professional ethics; and
  2. An indication that the existing apprenticeship standards designed for banking are not seen as being sufficiently relevant and need to be updated.

Enhancing banking professionalism

Since the Global Financial Crisis, the banking sector, policymakers and regulators have seen enhancing banking professionalism as a critical priority in financial services. Much progress has been made in the decade since 2008.

Central to this was the recognition that the ‘retailisation’ of banking from the mid-1980s had detrimentally eroded the culture and value of sector-specific, banking education that had historically underpinned banking as a profession.

Over-reliance on systems and processes, underpinned by narrow investment in sales and customer services skills led directly to many of the issues that were laid bare a decade ago.

It is deeply concerning, therefore, to see evidence that the value of sector-specific education is, once again, being eroded – driven this time by the lack of relevant apprenticeship standards and misaligned incentives created by the apprenticeship levy.

As other sectors embrace apprenticeships (accounting, for example) it is noteworthy that sector-specific qualifications continue to play a central role. We must act to ensure they do the same in banking too.

Aligning the apprenticeship frameworks and systems across the UK

Secondly, we must align the apprenticeship frameworks and systems across the UK. At present, as our Insights Paper demonstrates, it is proving impossible for banks and apprenticeship providers, despite their best efforts, to use the levy to help individuals throughout organisations develop the knowledge and skills needed by UK-wide employers.

The different apprenticeship systems, and different levels of funding available in different parts of the UK means that individuals are not benefitting from the opportunities that could be available for new or reshaped careers, and organisations are increasingly frustrated by the unnecessary, additional bureaucracy and friction caused by multiple apprenticeship systems.

The UK and devolved governments must work together at pace to resolve these issues.

Outstanding opportunities for both individuals and employers

Apprenticeships offer outstanding opportunities to both individuals and employers. The wider societal benefits that skilled and well-educated individuals will bring should also not be undervalued – not least in terms of improving UK productivity. In the banking sector in particular, we need to act quickly to ensure we attract, retain and develop the skills we need to support the jobs of the future.

As our Insights Paper demonstrates, there is a real urgency for policymakers and the banking sector to take stock of the gap between where our sector’s apprenticeships strategy is now, compared to the potential that a coherent vision for the future would offer.

The critical need here is for the banking sector to reassert its ownership of the apprenticeship agenda, consider its future needs and to harness the capabilities that the supporting professional bodies and apprenticeship providers have to offer in bringing that vision to life.

At the Chartered Banker Institute, we stand ready to assist and to play our part.

Simon Thompson FCIBS, Chief Executive, Chartered Banker Institute

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