A recent report has highlighted a significant shift in recruitment strategies within the finance sector, with 87% of employers now prioritising skills-based hiring methods over traditional resume and cover letter approaches. This figure surpasses the average of 81% seen across other industries, reflecting a growing preference for candidates with a blend of technical and finance-specific expertise, particularly in the rapidly evolving fintech landscape.
The report, titled ‘The State of Skills-Based Hiring 2024 in Finance,’ was published by talent discovery platform TestGorilla. It reveals that 80% of finance employees also prefer a skills-based hiring process, while an impressive 92% of finance employers reported satisfaction with the hires made through this method over the past year.
Despite the benefits, the report indicates that the hiring environment in the finance sector is becoming increasingly competitive. Around 38% of employers stated that sourcing top talent has become more challenging compared to the previous year, with 56% of employees expressing difficulties in finding suitable job opportunities.
Interestingly, the survey found that hiring bias is slightly lower in the finance sector, with 29% of employers reporting experiences of unconscious or conscious bias during recruitment processes. This is marginally below the industry-wide average of 31%. However, the satisfaction rate among employers using skills-based hiring remains high, with 92% reporting improvements in employee retention, diversity, and reduced hiring costs compared to the average across all sectors.
The report highlights that 94% of finance employers using skills-based methods have seen an increase in diversity, while 94% also noted enhanced retention rates. Furthermore, 86% reported reduced costs associated with hiring, and 90% have decreased the incidence of mis-hires.
The trend towards skills-based hiring is further supported by advancements in talent discovery platforms, which are proving effective in identifying candidates with essential skills such as communication, problem-solving, and critical thinking. These digital tools offer innovative ways to assess candidates beyond traditional application materials.
Jonas Atil, Director of Recruitment at NexusHR, emphasised the importance of assessment tools in today’s job market, stating, “Testing is crucial, especially as cognitive requirements for many roles increase. We need to evaluate specific skills that are not evident on resumes, such as coding.”
The report also highlights a strong preference among finance candidates for skills-based hiring processes. Over 80% of respondents stated that they favour these approaches because they allow them to showcase their abilities effectively. Joan Pelayo, a marketing specialist candidate, noted that skills assessments provide a vital opportunity to stand out in a crowded job market.
The report revealed that skills-based hiring methods are particularly popular among younger candidates, with 92% of those aged 25-34 preferring this recruitment approach. Across all age groups, 68% expressed a desire for organisations to increase their reliance on skills-based hiring in the future.
Wouter Durville, CEO and co-founder of TestGorilla, commented on the evolving employment landscape, stating, “The trend is clear: skills-based hiring is becoming the preferred method for both businesses and job seekers. While degree qualifications remain important, organisations that overlook non-degree-holding candidates risk missing out on valuable talent.”