• UK faces worst tech skills shortage in 15 years due to rising AI demand
• AI has become the most scarce skill in financial services, rising 260% in 18 months
• 89% of financial firms are investing in AI, but over half lack generative AI training
• Larger firms with $500m+ tech budgets are seeing better returns on AI investment
• Financial institutions are hiring AI talent from big tech firms and upskilling internally
• Engaging Gen Z employees boosts readiness and ROI on AI projects
• By 2030, bank tech teams are expected to shrink but specialise in AI integration
• Only 9% of firms feel ready for upcoming AI regulation
• 14% of firms lack any AI regulatory risk framework
• Experts warn current regulatory pace is too slow for the speed of AI adoption

The UK financial services sector is facing its worst technology talent crisis in more than 15 years due to an explosive demand for artificial intelligence skills that is outpacing both workforce training and regulatory oversight.

According to Harvey Nash’s latest digital leadership report, AI has jumped from the seventh most scarce tech skill to the most in-demand in just 18 months, marking a 260 percent increase in reported shortages.

Rhodri Hughes, executive director for financial services at Harvey Nash, has warned that without immediate action, the UK’s status as a premier global financial hub could be at serious risk.

“The UK has always been seen as a leading global financial hub,” Hughes told City AM. “If we don’t address this skills challenge, this could come under threat, and we could lose our status along with that of being the number one financial tech hub.”

The scale of AI adoption in the sector is substantial. Almost nine in ten tech leaders in financial services now report investing in AI initiatives, up from 43 percent a year ago.

But this investment is not being matched with sufficient training. More than half of firms surveyed admit they are not offering any education in generative AI, widening the gap between innovation and execution.

This divide is especially stark between large and small firms. Among institutions with tech budgets over $500 million, 44 percent report measurable returns on their AI investments. In contrast, the sector-wide average is just 27 percent.

This advantage gives well-funded firms a head start in building advanced capabilities while smaller rivals struggle to keep up.

To fill the widening skills gap, financial institutions are increasingly poaching talent from big tech firms, which have already developed mature AI practices.

At the same time, an internal shift is underway. Software engineers within banks are beginning to pivot toward AI, recognising it as a critical path for career progression.

“Generally, the talent we’re placing is from other big tech organisations,” said Hughes. “But there is also an element of talent emerging from banks themselves, with software engineers wanting to gain experience in the area to progress their career.”

Meanwhile, Gen Z appears to be a secret weapon in the AI transition. Firms that engage with younger employees and incorporate their perspectives are up to twice as likely to be prepared for AI implementation and are 56 percent more likely to achieve a tangible return on investment.

The structure of tech teams within financial institutions is expected to evolve significantly in the next five years as banks begin to run leaner teams comprised of engineers skilled in working alongside AI tools and dedicated AI specialists. This hybrid model is expected to provide greater value with fewer resources.

But as the technology gallops forward, regulation lags far behind. Only nine percent of UK financial services executives believe their firms are prepared for forthcoming AI regulation, and 14 percent admit they have no framework for managing AI-related regulatory risks.

In a sector built on trust, precision and compliance, the stakes of getting AI adoption wrong are immense. Without urgent focus on talent development and regulatory clarity, the UK’s financial sector may find its competitive edge dulled by the very technology it seeks to master.