Skill and leadership gaps are slowing digital transformation in India’s BFSI sector: Reports
Despite 93% of firms recognizing data as mission-critical and 78% exploring Generative AI, only 27% feel fully prepared, highlighting how leadership, L&D skill gaps, and weak AI readiness are stalling progress.
India, July 11, 2025 – KNOLSKAPE, a global leader in experiential learning technology, has released The Workforce Insights: BFSI Industry Report 2025, uncovering critical workforce challenges that are slowing down digital transformation across India’s BFSI sector.
The report states a significant disconnect between ambition and execution. While financial institutions demonstrate strong intent to digitize, structural challenges such as misaligned leadership, a weak learning culture, and limited data fluency are hindering effective implementation. Drawing insights from 35 financial institutions and over 6,500 employees globally, the report highlights that successful digital adoption requires more than just technology it demands organizational and cultural readiness. Without urgent action to address these gaps, the sector risks falling short of its transformation goals.
“The pace of change is dramatic, but it brings urgent challenges. As our new report highlights, digital transformation demands visionary leadership and a culture of continuous learning. Indeed, industry data indicate that roughly half of India’s BFSI workforce will require reskilling over the next few years. Addressing these leadership and skill gaps is critical to fully capitalize on our sector’s innovation potential.”, said Rajiv Jayaraman, Founder and CEO of KNOLSKAPE.
Key Insights:
- Digital Readiness Gap: 83% of Indian BFSI firms prioritize digital transformation, but only 31% believe their workforce is ready to deliver. This highlights a disconnect between strategic ambition and actual capability on the ground.
- Leadership Development Needs: 7% of organizations see leadership development as critical, but many lack programs that align with today’s digital and AI-driven demands.
- Limited Data Utilization: 93.3% value data and analytics, but only 33.3% use them effectively in learning and performance. The gap reflects challenges in applying insights to real workforce outcomes.
- High Intent, Low Execution: 83% of Indian BFSI firms list digital transformation as a top priority, but only 31% believe their workforce is ready to deliver on it. This highlights a significant gap between vision and execution, especially in applying AI for customer insights and operational agility.
- Structural Barriers: The report identifies poor leadership alignment, outdated talent strategies, and weak learning infrastructure as the three major challenges holding organizations back.
Data and Analytics: A High-Value, Low-Satisfaction Area A staggering 93.3% of organizations agree that data and analytics are mission-critical to L&D, yet only a third are satisfied with how data is used to drive learning outcomes. This “data-value gap” indicates struggles with data silos, poor governance, and a lack of an analytics-driven culture. Recommendations include investing in AI-powered L&D analytics, enhancing data literacy training for HR & L&D teams, and improving reporting tools for better insights.
AI Readiness: A Strategic Imperative with Execution Challenges Most financial institutions rate AI readiness at the highest levels, confirming that “the future of finance hinges on AI-driven transformation”. However, a significant gap exists between this strategic importance and actual preparedness, with only 26.7% of organizations expressing high satisfaction with their AI readiness. Challenges include legacy systems, a lack of AI-skilled talent, data silos, and ethical concerns. The report suggests developing AI-focused training programs, integrating AI-driven tools into L&D, and improving change management to foster an AI-ready culture.
Crucial Leadership Skills in the Age of AI: Balancing Head and Heart In a surprising shift, Emotional Intelligence (EI) & Empathy are ranked as the top leadership priority (17.2%), indicating that financial leaders are expected to do more than manage—they must connect, inspire, and lead with humanity. Ethical Leadership & Governance follows closely (15.4%), emphasizing the critical need for trust, transparency, and accountability in a highly regulated industry. Data-Driven Decision-Making (13.1%) and Critical Thinking & Problem-Solving (13.1%) also remain crucial. The report stresses the need for experiential learning, coaching, and AI-driven simulations to equip leaders with these vital skills.
Persistent Challenges in L&D Innovations All surveyed organizations reported facing at least one major barrier to L&D innovation. The most common challenges include:
- Budget Constraints (66.7%): Limited funding hinders workforce development, innovation, and competitiveness.
- Measuring Impact (60.0%): Difficulty in quantifying the success of training initiatives leads to a lack of clarity on L&D’s return on investment (ROI).
- Skill Gaps Among L&D Professionals (40.0%): L&D teams often lack expertise in designing and delivering modern, AI-driven learning programs.
- Technology Adoption & Integration (26.7%): Struggles with implementing new learning technologies into existing legacy systems persist.
Work Culture in Banking Needs a Makeover The report points out that while banks succeed in recruiting young talent, they often fail to retain them due to traditional, rigid, hierarchical structures and bureaucratic cultures. To keep top talent, banks must modernize work culture by flattening hierarchies, embracing flexible work models, highlighting the industry’s societal impact, and fostering cross-functional collaboration. The Accenture Banking 2023 report further highlights that many BFSI firms are struggling to define a comprehensive skills blueprint.
The Way Forward: KNOLSKAPE’s FUTURE Model To address these complex challenges, KNOLSKAPE introduces the FUTURE Model, a six-dimensional framework designed to transform L&D into a strategic lever for innovation and growth. Each pillar represents a core aspect of modern L&D transformation:
- Focus on Strategic Leadership: Embed leadership development as the cornerstone, prioritizing emotional intelligence, ethical governance, and data-driven decision-making.
- Upskill for AI & Digital Fluency: Treat AI as a co-pilot, training employees to interpret and ethically apply AI insights, and embedding digital literacy across all roles.
- Transform Culture for Agility: Shift from rigid hierarchies to agile, cross-functional collaboration, promoting a “fail-fast, learn-fast” mindset.
- Use Data for Decision-Driven L&D: Move beyond participation metrics to ROI and performance-linked indicators, adopting AI-powered analytics for real-time tracking.
- Reimagine Learning Delivery: Transition to embedded, just-in-time learning, integrating microlearning, mobile learning, and personalized, AI-curated content.
- Engage with Inclusion & Purpose: Infuse DEI into all L&D efforts, connecting learning to social impact, compliance, and customer-centricity.
By operationalizing the FUTURE Model, financial institutions can navigate workforce disruption, build AI-ready leaders, create thriving cultures, and deliver tangible ROI from learning investments, ensuring they adapt and lead the future of finance rather than being left behind. For further insights into the evolving workplace paradigm, visit
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