Skill-Based Hiring in FS: Is It Really The Way Forward?
In Hong Kong's competitive Financial Services landscape, the search for top talent is constant, meaning forward-thinking companies are always looking to improve their hiring strategies. Increasingly, we hear buzz around "skill-based hiring" – a promise of unlocking diverse talent pools and finding truly capable individuals.
But for busy hiring managers and Talent Acquisition professionals grappling with immediate needs, tight deadlines, and stringent regulatory demands, the question isn't just "What is it?" but, more importantly, "Is it truly a viable path for my team, and what are the honest realities of adopting it?"
Let's cut through the hype and explore skill-based hiring with a realistic lens, acknowledging both its potential and the very real complexities it introduces for Financial Services organisations.
What Exactly is Skill-Based Hiring? (Beyond the Buzzwords)
At its core, skill-based hiring is an approach that emphasises a candidate's demonstrable abilities, core competencies, and inherent potential over solely relying on traditional proxies like specific degrees, rigid years of experience, or a highly conventional career path. It focuses on objectively assessing the critical skills (both technical and soft) a role truly demands, and how a candidate can apply their knowledge and experience.
It’s about complimenting essential questions like: "Where did they gain their experience, and what specific qualifications do they hold?" with: "Can they effectively [manage a complex derivatives portfolio / interpret new regulatory guidelines / build robust fraud detection models]?"
This approach typically involves:
- Deconstructing Roles: Breaking down a job into the specific, measurable skills and competencies needed for success, rather than just a list of responsibilities.
- Objective Assessment: Designing interview questions, practical exercises, or assessments that directly test those identified skills.
- Considering Potential & Learning Agility: Looking for candidates who demonstrate an ability to learn and adapt quickly, even if they lack an exact match in traditional experience.
The Attraction vs. The Unvarnished Truth.
While skill-based hiring holds significant promise, it's crucial to weigh those aspirations against the very real operational and strategic challenges it presents, particularly in highly regulated sectors in Financial Services.
The Potential Attraction (Why the Industry is Talking About It):
- Access to Broader Talent Pools: It can open doors to candidates from non-traditional backgrounds, or those with highly transferable skills, potentially addressing talent shortages in niche areas.
- Improved Quality of Hire (Potentially): If executed well, assessing actual capability can lead to hires who are a better functional fit and add a diverse perspective.
- Reduced Bias: Focusing on objective, demonstrable skills can, in theory, mitigate unconscious biases that might creep into traditional, unstructured interviews.
- Future-Proofing: Identifying learning agility might help build a workforce more adaptable to rapidly evolving industry demands (e.g., AI integration, new FinTech). It can also improve employee retention.
The Unvarnished Truth (The Realities & Obstacles):
- The Mindset Shift Isn't To Be Ignored: This isn't a small tweak; it challenges decades of ingrained hiring habits. Hiring managers are accustomed to leveraging pedigree and direct experience as initial filters. Moving away from this comfort zone involves real perceived risk, especially when the stakes are high.
- Regulatory & Compliance Non-Negotiables: For many roles in FS (e.g., licensed traders, qualified actuaries, senior compliance officers, audit partners), specific certifications, legal qualifications, or direct regulatory experience are not just "preferences" but mandatory requirements. Skill-based hiring cannot, and should not, circumvent these legal and ethical obligations.
- Perceived Workload & Risk for TA's / Hiring Managers: Increased Screening Complexity: Without traditional filters (university, years), the initial application volume might seem overwhelming, fearing it will swamp already busy TA teams and hiring managers with unqualified resumes.
- Assessment Design & Execution: Creating truly objective, valid, and efficient skill assessments (e.g., case studies, simulations) is time-consuming and requires real consideration and planning.
- Risk of "Getting It Wrong": The fear of making a costly mis-hire on a less traditional candidate can be a significant deterrent. This might seem small, but it's a genuine barrier.
- Remuneration & Internal Equity: This is a real concern. How do you fairly compensate a highly skilled individual with a less traditional background when they're working alongside colleagues with extensive, recognised experience at the same level? This can create significant internal friction and salary band challenges.
- Onboarding & Development Burden: If you hire someone with high potential but "less traditional" experience, are hiring managers and their teams genuinely prepared and resourced to provide the necessary onboarding, up-skilling, and mentorship? This requires a significant time investment that current team structures might not easily absorb.
- Devaluing Proven Paths: For many roles in FS, graduating from a reputable university with a relevant degree, and accumulating experience at established firms, provides a strong, reliable indicator of foundational knowledge, discipline, and industry understanding. Dismissing these entirely would be a disservice to valuable talent pipelines.
Finding the Fit: When (and If) Skill-Based Hiring Makes Sense for Your Roles.
Given these realities, skill-based hiring is most valuable when applied strategically and selectively. It's about identifying where its benefits genuinely outweigh the implementation challenges, rather than a universal adoption.
Assessing Which Business Functions & Roles Are "Skill-Basable" for Your Firm:
You can evaluate roles by deconstructing job requirements and differentiating between non-negotiable foundations and assessable skills.
- Category A: High Skill-Based Potential (Where demonstrated skills lead):Roles where core abilities (analytical, technical, problem-solving, behavioural) are highly transferable, and where deep financial services-specific regulatory knowledge can be quickly acquired or up-skilled.
- Examples in FS: Technology roles (FinTech, RegTech): Data Analysts, AI/ML Engineers, Cyber Security Analysts, Software Developers. Operational & Process-Oriented roles: Process Improvement Specialists, Junior Business Analysts (focused on process), Change Managers.
- Category B: Hybrid Approach (Credentials + Skills are equally critical):Roles where specific licenses, certifications, or core domain knowledge are essential foundations, but success heavily relies on how those are applied, along with critical soft skills (e.g., communication, leadership, problem-solving).
- Examples in FS: Mid-to-Senior Compliance Officers (must have regulatory knowledge, but also strong application, communication, and influencing skills), Experienced Auditors (CPA/ACCA required, but ability to critically analyse, identify discrepancies, and manage teams is key).
- Category C: Predominantly Credential/Experience Driven (Where skill-based is supplementary):Very senior, highly specialised, or legally mandated roles where a long track record, specific licenses, and deep, context-specific industry knowledge are often non-negotiable prerequisites. For these, skill-based assessment can still help differentiate top candidates among those who meet the strict traditional criteria.
- Examples in FS: Chief Compliance Officer, Appointed Actuary, certain highly specialised front-office trading roles requiring very specific market access experience.
Taking the First Steps: Practical Pilot Approaches (If It's Right for You).
If, after a pragmatic assessment, you believe skill-based hiring could offer a strategic advantage for specific roles, here are some smaller, practical steps to begin exploring its potential without a full-scale overhaul:
- Identify a Pilot Role: Choose one or two roles in Category A or B where you face consistent talent shortages, or where you suspect traditional filters might be unnecessarily limiting your options.
- Collaborative Role Deconstruction: Work closely with the hiring manager and a top performer in that pilot role. Instead of just reviewing the existing JD, engage in a focused discussion: "What are the top 3-5 things someone must be able to achieve or do to succeed here, regardless of their specific background?"
- Refine Your Job Descriptions for Clarity: Based on these core skills and outcomes, re-craft the JD for your pilot role. Focus on what the person will achieve and contribute. While still clearly stating essential credentials (e.g., "CPA qualification required"), emphasise the skills needed to perform the job effectively. This helps filter out inaccurate applications by clearly defining expectations.
- Pilot a Targeted Screening Question: For your chosen pilot role, include 2-3 brief, mandatory application questions that directly assess a critical skill or foundational knowledge point. For example, for a Junior Risk Analyst: "Describe a real-world scenario where you used data to identify a potential financial risk. What was the outcome?" (short text response). This can be a highly effective, low-effort filter that provides early insight.
Designing the Gateway: Accurate JDs & Smart Initial Screening.
Optimising your initial application gateway is crucial to ensure you're attracting the right talent for skill-based roles without overwhelming your teams.
DIY (Human-Led) Approach for JDs & Screening:
- Focused JD Review: Conduct internal sessions with hiring managers to strategically rewrite JDs for pilot roles, emphasising outcomes and core skills.
- Manual Screening Grids: Develop clear, skills-based metrics for initial resume reviews. This allows TAs to efficiently assess candidates against identified core skills and non-negotiable credentials.
- Standardised Phone Screens: Implement brief, skill-focused questions for initial phone screens by TA, ensuring consistency and a quick check for key competencies.
AI-Enhanced Approach for JDs & Screening (as a Supporting Tool):
AI can provide analytical support for these initial steps, but human oversight is a must. Use AI to optimise your Job Description in line with a Skill-Based hiring approach, and for generating initial screen questions as part of the application process and screening calls, as a first and second line of filtering.
AI for JD Optimisation (prompt)
"Rewrite the following traditional job description for a [Job Title] in a [Business type] firm. Focus on skill-based language, highlighting core competencies and desired outcomes rather than just responsibilities and rigid requirements. Ensure it attracts talent with relevant transferable skills while still acknowledging the ESSENTIAL REQUIREMENTS for [insert essential requirements, e.g., 'CPA qualification' or 'SFC Type 1 license']. Output should be concise and engaging."
AI for Initial Screening Questions (prompt)
"For a [Job Title] role in a highly regulated [insert business type] environment, suggest 3-5 brief, mandatory application questions that can serve as initial filters. These should assess the ESSENTIAL requirements and the core demonstrable skills directly relevant to the role's success. Focus on questions that can be answered concisely."
Human Oversight Remains Crucial. AI provides a valuable starting point, but human judgment is absolutely essential for:
- Validating AI's output with contextual knowledge of the company, team dynamics, and specific regulatory environment.
- Defining the precise "thresholds" for initial screening and the ultimate "fit" for your organisation.
- Conducting the critical in-depth assessments that follow.
The Journey Ahead...
Embracing skill-based hiring is a journey, not a switch, and it requires thoughtful planning, internal champions, and realistic expectations. It promises a more effective, equitable, and future-proof approach to talent acquisition in Financial Services, but it's a strategic choice with clear investment requirements.
We'll delve deeper into the significant practicalities of this journey, in future blogs. You can expect us to cover;
- Redesigning your interview process for authentic skill assessment.
- Effective training strategies for hiring managers.
- Addressing the complexities of remuneration and internal equity.
- Optimising onboarding and continuous development for new hires with diverse backgrounds.
Recent Posts

Social Share








