Some of the challenges in the market from Q1 have carried over to Q2 of this year, with some Investment Banking clients still aiming to reduce headcount and save on cost.
However, there has been some movement on this front, with Barclays announcing at the beginning of the Quarter that they had achieved much of their headcount reduction targets. Most clients have also made strides in moving away from capital intensive trading activities, in some cases in the face of criticism from within the Investment Banking world. Most analysts agree that the capital requirements regulations make this the smart move for the big players.
Britain’s Exit of the EU is obviously the big topic of discussion at the moment. There has been a lot of speculation on what the implications are for the market, and it remains unclear what the longer-term landscape is going to look like in a general sense. While the short-term economic fallout of the decision may add pressure to budgets and headcount, in the medium and long-term, the feedback from senior clients has been that the market will stabilize, and we will be back to business as usual, barring an unlikely run on the banks. One thing that we can be certain of is that all of the major regulatory initiatives currently roadmapped for delivery will go ahead, and remain unchanged.
In demand areas in Q2:
It’s not going to be a surprise that activity in the Finance Change market has in large part been driven by regulatory initiatives in Q2, however there has been some activity on strategic Programmes too.
IFRS 9 has seen the steadiest flow of jobs in Q2. Heavy investment in consultancy services means that programme plans and target operating models are broadly developed, leading into several clients initiating the implementation phase or at the very least, ramping up for delivery. Some firms remain behind the curve, having faced architectural issues with data quality, which has left the pressure very much on for the January 2018 delivery date. Demand for implementation skillsets in this area has slowly begun to surface, and should be a growth area coming into Q3.
The other key regulatory deliveries are LCR and NSFR, although the challenges presented are quite different- ongoing changes to the regulatory requirements, and re-interpretations of the impact of the new liquidity regulations, and constant deadline-shifting. Recruitment in this area is, however, a slightly simpler affair, the challenge being a limited pool of talent with the requisite SME knowledge. The key skillset demand is fairly standard, a solid understanding of treasury and liquidity with sound problem solving skills.
Another demand area for finance has been for Product Control Change. Demand has been driven by one key player embarking on a strategic Finance Architecture overhaul. This demand has been driven by a common trend towards shrinking trading books and speedier and cleaner data, product control change seems as ever to be safe bet for a long term in demand skillset.
In demand areas in Q2:
The ops market, normally a high-volume area at this time of year, has seen a sluggish Q2. A reasonable volume of roles have been released in comparison to other areas, but many of the recruitment processes have remained slow-moving. There has been a significant increase in candidate supply so far this quarter (in line with our recent report of a 36% increase in candidates looking across the board).
The richest vein of jobs in Q2 this year has been MiFID 2 - with half a year passed since the deadline shifted, most clients are now into delivery phase. There has been heavy demand for Business Analysts in this arena, as well as some Project Management requirements, on both contract and permanent roles. Roles have been focused on two main aspects of the regulation - Front Office Control/Conduct based work (Best execution, Investor Protection etc.), and Transaction Reporting.
Another area that has seen some activity has been Ringfencing, with demand for candidates with TOM experience, and a solid appreciation of banking structures Front-to-Back, as well as experience with issues such as customer journey, and front-to-back flows. With most high-level plans in place and confirmed by the regulator, the majority of the work this quarter has centred around defining operating models in more detail, and solving the business-driven issues of offering a unified service to clients via two separate entities.
Finally for Operations, there has been demand for Process change, LEAN Process Improvement, and other cost-reduction based roles. Unsurprisingly in the current market, there have been several cost-reduction based initiatives, as well as demand for automation and efficiency related skillsets due to pressure on headcount across the board.
In demand areas in Q2:
The first half of 2016 has been very quiet as a whole but in risk change this has been the case even more so, there have been a number of reasons that have led to this. Brexit, the pushing back of regulatory dates and the general state of certain banks' prize decline in share prices.
Throughout the first 6 months in risk change there have been almost as many credit risk roles as there have been market risk, however operational risk has been fairly quiet.
The pushing back of FRTB in particular has slowed down the recruitment and in some cases it has stopped recruitment altogether. Two major banks have had their budgets slashed by 75% with the promise towards the back end of this year or early next year they will hire heavily.
Hiring into IMM programmes has been big in 2 major banks in particular, especially with both CEM and SM being replaced with SA-CCR. Hiring managers have as a rule required a strong quantitative background.
Stress testing was another area that was predicted to be busy at the bank end of last year, this hasn’t materialised however the few roles we have had out in this area have required prior exposure to CCAR or FDSF.
There has been a dramatic increase in the number of banking book roles particularly in credit risk in comparison to 2015, the roles have been very data focused e.g. BCBS 239 or working on stress testing programmes. Hiring managers have looked at individuals with strong recent exposure to banking book products only. There has also been a small surge of hiring in data architecture change roles - focusing on data quality and creating structures where any remediation is dealt with in real time.
In demand areas in Q2:
Activity in the Custody, Asset Management and Asset Services Markets has been steadier than the Investment Banking world. There has been a slight dip in activity due to poor economic conditions, but the impact is much less prevalent without the big unknowns of the IB world (impact of capital adequacy, scale of regulatory delivery, strategy changes for the Investment Banks).
The majority of work in the Asset Services world has been large-scale systems change, for Corporate Actions and Order Management Systems - these have been consistent areas of demand over the course of several quarters and have remained so in Q2.
There has been a lot of demand in the Payments area, with the need to increase transparency and diversify their product offering, firms have elected to invest in improved payments infrastructure, Demand Deposit Accounts and and Digital Transformation in the payments area.
This sector has felt the impact of poor economic conditions however, and cost reduction initiatives have also been in demand, with a focus on strategic long-term process improvement initiatives rather than quick-win driven small scale changes.
In demand areas in Q2:
So far this year, Compliance has been the one area of recruitment that has kept a steady flow of demand from the big banks. In Q2 this year, we have seen a mix of Business Analyst and Project Management roles focusing on KYC and Onboarding, Regulatory Compliance and Financial Crime Compliance.
KYC roles have focused on data mapping, Target Operating Model, and Policy implementation. Within Financial Crime, demand has newly come in for Anti-Bribery and corruption candidates, as well as a steady demand for generalist Financial Crime skillsets. The Regulatory Compliance space has seen a broad range of skill sets in demand, candidates with experience of Conduct Risk, MiFID II or FATCA have tended to be more successful in attaining interviews. The key to success in Compliance also seems to pin on longevity, headcount has increased for most compliance functions, but knowledge retention is key to success at this point in time.
Concerns over the high-profile nature of legacy issues have led to a serious focus on delivery structures and process optimisation within compliance, as increases in headcount haven’t always led to efficient management of incidents.
The FCA has publicly committed to pursuing cases against individuals, and now that the Senior Managers Regime has come into force, with attestations ongoing, Compliance is likely to remain a key area of recruitment for the banks. The sentiment in the market is that Anti-Money Laundering and Anti-Bribery and Corruption is likely to remain a key area moving to the second half of the year.
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