Even though multiple hurdles have been thrown at the market over the course of this year, 2017 has been very positive for recruitment in the financial services arena.
For example, there was an unexpected general election in the UK in June weakening the government’s bargaining position along with the continued lack of clarity around leaving the EU, which should have slowed things down. However, with the impending MiFID II deadline, many firms have continued to hire in this space and some have also started to act to stay ahead of the curve on Brexit, with many opting to set up the internal infrastructures to tackle this mammoth task.
The confidence to progress with anything beyond mandatory projects has been weak with limited investment going into Greenfield initiatives. Therefore the demand has remained high for regulatory professionals with it peaking around the start of July and has remained consistent right into early Q3. We have also seen an appetite for change management professionals across a wide range of clients and not just the big players, improving the overall sentiment within the market. With the deadline of January 2018 coming ever closer, there had been a rush at the start of Q3 from organisations to secure the best talent to fast track their delivery. Those candidates with a deep understanding of the regulatory requirements, strong product knowledge and an implementation background have been hotly sought after, with rates increasing dramatically for the most experienced. As expected, the demand in this space has started to taper off as we move towards the end of the year as most of the work streams head into the delivery phases of these initiatives.
The demand profile from clients has been changing over the past 12 months with contract still remaining the core focus, however we are seeing an increasing amount of permanent and fixed term requests coming through. The Asset Management space has seen the biggest in this mindset and one large banking institution is leading the way, with a very high percentage of their change function employed as FTE’s.
Demand in the compliance change space has slowed dramatically through this year; most organisations are now close to the ‘business as usual’ stage which can be delivered with their existing teams. It has been a huge growth area over the last three or four years, so naturally it would curtail as the projects are fully mobilised and nearing completion. Most of the roles recently have been through resource replacement rather than a growth in project teams.
Future pipeline in the compliance change space is limited with many of the change and BAU roles being driven out of more cost effective locations as they enter into final stages of deliveries. The only major increase in demand in hiring continues to come from a large European bank, where they are running a large client onboarding initiative.
The strongest area of demand has remained in the regulatory space, with much of the hiring coming from MiFID II projects throughout the year. As we enter the latter stages of these programmes, there has been an increase in the demand for strong regulatory change professionals with experience of testing, specifically within trade and transaction reporting work streams.
A number of mid tier banks and hedge funds have either staggered deadlines for their MiFID II deliveries or they are behind on their programmes. We have seen a recent increase in demand from these houses looking to bring strong business analysts and regulatory leads to aid their regulatory deliveries. As the Tier 1 Banks look to wrap up and focus on the delivery date in January, there will be an inevitable reduction in the size of these large change teams as we move into next year. Some of the candidates with experience of working on best execution, investor protection as well as costs and charges work streams can expect to have their MiFID II shelf life increased with a shift to the mid tier banks. Others are likely to stay on to work on a string of remedial work that we expect to go on for another 6 to 12 months post delivery. A lot of the banks will also look to move a high proportion of these resources onto Brexit and their ring fencing initiatives.
Outside of this mandate, we have seen an increase in requirements for GDPR as firms rush to meet regulatory expectations of May 2018. One noticeable difference we have seen is organisations placing continued emphasis on creating synergies between their mandated regulatory change initiatives and their internally driven strategic change ambitions. This has resulted in a growth of strategy teams to sit across the organisation with a holistic view of their change agenda and making the most out of the regulatory budget.
Finance change has remained slow throughout Q3 of 2017 as the regulatory demands coming from MiFID II have squeezed budgets across the banking industry. At the same time there appears to be an air of consolidating finance functions rather than embarking on large scale architectural or process changes. The second area of hiring has been around ring fencing. The separation of retail and investment banking has meant a change within finance architecture with new legal entities needing their own systems and reporting processes.
The hiring here however has been limited, with most growth being done last year. The future of finance seems to be about the cleaning up of architecture. With changed structures, newly implemented regulations and the allure of new technologies (such as cloud based ledgers), we expect most large banks to look into cleaning up their data, automating processes and updating their finance offering. Exactly how much budget they can secure and what projects they actually initiate remains relatively uncertain.
Even though the delivery date for MiFID II is coming ever closer, it still remains a big focus in the asset management world. Lots of firms seem to be ahead of the curve compared to their investment banking counterparts, but there will be a lengthy period of remediation in 2018 before it moves into business as usual.
Other regulatory work where we have seen hiring has been around the Central Securities Depositories Regulation (CSDR) as businesses scope out how it will affect them and what areas the analysis needs to focus on. Places recruiting for candidates with T2S experience have slowed down massively this year as it comes close to the tail end of the mandate in quarter 1 of next year.
A global custodian continues to hire for its multi-year asset servicing, but this isn’t quite at the levels it has been over the previous two years. This is due to phase 1 coming to an end over the next few months, so all the focus has been around getting this over the line rather than recruiting for phase 2 as well. We expect there to be a lot of recruitment activity around this piece of work from December onwards, so business analysts with corporate actions and income experience could be highly sought after.
One of the large asset managers have moved their focus more to the permanent market as they look to redress the high percentage of contractors in their change division. As this area is mainly made up of technical change people, they have been looking for more business focused project managers and business analysts for a range of programmes.
Initiatives around cash management, legal entity set ups and fund launches have also seen some demand from the buy side firms for strong candidates. As we are in budget season now, this has slowed down slightly but we expect things to pick up in the New Year.
There has been a steady decrease in hires within risk change through Q3 as many of the major banks recoup and prepare budgets for 2018 hiring. A big driver of hiring for the first half of the year had been IFRS 9, with one British bank in particular recruiting heavily into their model governance work stream. Recruitment into this area has since dried up as the delivery date draws nearer. Other areas that have quietened down significantly across financial services are BCBS 239 and CRD IV, as resources for both projects are now in place.
The one area hiring that has been consistent throughout the year is FRTB – whilst it hasn’t been as big a driver as recruiters and candidates alike would have hoped for, it appears that banks are taking the regulation very seriously, which does bode well for 2018. There has been a lack of urgency to get these roles filled largely due to a combination of the deadline for FRTB being pushed back along with having to compete for budgets with MiFID II. Our opinion is that hiring will pick up in the latter part of the year as banks start delivering on MiFID II and get highly paid contractors off their books, which should free up funds for hiring within FRTB.
British, German, American and banks based out of Asia have all been hiring contingent and permanent resources. For instance, a new programme manager for FRTB at a Japanese bank based in the City has recently been appointed, so in general, prospects for hiring next year are looking good.
Risk change also expects to see 2018 hiring driven by Brexit programmes. A major investment bank based in Canary Wharf already has this as their highest priority programme for the foreseeable future and we would expect other organisations to follow suit as the UK’s Brexit negotiations become clearer. To summarise, it has been a quiet Q3 and will likely be a slow Q4, but there seems to a lot of talk around it being a big year for risk change in 2018.
We have seen a steady increase in demand from the market in permanent requirements and this theme has continued to develop through 2017 with expectations for this trend to continue into next year. Many of the banks are looking to fill core positions within the programmes with permanent resources and have a team of contingent resources working under them. This is as a result of a strong push towards cutting costs along with the desire to retain high calibre candidates.
The biggest increase has been in the asset management sector but all Tier 1 investment banks and retail banks have been demonstrating an increase in the appetite for these types of employees. As we reach the tail end of Q3, we expect majority of the permanent hires to slow down until early Q1.
One British based bank has been recruiting heavily at the AVP level (anywhere between £50K and £70K), and their VP level salaries have been £80K - £100K for a variety of roles across ring fencing, strategy, Brexit and FRTB initiatives.
Overall 2017 has been a good market so far for change resources with specialised knowledge in the current hot regulations. Front office and consultancy experience has also been in high demand from both the investment banks and asset managers, and this will continue for the foreseeable future. Outside of this, and in particular in finance or operational change, it has remained a challenging market for most people in these areas. Hiring has definitely slowed down as we move into budget season but we expect this to be just a short term issue and things will pick up again in January.
The industry is showing signs of opening up to a broader spectrum of skill sets and we would expect this to provide options for people outside of the regulatory fields. This is due to the upcoming deadlines early next year and firms being able to focus their attention more on other initiatives such as Brexit, GDPR and ring fencing to name a few. Consultants with a strong track record of delivering change within global banks coupled with experience of legal entity restructuring, offshoring, operating model design or technology change are likely to be sought after as programmes around the UK leaving the EU ramp up. Basel IV is also already on the cards and a couple of banks have large plans for restructuring their finance, risk and treasury functions.
As mentioned above, permanent hiring has seen a huge increase as banks look at longer term solutions to be more cost effective in the future. If you are looking for job security, it could be worth exploring this option as well as contract.