Relentless regulations, dense data & the Tweeter-in-Chief

Firm promise of policy or off the cuff madness – you can never tell with Donald Trump. Mind you, less regulation will probably be welcomed by the investment banks, so let’s wait and see what Donny boy has up his sleeve. In 2017, we expect cost efficiencies, regulations and new technologies to drive activity across the recruitment world.

It was the year that brought us President Trump, Brexit and a perpetual merry-go-round of political resignations. To say that 2016 has been an unpredictable year would be somewhat of an understatement. In and amongst the chaos, the recruitment market took a contemplative pause to take stock of its volatile new surroundings – and activity slowed down accordingly. Flash-forward to the present day and this period of contemplation, despite the high degree of uncertainty that still exists, seems to be drawing to a close as we move towards the triggering of article 50.

Looking at the financial services sector in the short term, we continue to see widespread ‘off-shoring’ at the investment banks. This is where they are building operations functions out of countries that have a cheaper cost base, such as Poland. Although it is not all doom and gloom for the UK with back office functions typically staying in the country, through a process of ‘near-shoring’, moving away from London to other regions such as Birmingham. Other remits such as the ring fencing of investment banks and their retail arms continue to be executed by the major players, although the regulators are watching closely.

In 2017, we expect cost efficiencies, regulations and new technologies to drive activity across the recruitment world. One large constant in the last few years has been the ongoing regulatory reform of the financial system, which even pre-dates the 2008 financial crisis. Despite this long span of years, we only appear to be midway through the reform cycle, with quite some time left to run on this key driver of hiring activity. Although one potential spanner in the works can perhaps be found in the Twittersphere, where 2016’s Tweeter-in-chief (no prizes for guessing who) has expressed a desire to dismantle the Dodd-Frank Act. Firm promise of policy or off the cuff madness – you can never tell with Donald Trump. Mind you, less regulation will probably be welcomed by the investment banks, so let’s wait and see what Donny boy has up his sleeve.

Imminent regulations such as MiFID II (Markets in Financial Instruments Directive) and MAR (Market Abuse regulation) will mean a continued flurry of hiring activity at organisations where they have not managed to get their infrastructure in place. FRTB (fundamental review of the trading book), loosely defined as a set of proposals by BCBS around a framework for next generation market risk regulatory capital rules for the large international banks, will be hiring in 2017.

Technology will continue to be at the forefront of large change with the financial services arena. With growth under pressure from reduced margins and ongoing competition, firms recognise that successfully adapting to the times is crucial if they are to gain an edge over their rivals. With a continued focus on how firms should utilise their data to drive enhanced customer analytics and client centric information, 2016 was a strong year for ‘Big Data’. One trend to watch in 2017 is the rise of fintech (financial technology), with the likes of Bitcoin, the crypto currency linked to Block Chain, leading the way – their share price broke through the $1000 barrier at the beginning of January.

The mood in the business world post-Brexit is one of cautious optimism; with 6 out of 10 bosses surveyed predicting positive things to come for the market in 2017. However it would be foolish to get carried away, especially when you consider the contradictory rhetoric from economists, who are predicting further uncertainty. The French election in April seems like it could be a pivotal moment for our soon to be ex-EU club members, acting as barometer on what the European mindset may hold. Confidence counts for a lot – and faith in Britain’s economy will certainly be tested when the article 50 decision is made and the exit strategy becomes clear.

 All in all, there is plenty to play for in 2017.

Victoria Walmsley's picture
Managing Director
vwalmsley@morganmckinley.com

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