So far, 2017 has been a very tumultuous year for recruitment in financial services with multiple hurdles thrown into the market over the course of the last seven months.
We have seen an unexpected election in the UK weakening the government’s position, along with the prospect and lack of clarity around Brexit weighing heavily on minds of the strategic decision makers. Macro economics has seemed to have had a greater impact on hiring perhaps due to the ever growing links between businesses and the world around them or perhaps because there is greater scrutiny than ever before from senior management about what’s happening within their businesses. Even with these effects however, the underlying demand has seems to have remained robust.
We have only seen one slow down in Quarter 2, which was during the Easter break and May Day bank holiday period. The confidence to progress with anything beyond mandatory initiatives has been weak, however the demand has remained high for regulatory professionals with it peaking around the start of July. 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.
MiFID II has continued to be the main driver for this buoyancy and the demand for these people has been strong across the market. With the deadline of January 2018 coming ever closer, there has been a rush 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. There is an expectation though that the demand in this space will start to taper off towards the end of Q3 as most banks should be fully staffed by then.
The demand profile from clients has been changing recently; contract still remains 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 most increase in Perm/FTC and one large banking institution is also leading the way in this type of recruitment with a very high percentage of their change function employed as FTE’s.
Demand in the compliance change space has slowed dramatically; most organisations are now close enough to the business as usual stage that they are able to deliver with existing teams. It has been a huge growth area over the last three of 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 the only major increase in demand coming 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. MiFID II projects are in full flight and in line with their 2018 deadline, with a few organisations looking for very specialist positions across the programme to meet the requirements. Outside of this mandate, we have seen an increase in requirements for GDPR and CSDR as firms rush to meet regulatory expectations. One noticeable difference we have seen is organisations putting more 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 the first half of 2017 and the regulatory demands coming from MiFID II have squeezed finance change 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.
Having said that there have been a couple of areas which have driven hiring. The impending IFRS 9 regulation has seen some growth among British banks across both permanent and contract recruitment although this has slowed as we head into the implementation phase of the programme. There is already talk by the regulators about bringing greater homogeneity among the various banks which could see a “day 2” programme throughout next year. Our best guess however is that IFRS 9 teams will remain the same to get that work completed and shouldn’t necessitate further growth.
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.
We have seen a increase in M&A activity in Asset Management as companies merge to combine their forces and gain market power. This has led to a level of uncertainty for many within the industry but has created some change programmes to help navigate the switch of systems and operational processes.
MIFID still remains a huge focus, although not as widespread as the Investment banking industry. With no MIFID I frameworks in place, a lot of Asset Managers who under estimated the regulation have had to make quick adjustments to ensure they have adequate resources in place to deliver this initiative. A lot of this has been well synergised with the wider fund strategies and the necessary changes that occurred when the regulations were implemented.
The first half of the year has been steady from a Risk Change perspective. For quite some time now, we have been waiting in anticipation for the spike in hiring due to FRTB. Unfortunately this hasn’t transpired in the manner both job seekers and recruiters alike would have been hoping for......yet!
This is largely due to the budgets within financial services being geared towards MIFID II, amidst the rapidly approaching deadline of next January. Despite this, there has been some movement in preparation for FRTB across banks and consultancies on both contract and perm basis.
On the contract side there has been less hiring than expected within FRTB, but we have seen some of the major players releasing jobs at day rates of £600 - £750 per day. There is however a lack of urgency to get these roles filled largely due to a combination of the deadline for FRTB being pushed back and as mentioned previously, having to compete for budget 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.
Outside of this regulation, there has been intermittent hiring across BCBS 239 at one British Bank (mostly for replacement contractors who have left) and IFRS 9 at another. Most organisations have their teams in place for these two regulations though, so we don’t anticipate too much more hiring for the rest of the year, although one Bank is bucking the trend and making a number of AVP hires! There will of course also be hiring across Stress Testing, Ring Fencing and CVA, but in low volumes.
Last year saw an 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 through into 2018. 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.
One British based Bank is 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 Structural reform, strategy and FRTB.
We have seen a wider push for director level roles to work on the Brexit strategy at some of the smaller challenger banks which will look at the current state and take them forward into the unknown.
Two big four consultancies are hiring aggressively for FRTB, with their salaries ranging from £65K - £80K for a Manager and £45K - £60K for an Assistant Manager. One consultancy has stopped hiring completely within the Risk and Quant space due to a reshuffle at the senior end of the spectrum. They know that they're going to be behind the curve with FRTB hiring, but they are planning on compensating for this by upping their salary range.
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.
The industry is, however, showing signs of opening up to a broader spectrum of skillsets and I would expect this to provide options for people outside of the regulatory fields as we move through the rest of the year. 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. 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, so if you are looking for job security it could be worth exploring this option as well as on the contract.