COMPLIANCE JOBS IN 2018? · 2018-10-16 · A CAGIG MARKET: WAT’S APPEIG TO LODO COMPLIACE JOBS I 2018? 01 It’s been an offbeat year so far for the compliance contract market.

WHAT’S HAPPENING TO

LONDON COMPLIANCE JOBS IN

2018?By James Batters

Compliance Recruitment Consultant

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A changing market: What’s happening to London compliance jobs in 2018?Can the continual spend on compliance in the City be sustained for much longer?Reduced product offerings against increased spendingBrexit signifying the time for cost saving Views of the European Head of a leading Compliance Certification AssociationA challenging time for the compliance sectorAdvice from a compliance recruitment consultant

A CHANGING MARKET: WHAT’S HAPPENING TO LONDON COMPLIANCE JOBS IN 2018? 01

It’s been an offbeat year so far for the compliance contract market. Like for like vs 2017, we have seen the number of day rate contract compliance roles drop significantly - is it just a blip? Or has the once titanic compliance job market struck a summer iceberg?

We are going to focus specifically on one of the most challenging areas of the market this year - KYC, and will precisely be looking at how this has changed over time in London.

We will explore the root causes of this, and look at how it could affect the wider compliance job market.

A CHANGING MARKET: WHAT’S HAPPENING TO LONDON COMPLIANCE JOBS IN 2018?


The year of 2012 held a major boom for compliance. The new, heavy handed penalties from regulators in the post financial crisis period saw demand for compliance professionals soar, and the supply not even coming close to keeping up.

To entice graduates into the field, basic salaries went up and in an attempt to hire directly from rivals, salary increases upon offer went up...and to fill the void in the interim? Contractors.

Through the next couple of years, the number of fresh faced young professionals entering the industry grew. Universities even began offering bright graduates the opportunity to take an MSc in financial crime or investigation in an attempt to tailor to industry demand.

Fast forward to 2018 and we have come to a point where, even though banks’ overall headcount has shrunk, compliance headcount had doubled. For tier-1 banks, compliance represents 3% of non-interest expenses. For small to medium sized firms, compliance takes up close to 9% of costs.

This leads us to ask the question, can this increase in spend be sustained?

CAN THE CONTINUAL SPEND ON COMPLIANCEIN THE CITY BE SUSTAINED FOR MUCH LONGER?

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Compliance Headcount (Thousands)


REDUCED PRODUCT OFFERINGS AGAINST INCREASED SPENDING

Currently, the average tier-1 bank spends in excess of $1 Billion per year on compliance and, according to a survey of over 180 senior managers across both buy & sell-side firms (Duff & Phelps), regulatory costs could double over the next five years.

Post financial crisis, we have seen a reduction in product offerings of tier-1 investment banks, with only J.P. Morgan remaining truly tier-1.



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Investment Bank

FICC

Equities

G10 Rates

G10 Foreign Exchange

Global Revenue(USD Billion)

EM Macro

Credit

Secuntization

Commodities

Muncipal Finance

Cash Equities

Equity Derivatives

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Two Strongest Performers current year vs. Previouse year at constant exchange rate CRISIL Coalition’s League Table analysis includes the Top 12 Banks at the Corporate $ Investment Banking level globaly.The following tiering applies

IBD

Rank 1-3 Rank 4-6 Rank 10-12Rank 7-9 Not Active/Analysed (Source: https://news.efinancialcareers.com/uk-en/256351/tier-1-tier-2-tier-3-investment-bank)

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https://news.efinancialcareers.com/uk-en/256351/tier-1-tier-2-tier-3-investment-bank



If offering certain products becomes unmanageable due to compliance risk vs reward, could we see yet a further reduction in product offering from the top banks? Certainly before turning away from business, the first option is to cut operational costs where possible. This is what I believe to have already begun in the on-boarding space, and will continue into the rest of the compliance market.

Prime examples of this are firms offshoring or nearshoring the basic CDD, taking these jobs away from the expensive capital. We have seen the likes of Citi, J.P Morgan, Deutsche Bank and Barclays move teams out to Belfast, Bournemouth, Birmingham and Manchester respectively.


BREXIT SIGNIFYING THE TIME FOR COST SAVING

I believe that this increase in spend is unsustainable at the current rate, and that the

aforementioned nearshoring is the first evidence of this. My prediction is that the

compliance market is about to go through all of the typical cost saving methods that

departments like ‘contact centers’ and (to a certain extent) IT have seen before.

This will include:

• The offshoring of rudimentary tasks, CDD refresh etc.

• Gradual training and development of these foreign hubs. With upskilled staff

more complex actions can then be offshored such as EDD and financial crime.

• Investment into technology, rather than headcount.

• Further automation of processes, and tasks such as assurance & surveillance.

Brexit will no doubt have a huge effect on the UK job market. Although there is

uncertainty about how the final ‘deal’ (or no-deal) will manifest, what we do know

is that the majority of large banks in London are already hiring Brexit planners and

creating contingencies for almost every possible outcome.

The preferred locations for moves seem to include Ireland for big US banks and

Frankfurt for large EU banks. Luxembourg is also a notable option for many, and, along

with Frankfurt, is a very strategic location geographically for attracting the top talent

on the continent.


THE VIEWS OF EUROPEAN HEAD OF ALEADING COMPLIANCE CERTIFICATION ASSOCIATION

To further evidence this probable prodigious traversal of the English channel by banks, I interviewed the European Head of a leading Compliance Certification Association, one of the leading membership organisations dedicated to the international prevention of money laundering.

James: “Can you provide any statistical information of the growth of the compliance market, perhaps number of market leading compliance certificate holders or new applicants year-on-year from 2012 to 2018?”

“Certified members of our association are growing at around 50% per year. This is a huge level of sustained growth, largely down to the international recognition of the Compliance Certification.”

In the near future, having an internationally recognised certification could pay dividends should banks move abroad and candidates look to work remotely or relocate.

This growth could also be a sign of a poor job market;

James: “Have you seen the number of applications abroad rise during this period, perhaps in Eastern Europe? Do you have any statistics you can share on this?”

“In Lithuania/Estonia/Latvia (Baltic states) the number of people certifying is 400-500% higher than the rest of the world average. Lithuania seems to be setting itself up as compliance center of excellence. Poland has been like this for a couple of years now, with 200-300% over the last 2 years.”

“More people than ever are applying for our certification, knowing that in today’s job market, a person needs to develop themself as much as possible to succeed.”

“”


THE VIEWS OF EUROPEAN HEAD OF ALEADING COMPLIANCE CERTIFICATION ASSOCIATION

Another notable comment made on this was that Vendors, the banks themselves, have a big presence. They are actively training and upskilling their staff specifically in these regions.

James: “Do you have any advice on how a more junior candidate could differentiate themselves in this saturated market?”

“Candidates should aim to gain a Compliance Certification after 1-2 years of work experience. I recommend they join their local AML networking group (our association runs chapters in most EU countries, free of charge and arrange meet-ups). You must self drive your own development.”

James: “What effects do you believe major upcoming geo-political change (such as Brexit) will have on the compliance industry?”

“We are seeing large UK based firms taking out banking licences in other cities (Frankfurt/Paris), as well as expanding premises in Poland significantly. Firms are changing their corporate structure to include Luxembourg and Ireland more, or even establishing full entities in these locations.”

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A CHALLENGING TIME FORTHE COMPLIANCE SECTOR

With the cost of compliance growing each year, and with no sign of regulators loosening their grip, banks are being forced to look for ways to cut operational costs.

We are seeing the early signs of this with more limited roles already moving away from the capital, and major plans being in place to move further departments abroad, with banks upgrading both their Eastern European infrastructure as well as upskilling staff in advance. Brexit appears to have added some impetus to the dissolution of the London compliance job market.

Technology and automation also appears to be a potential threat to some headcount, although there will always be a need for someone to write the rules and monitor performance of the machines. Technology solutions are often touted as the largest threat to jobs, and whilst this is a growing area in spend, and would naturally offer a lower overhead (once up and running) than people, I do not believe it is currently as large a threat as made out.

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A CHALLENGING TIME FORTHE COMPLIANCE SECTOR

Just look at the Thomson Reuters cost of compliance graph - only one third of over 900 senior compliance professionals foresee more involvement in reg-tech, a significantly lower number than all other surveyed areas.

69%

60%54% 52% 51%

48%

33%

5%0 %

10%

20%

30%

40 %

50%

60%

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Over the next 12 months I expect more compliance involvement in...

Implementation of a demonstrablycomplaint culture

and tone from the top

Assessingeffectivenesof corporategovernance

arrangements

Liaison with andup-skilling of

senior managersand board

Setting of complaince

budget and other risk management

resourcing

Setting of risk appetite

Assessing cyberresilience

Assessing fintech/regtech

solutions

Other

source:https://blogs.thomsonreuters.com/financial-risk/risk-management-and-compliance/cost-of-compliance-report-2017-is-there-a-new-risk-approach/

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https://blogs.thomsonreuters.com/financial-risk/risk-management-and-compliance/cost-of-compliance-report-2017-is-there-a-new-risk-approach/


A CHALLENGING TIME FOR THE COMPLIANCE SECTOR

I am keen to stress that it’s not all doom and gloom!

I predict that smaller banks, UK entities of foreign banks and other mid-sized financial

services firms such as brokers, payments providers and insurers will remain largely

domesticated due to not having the pre-existing infrastructure or capital to set up

abroad.

These areas will see better performances job-wise, although there may be a shift away

from day rate contracts to fixed term contracts and permanent roles.

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ADVICE FROM A COMPLIANCE RECRUITMENT CONSULTANT

Carry on developing yourself where you can; look to certifications from leading bodies such as ACAMS, the ICA, or CISI as it will not only build on your knowledge but also help to get your CV to stand out amongst the crowd.

Be patient in a difficult market - there are more candidates and less roles. Be prepared to be involved in multiple interview processes at one time in order to give yourself the best possible chance of securing a good job offer. If you aren’t succeeding at first, don’t panic - you most likely aren’t doing anything wrong.

Consider different options; whilst it’s always commendable to ‘stick to your guns’ on what you are looking for, this may be the time to look at different types of roles. We are seeing a large increase in the number of fixed term contracts vs day rate contracts. If you have never considered this before, now would be a great time.

If you have only worked for global banks in the past, consider your options with

different types of firms. You may find that the less siloed approach they offer and

often more high-risk appetites may well add a new string to your bow.

I’m always happy to have a friendly and informal conversation about the pros and

cons of career choices, and offer my own advice. Feel free to reach out to me if you

would like any further information.

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JAMES BATTERS

COMPLIANCE RECRUITMENT CONSULTANTT: +44 207 092 0281E: [email protected]

For information on how to price yourself in today’s job market, check out our salary guide here:

https://www.morganmckinley.co.uk/article/2018-compliance-salary-survey-guide

To see our compliance team’s Q2 review, click this link:

https://www.morganmckinley.co.uk/article/compliance-recruitment-kicks-throughout-q2-2018

To browse live compliance jobs with Morgan McKinley, take a look at this page:

https://www.morganmckinley.co.uk/compliance-jobs

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ADVICE FROM A COMPLIANCE RECRUITMENT CONSULTANT

https://www.morganmckinley.co.uk/article/2018-compliance-salary-survey-guide

https://www.morganmckinley.co.uk/article/compliance-recruitment-kicks-throughout-q2-2018

https://www.morganmckinley.co.uk/compliance-jobs


CONTACT US

Morgan McKinley | 61 Aldwych | London | WC2B 4AE

+44 (0)20 7092 0000 [email protected]

morganmckinley.co.uk

COMPLIANCE JOBS IN 2018? · 2018-10-16 · A CAGIG MARKET: WAT’S APPEIG TO LODO COMPLIACE JOBS I 2018? 01 It’s been an offbeat year so far for the compliance contract market.

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