After a relatively positive year for financial technology, initial research projections suggest budgets are likely to be larger in 2011. However, with shifting spending priorities comes new areas of expansion. Here's our considered take on where the jobs will (and won't) be in the coming 12 months.
2011 could be a good year for...
Regulatory-driven tech projects:
Banks and financial services firms are battling a raft of regulation, which will spur a need for some huge compliance technology projects next year.
In its Financial Markets Technology 2011 outlook, Research and Markets suggest that regulatory changes will dominate banks' IT investment next year, with firms struggling to enhance both operational controls and data management.
This is echoed by research firm Ovum, which anticipates that significant investment in compliance and reporting systems will drive a 4.5% increase in banks financial services tech spending next year.
"They will also be investing heavily in systems that help them comply with the barrage of new regulations brought in since the global financial crisis," says Daniel Mayo, author of the Ovum report.
Already this year, banks have been building their tech teams for these projects and this looks set to accelerate in 2011.
The role of the commodities techie has been an elevated one for some time now, particularly those with knowledge of Openlink, but this looks set to continue into the new year. Recruiters suggest that they're eager to hear from "anybody in a commodities technology function" and that this shows no sign of abating.
"On the back of increased trading volumes, some of the big banks are moving away from vendor-based systems to build their own risk and trading systems, which is creating ongoing demand for technologists in the commodities sector," says Paul Bennie, director of financial technology headhunters Bennie MacLean.
A few banks, such as Credit Suisse and Morgan Stanley, have flagged prime services as a growth area this year, while the likes of HSBC launched a new division. In terms of IT projects, the work is just heating up, suggests Mark Warburton, partner and sales director at IT in finance recruiters 752 Solutions.
"Clients are telling us that prime services is an area of IT investment next year and, while we've seen some momentum in terms of recruitment so far, we expect this to pick up further in 2011," he says.
And 2011 could be a bad year for...
It may be slightly harsh to include IT contractors in the financial services sector in the going down section of both 2010 and 2011, but sadly it looks like being another tough year. There will always be specialist skill-sets in demand, but generally appetite to recruit contractors is waning.
"One of our investment banking clients has a ratio of 95% contractors working in certain divisions and there's a real need to redress this balance with permanent hires next year," says Warburton.
"We're definitely seeing the contractor market depreciating and the permanent market growing," adds James Richmond, sales director at recruiters Cititec.
The UK's ability to hold on to techie talent
Yes, it's something of a cliché to suggest that Asia is the place to be for financial services professionals and that banker bashing in the UK means more and more people are hopping on a plane to Hong Kong or Singapore.
However, when it comes to the IT in finance space, it's less about being pushed out of the UK and more about being lured across to Asia. One of the biggest stumbling blocks in attracting City-based techies has always been the pay disparity - and this gap is now closing.
"A number of financial services organisations are rolling out huge technology projects in Asia, and there's something of a skills-gap in the local market," says Bennie. "Understandably, they're looking to the UK and offering increasingly lucrative package to persuade people to make the move."
Keeping certain IT functions on UK shores
As we alluded to earlier this month, investment banks tendency to offshore front office development work to Eastern European locations looks set to continue next year. BarCap's office in the Ukraine, which was opened in June, is evidence of this.
This in itself doesn't necessarily equate to an automatic headcount reduction in the UK, but certain functions in "development and support" could becomes surplus to requirements, suggested Vadim Iasenik, managing director, Western Europe at outsourcing company Luxoft.
"A lot of non-core infrastructure rolls are being filled outside of the UK, in medium-cost locations like Singapore and Toronto, and we'd expect that trend to continue going into 2011," adds Richmond.
But there are also (some) opportunities being created because of this, suggests Bennie.
"Because banks are relying on the offshore community to do the development work, they need business analysts to understand and interpret the needs of the business and communicate it to these satellite providers," he adds.