Hiring was sluggish across most sectors in financial services in 2013, with a select few seeing moderate growth. Front office hiring was rather subdued as almost every big bank made concerted efforts to become efficient and return more capital to shareholders (read: get smaller). Back office hiring was stronger but rather sporadic.
Looking forward to 2014, the hiring environment should be kinder. The annual Outlook for Investment Banking Services, published by Thomson Reuters and Freeman Consulting, found that 71% of financial services firms expect to increase recruitment activity in 2014, up from just 11% in 2013. But where will all the growth occur?
We asked three banking recruiters – two based in New York and one in London – to give their views on their recruitment pipeline and their hiring predictions for the coming year. The short of it: the hiring landscape should indeed improve, but expect more growth in the back office than in the front. Investment banks could be primed for a comeback of sorts, though.
Peter Laughter, CEO of Wall Street Services, New York
By all counts, 2014 looks to be a strong year for financial services and many sectors will see an increase in hiring. Globally, conditions continue to improve and corporations are holding significant cash reserves so M&A activity is likely to continue to increase. I see the trend in hiring compliance and risk professionals continuing to increase as well - regulatory changes are far from over and with increased punitive action from regulatory bodies, you can expect banks to continue to shore up their compliance capabilities.
What I find most exciting is banks' desire to improve operational risk and controls - it is expected that the investigation into Barclays' role in the Libor scandal is just the tip of the iceberg. Across the board, other failures in internal controls have led to significant loses and fines. As firms look to rectify these failures for the future, demand for seasoned operational risk professionals will significantly outstrip availability and many people will enter this field. Once immediate risk needs are met and demand wanes, these professionals will be repurposed toward process improvement projects designed to streamline middle and back office operations.
The resulting process improvements will eventually drive reductions in staff levels in operations but I am unclear whether that will happen in 2014. Technology spending is expected to marginally increase so there will be little change in that sector.
With unemployment levels hovering around 7% we expect consulting hiring to remain strong throughout 2014. Currently, consultant hiring outpaces direct hires two to one, and employers have become accustomed to using higher level professionals on a consulting basis.
Anne Crowley, managing director at Jay Gaines and Company, New York
The heavy focus on hiring for regulatory-related functions will continue. This spans a range of functional areas including compliance, audit and risk. AML expertise is particularly in demand as banks respond to increased scrutiny from regulators in this area.
We have also seen hiring in "regulatory policy" roles that focus on interpreting and responding to new regulation. These positions bring a technical orientation (e.g. GAAP accounting) vs. legal.
Security, information security and IT risk management are also areas of demand as the banks face ongoing and increasingly sophisticated threats and are under pressure from regulators to demonstrate preparedness and that they are meeting regulatory standards.
There may be increased hiring in program and vendor management to provide oversight of large initiatives that utilize a lot of consultants or sub-contractors to ensure the programs are meeting contract requirements as well as quality and security standards.
An up-and-coming area is mobility solutions, which banks are building as a means of competitive edge with retail and commercial clients. Banks will be hiring architects and developers to create these solutions and testing professionals to ensure they are bug-free.
And, with the low interest rate environment continuing, banks are intensely focused on expense reduction. Most large banks are continuing to move back office and support functions out of high-cost metropolitan areas to lower cost domestic centers or overseas. And, the push for consolidation, automation and outsourcing is continuing. These efforts will result in ongoing layoffs or movement of personnel at all levels of seniority.
Chris Apostolou, managing director at London-based Arbitrage Search and Selection
The strange thing for Arbitrage in 2013 was lack of seasonality – hiring just continued to grow without restriction quarter-on-quarter [and] the purse strings have been snipped.
From my experience, ironically, few investment firms are forward-looking. Hiring just lags markets, so probably good hiring to come in equities, particularly on the buy-side. I'm generally bullish for the market in 2014, but you're likely to see more job cuts in falling markets, such as commodities and U.S. bonds.
One large bank client told me "we have been running on a skeleton staff for 3 years, so I can't wait for the improved budget on Jan 1st".
Just pray the European bank capital tests are a believable fudge again.