By Steve Robson, Founder of ea Change Group
As ea Change Group celebrates its 20th anniversary, its founder, Steve Robson, provides an insight into how recruiting for the financial world has changed and considers what its future may hold.
Substantial change has permeated every sector in the last 20 years, altering the people who work within them and the ways in which firms recruit for them; and the financial world is no different. There have been key changes to this landscape: its technology, regulation and market—and the professional lifestyles it produces. As technology continues to evolve, these trends are only set to accelerate. By taking stock of the past two decades, organisations can equip themselves with the correct personnel for the challenges and opportunities that the next two decades will bring.
New rules, new threats
Due to a mounting demand for accountability following the financial crisis, regulation, once a back-office operation, has become front of house and underpins the industry now more than ever. The implementation of regulations such as the Senior Managers and Certification Regime (SMCR) and the Markets in Financial Instruments Directive (MiFID) demonstrates the efforts of UK authorities to increase accountability and regulation across the sector—ensuring that banks do not fall victim to the behavior that facilitated the financial crash. In fact, one report estimated that in 2016, the annual cost of regulating UK financial services was £1.6 billion, a six-fold increase since 2000.
Recruiters have increasingly supported banks in their search for quality personnel to prepare for upcoming regulatory frameworks. Huge demands for GDPR (General Data Protection Regulation) experts have swelled across Europe during the past 12 months, and, with the May 25th deadline fast approaching, this is only set to continue as a result of an intensifying European demand for accountability.
New technologies have also heralded new threats, and an organisation’s ability to protect itself against these will dictate its success in coming years. As banking has become digitised, balaclavas and bank heists are a thing of the past, and modern-day villains lie in the cyber-world. 1.9 billion data records were breached in the first half of 2017, with the NHS (National Health Service), Uber and Nissan just some of the international names to fall victim to cyber-attacks in this year alone. The cyber-security firm Norton reported that, in total, a staggering £130 billion was stolen from consumers in 2017.
A simple case of supply and demand, specialist cyber-roles have become increasingly sought after. We have witnessed penetration experts, who essentially break into banks’ systems in order to detect weaknesses and consequently strengthen them, substantially deployed across the sector; and the mounting presence of cyber-threats means demand for these roles will stay high.
Technology: not always the solution?
Just as technology has revolutionised operations in the financial-services sector, it has transformed the ways those institutions find and hire the very best talent. Placing quality financial figures in esteemed institutions can now be done in a fraction of the time, with the use of video interviews, apps that connect recruiters and candidates, and social-media platforms such as LinkedIn. Administrative processes have been streamlined as technology provides new ways for recruiters and Human Resources teams to screen, review and check candidate data using artificial intelligence and automated processes.
Yet these generic administrative aids are as far as intelligent technology has gone within our sector. These systems cannot be used to identify the elite candidates that the financial sector demands: when sourcing premier financial minds for premier financial institutions, a high degree of human contact is still crucial. When recruiting for the leading financial minds, an automated process would fail to serve the core requirements of the role, the client and the complexity of the industry.
Driven by this new technology, we have seen recruiters lose face-to-face relationships and industry expertise in their determination to deliver solutions quicker and cheaper. There has been a process of commoditisation across the sector. Operating within a highly regulated and complex industry, which demands not only intelligent but highly reputable individuals, it is vital that consultants understand the needs of their financial-services clients, and that there is a level of trust in their relationships. They must take the time to verify the quality of candidates—a process through which they can add value.
Longstanding and trusting relationships are the most valuable vetting process. Recruiters who have long-served the industry will know their candidates as well as their clients and, essentially, sell people they know. As banks increasingly seek trusted individuals and require their suppliers to know their candidates, a relationship with both candidate and client is vital. A challenge for the future of the sector will in fact be to retain these quality relationships in the face of the drive for faster, cheaper solutions. Against this headwind, the most successful financial-services organisations will be those that retain cross-sector quality, human relationships and concentrate on delivery as opposed to price or speed.
Still a career of choice?
Fintech and digitalised banking systems have entered the market, targeting the digital generation. Unlikely competitors have also arisen: John Lewis has recently launched its personal-loans service, and Amazon has even leant an excess of $3 billion to small businesses in the United Kingdom, United States and Japan. Technological advances also now mean that empires can be established from an entrepreneur’s laptop at home, creative apps can turn impressive profits quickly, and talented people can increasingly be their own bosses. These are enticing options for a Millennial generation that is often perceived as more mobile and less loyal to long-term employers. Financial-services organisations need to be conscious of this new dynamic in order to attract the best talent. Operate with a structure that is too bureaucratic or hierarchical, and risk losing out on entrepreneurial and talented candidates. Ultimately, professional horizons have been broadened.
Given the other options available, and the constant drip of headlines highlighting the personal risks of falling foul of the regulators, The City is not as attractive a career choice as it was 20 years ago. Prison sentences are now a tangible reality for financial professionals—as the UK’s SFO (Serious Fraud Office), for example, charged 28 individuals with serious fraud, resulting in five convictions so far, and their US counterparts went even further, convicting 324 people with 222 prison sentences.
In this context, a key challenge for the sector has been its ability to attract and nurture the best talent. Whilst existing employees may not be jumping to a new market entrant’s ship, the appeal of innovative fintech startups is increasingly attracting new entrants away from the traditional corporate institutions. Organisations across the globe have begun to make changes to attract recruits, mirroring a new generation’s expectations of the financial and professional world. Innovation hubs in Singapore operate with flexible working hours, “chill out” areas and relaxed dress codes. Australia’s Westpac has also created a “tech hub”, installing an internal system that identifies innovative minds within the bank and facilitates the development of their ideas. This allows for creative technology to evolve within the business, fueling its own growth, whilst attracting innovative minds to the organisation.
As a new generation increasingly enters the financial profession, traditional institutions and their recruiters must ensure that they are creating a variety of working environments. It is likely that banks will establish a range of brands targeted at different professional cultures. Mirroring the innovative Silicon Valley names, banks can offer flexible working spaces, modern offices and tech labs. By creating a series of incubator brands, these large organisations can remain true to their established roots as well as evolving to look and behave like the banks of tomorrow with their innovative, more flexible, professional environs.
Preparation for the future
As technology continues to evolve—bringing both opportunities for commercial advantage and sophisticated cyber-threats, whilst the regulatory burden continues to weigh heavily—the sector must ensure it is thinking about how to find and keep hold of the people it needs for the future. Skilled, trusted and nurtured personnel will be key for the progress and success of the industry in years to come. With these cyber-threats and mounting webs of complex regulation, arguably a human approach is now more important than ever.