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What does 2018 hold for the Financial Services market?

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New regulations, competition for talent and a growing market: take a look at the year ahead for Financial Services...

The Financial Services market is entering 2018 on the back of a strong year. The last twelve months have seen multiple mergers and acquisitions, market consolidation and strong growth: over 2017,47% of financial companies reported an increase in business volumes, and 41% reported an increase in their profits. London remains a booming financial centre, pulling in business from around the world, and contributing to a strong, resilient financial market that is expected to grow over the coming months. 

However, change is on the horizon. Brexit remains a source of uncertainty for many firms, and regulatory changes are proving a challenge for many- especially smaller companies, who are struggling to adopt the stringent measures required for success in the changing marketplace. Though business is booming, competition for candidates is fierce, and new roles are being created as technology takes hold of the way in which customers, consumers and companies do business.

Here’s our outlook for the year ahead in Financial Services.

A market overview

The last twelve months saw unprecedented growth in certain areas of the market, especially in paraplanning, which enjoyed a 94% rise in demand for roles and provides Financial Services firms with the specialist regulatory, technical and legislative advice needed to thrive in the changing market. Indeed, this demand will likely continue into 2018, as changing regulations force companies to seek advice and adapt their current systems. Though financial and political uncertainty have resulted in fewer risks taken, and investment levels remain unclear, the market is expected to grow globally- albeit more slowly- in the future. Indeed, the UK economy is expected to grow by about 2.5% over the coming year, providing financial firms with an environment to flourish in.

We’ve also seen a lot of market consolidation over the past months, as large financial services ‘superfirms’ move to buy up smaller, independent firms. The current market uncertainty has proved destabilising for many smaller companies as they struggle to keep up with changing market conditions and the war for talent, and the need to diversify their market offerings as a result. Perhaps because of this, last year proved to be a positive year for mergers and acquisitions, as larger companies moved to take hold of the market; this trend will likely continue in the future.

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A shortage of candidates

This market consolidation, combined with an explosion in areas like compliance, paraplanning and Fintech, have taken their toll on the candidate pool: currently, the Financial Services market is extremely candidate-driven, and it’s estimated that 86% of UK Recruiters expect the job market to get more competitive in the future.

This has resulted in a war for talent, as companies battle with each other to attract and retain star performers to their businesses. Salaries are increasing as firms boost wages to retain staff, and this trend will continue over the next year, as companies innovate their candidate offerings with a range of employee benefits like flexible hours and health insurance.

Indeed, many Financial Services firms are starting to proactively train their own staff- for more, see our article on how Financial Services qualifications are taking off.

Regulatory changes

The coming months look set to bring with them a whole host of new regulatory changes for Financial Services firms to deal with. Compliance will be a major issue in 2018 and we are already seeing a rise in job numbers come through in this area. The upcoming enforcement of the EU’s new GDPR laws, which aim to protect customer data by enforcing stricter laws on how firms process, store and transfer that data, will also pose challenges for Financial Services firms looking to innovate and remain compliant.

However, one of the issues that is likely to cause the biggest ripples going forward is the upcoming MIFID 2 regulations. Designed to protect investors and increase market transparency even further than the original MIFID regulations, MIFID 2 is set to transform the way in which the financial industry works. Enforcing a shift in trading towards more structured marketplaces, and orderly trading behavior, MIFID 2 will require many Financial Services firms to change the way in which they work to comply with the new laws. These laws apply across the whole of the EU and include new rules on research and inducements, new transparency requirements and an entirely new market structure. 

The result? We’re expecting to see an increased demand for a whole host of compliance-related jobs over the coming months, to cope with the influx of new regulations and help companies transition smoothly to a new way of working.

Technology is taking off

Given that81% of banking CEOs are worried about the speed of technological change, with investment in FinTech hitting record levels last year, it’s clear that this trend is here to stay. Technology is transforming the way in which we do business, and the Financial Services market is no different. Along with the rise of blockchain, a new way of cyber-banking which makes trading more secure and faster than ever before, the rise of FinTech means that many older, more traditional firms are scrambling to retain their key clients. The answer is online: indeed, many Financial Services companies have started to use technology to digitally engage their wealthier investors, and open up the market to the next generation of customers.

The past year has seen lots of new roles come onto the market, as financial firms start to look at embracing technology and engaging users in new ways. By innovating their digital services, these firms hope to offer customers an easy-to-access, instant service which is oriented around customer experience. Some have even started to make partnerships with FinTech startups- such as JP Morgan Chase’s deal with Digital Asset Holdings for a trial blockchain initiative which aims to make trading easier than ever.

Today, firms need to offer an excellent customer service and digital user experience if they expect to attract new clients; consequently, the next twelve months will see a rise in digital-oriented roles such as digital marketing executives, software engineers and developers, to cater to this massive rise in demand.

Take a look at our Salary Guide

It’s clear that the next twelve months are going to bring unprecedented change within the Financial Services industry. From the rise of technology to the war for talent, which affects salaries, employee benefits and company productivity, there’s everything to play for in the market right now- especially for firms who can spot and take advantage of upcoming trends.