Market Update: Operations for Investment Banking 2019
Working as an Associate Consultant at Morgan McKinley, I am fortunate to have the opportunity to speak to a number of professionals across the financial services industry, including job-seekers and hiring managers. As Operations is one of my areas of focus, I thought it would be good to share some of the information I have collected from talking to professionals within the industry.
The Operations market in 2019
Job flow and hiring for Financial Services Operations was rather slow at the beginning of this year in Quarter 1 (Q1) and Quarter 2 (Q2), especially before the time of golden week as the financial market was not so forgiving. However, as the market slowly started to recover, we saw an increase in job flows in June and July, with firms looking to upskill instead of expanding their teams. Moving into the final quarter of the year, we predict that some firms may be looking to expand their teams, however not as much when compared to 2018.
The impact of the slow financial market in 2019
Headwinds in the global financial markets in recent years has led to several financial institutions deciding to undergo organizational restructuring as well as cost cutting to make up for tighter profit margins. Several firms have found ways to save costs by outsourcing, off-shoring or using automation technology to complete more of the production work. Despite this, positions are sometimes complicated to replace due the requirement to work closely with Japanese clients and regulators. As such, there is still a demand for people to do the non-production work that can’t be offshored/outsourced.
We saw several financial institutions struggling with their equity business lines and as a result equity professionals were looking for opportunities in the market. Other banks looked to strengthen in the equities space and actively targeted these individuals.
What sort of people are investment banks looking to hire within operations?
As talents pools are comparatively small in japan - especially people who are bilingual in both Japanese and English - we have seen hiring manager become more flexible, allowing people who do not have investment banking experience to apply. The types of candidates they are looking for are people who have operations or middle office experience within any financial institutions, and not necessarily within investment banking. They have also been open to professionals from a consultancy background who support financial service clients. Of course, people who have direct experience within investment banking are preferable, but the number of people with relevant experience is often limited. With the shortage of talent within banking, from time to time we do see openings for people who do not have financial services experience at all.
All banks are looking to upskills within their operations departments after years of cost-cutting. Managers are looking for professionals who can add value to the business, work closely with clients and regulators, work in a change and transformation environment, and use new technologies.
Type of operational positions in 2019
Within middle and back office operations for investment banks, I have outlined several areas of both increased and decreased job flows.
- Line roles like trade support, sales support, settlements and collateral management: Mostly replacement roles, thus activity varies based on urgency. We have also seen a few smaller financial institutions looking to set up or grow their business in japan and strengthen their line functions.
- Roles within control and regulatory reporting areas have slightly increased from Q3. Managers have been keen to strengthen these areas for a number of years and are finally getting budget to do so. Cost cutting coupled with more stringent regulatory requirements as well as high expectations from Japanese clients has forced banks to strengthen their first-line controls within different departments.
- Q1 and Q2 continued to see a high demand for KYC and Client Services related professionals. However, openings declined in Q3 as banks have met their requirements within these areas.
Tips for job seekers in 2019
We often see professional waiting for the perfect opportunity to come along. However, with the market tight and most banks reevaluating their hiring requirements in Japan, job seekers may be waiting for a long time for that dream job. In the mean-time they let good opportunities slip by as they fail to effectively analyse what roles would be best for their long term career. They are left unsatisfied in their current roles and do not equip themselves to deal with the many changes taking place in banking operations. It can be scary to move, thinking if it is the right decision or timing. But at the end of the day, if an opportunity comes up and your instincts tell you to go for it, usually the first choice ends up being the right one.
Looking for a job in Financial Operations?
If you would like to discuss any of the content in this blog or get advice on what opportunities may be best for your long-term career, please feel free to reach out.