28 January 2009 News

 

Research: Investment banks drive IT recruiting despite cull

Despite job culls across the investment banking sector over a third (36%) of new IT job vacancies in the financial services sector are for positions in investment banks, according to research from ReThink Recruitment.

It also estimates that the number of new IT job vacancies being created in investment banks has shrunk by over a third in the past year (-39%), from approximately 11,800 in the last quarter of 2007 to 7200 in Q4 2008.

According to ReThink's research, the number of IT vacancies across the finance sector has fallen by 47% from 32,256 in Q4 2007 to 17,191 in Q4 2008.

Michael Bennett, director of ReThink Recruitment said: "Even as investment banks are reducing their overall IT headcount they still have to recruit IT staff to fill other gaps elsewhere. Many of the IT skills in investment banks are so highly specialised that you can't jut shift staff from one job to another."

According to ReThink Recruitment, investment banks are being forced to recruit IT staff address flaws in their systems exposed by the financial crisis.

Rethink Recruitment says that both investment banks are now facing a major overhaul of risk management, credit control and compliance functions all of which will need a substantial investment in IT systems.

Financial services sectors	New IT  job vacancies Q4 07	New IT job vacancies  Q4 08	% change between Q4 07 & Q4 08
Investment banking	11,836	7,201	-39%
Insurance and life insurance	6,667	4,975	-35%
Retail & commerical banking	8,374	2982	-64%
Traditional fund management	2,641	951	-64%
Hedge funds	2,738	1,082	-60%
Total	32,256	17,191	-47%

Bennett commented: "Financial institutions are cutting spending on IT and putting in place hiring freezes in some areas as they scale back expansion plans, but there is still demand for IT professionals on projects which can generate cost savings in the short to medium term."

"Regulatory reforms will impose much more stringent risk management requirements on the banking system. The FSA's proposed overhaul of banks' capital rules, for example, will create IT jobs as systems are changed in the wake of the financial crisis."

Bennett also points out that the Financial Services Authority recently announced that UK retail banks will need to spend £1 billion on IT systems by 2010 to handle faster customer claims processing in the event a bank collapses.

Adds Michael Bennett: "There's no doubt IT will be of enormous strategic importance to financial institutions in the battle to shore up losses sustained during the financial crisis."

The research from ReThink Recruitment also shows strong demand for IT professionals in insurance and life insurance companies, which are creating almost a third (29%) of all new IT jobs in finance.

Growing areas of demand for IT professionals in financial services

Compliance:

• ReThink Recruitment says regulatory compliance issues will demand greater investment in IT during the downturn. The FSA, for example, recently said UK banks need to spend £1 billion on IT systems that will allow depositors to recover funds quickly in the event a bank collapses.

• The Madoff and Société Générale scandals are also spurring banks to enhance compliance systems to militate against the growing risk of fraud.

Risk management:

• Flaws in risk management systems have been cited as a major cause of the credit crunch. ReThink Recruitment says that improvements in risk management systems which help predict, model and report risk in financial institutions will be high on the agenda in 2009

Post-merger integration of IT systems:

• According to ReThink Recruitment, consolidation in the banking sector resulting from the credit crunch has the potential to create significant numbers of jobs for specialists in integrating IT systems.

• Michael Bennett comments: "Newly merged financial institutions will need IT staff to harmonise their systems. The HBOS and Lloyds TSB merger will lead to a major consolidation of IT systems across the two organisations, for example."

Quant funds:

• Quantitative funds, which use computer models to direct trades, suffered heavy losses on sub-prime investments. These models are being overhauled, and with market volatility reaching new levels a whole new range of investment strategies will have to be modelled.