Those of us working in and around the financial services industry, both here in Asia and globally, live in challenging times: profit and operating margins at banks and funds remain under considerable pressure and will do so for some time yet.
According to a recent McKinsey report, for example, the average bank will need to cut costs by a further 25%, and yet more redundancies are on the cards. Banks have exposed themselves to inefficiencies and duplication by structuring their business by asset class; they should instead organise themselves into an “execution factory”, which handles most flow trading through electronic platforms.
If you work in the back or middle office this doesn’t make for pretty reading. So what can you do to mitigate the risk of being on the wrong end of a cost-reduction decision? Here is some advice:
Most financial institutions have outsourced or offshored the majority of their transactional capacity. The operational cost of doing business is too great and the infrastructure required is too inflated and not flexible enough – the obvious solution is to shift the business model to outsourcing or offshoring.
This means that firms are moving to smaller, high-quality teams that manage vendor relationships. In-house roles now tend to be more qualitative or decision-making, requiring an in-depth understanding of both product and processes.
Businesses need people who can manage risk and know how to escalate issues quickly. Be curious and ask questions, keep learning and make sure you are recognised internally for being technically strong and having sound judgement.
As banks and funds move through this process of outsourcing and offshoring, they need people who can help change the culture and challenge the status quo. If you can demonstrate that you can take a step back, look at current procedure and create innovative ideas for process improvement, you are much more likely to be viewed as an indispensable asset.
Also look to take on more responsibility where possible – be flexible, open to new ideas, and look to support management throughout the change process. See the change as a challenge, not a threat.
This is especially true at the start of your career. If you work within operations and your current employer is offshoring the work you do, be prepared to move to the new location. As the job market within financial services continues to shrink, staying relevant and in employment is key to a successful career.
There are many people who have been out of work for at least 12 to 18 months and are struggling to find new employment within the sector. Some may never do so. Working offshore for a few years could well mean that when you move back to your preferred location you can move into one of the more qualitative roles outlined previously and keep your career on track.
Be open-minded about the company you work for. While once seen as less prestigious than working within the industry itself, third-party vendors are now an attractive long-term option. Many are highly regarded for the work-life balance they provide and for the training and personal development they offer employees. As many are also in growth mode (for all the reasons already outlined) third-party vendors can also offer fantastic career progression across a wide range of locations.
The McKinsey report advised firms to pick their sweet spots in terms of product offerings. The days of being a one-stop shop to clients are long gone and there is no space for non-profitable franchises within any financial institution, irrespective of perceived strategic importance. If you work within an area of a bank that isn’t profitable, explore routes to move internally to a stronger product, or to a different firm that is strong within your area of specialisation.
Also look to keep abreast of regulatory issues and wider trends within the market. This harks back to my previous comments about being recognised as technically strong – any financial services employer wants people who can support business change, growth and development. Sitting with your head down and hoping not to be noticed won’t help you avoid downsizing, but keeping abreast of regulatory changes or software developments, and highlighting their impact to the business, may mean you are looked on favourably or moved laterally when redundancy decisions are made.
Fraser Douglas is the managing consultant of the banking, finance and accounting division of recruiters Links International in Hong Kong.