Vex in the City: Has London's financial sector become a ghost town?

With job axes and bank losses, has the City changed forever?

What do Wonga, MedicAnimal and Zaggora have in common? As businesses in lending, pet care and fat-burning hot-pants respectively, you might not think there’s a whole lot. But each of these successful businesses was started by an ex-City worker.

It’s no breaking news, financial-whizz leaves the City to become an entrepreneur, but it has gathered momentum over the past five years and it doesn’t take a rocket scientist to see why. The City has seen some 100,000 jobs axed since the beginning of the financial crisis as banks struggle to restructure and recoup some of their losses. Those having either lost their jobs or fearing for them have been leaping into the unknown and starting their own businesses.

So what is to become of the City? Is it changing forever – destined to become a ghost town as banks operate at minimum staffing levels? Well, not necessarily. There’s no denying the high levels of job losses but it’s certainly not all bad news. The City is transforming, talent is migrating and there are still opportunities to be had – they just might not look like they did five years ago.

“Looking at the job opportunities across the financial sector on the whole, the permanent market has been challenging,” says Geoff Fawcett, director, Hays, the recruiting experts.

“We have seen a seasonal spike in the first part of the year and that is most likely down to attrition but not as many opportunities lie out there in the large scale banking houses. The more agile mid-tier organisations however are showing positive signs in hiring.”

The big names that financial professionals would have once aimed for are scaling back on permanent hires but this is giving the smaller, lesser known banks and financial organisations a chance to pick up some top talent. The lure of the big name banks isn’t as strong as it once was and these smaller organisations are able to offer different benefits to those looking for a move.

But there is one area of finance which is seeing a real boost across most organisations. One of the strong legacies from the banking crisis has been a renewed focus on audit, compliance and risk management. The Financial Services Authority has set forth a swathe of regulations designed to prevent another crisis from occurring and along with the international regulatory standard of Basel III which kicked in earlier this year, there is a lot of work to be done in this area.

“Areas such as compliance and risk management are still seeing a lot of investment from banks in hiring in these areas. We have increasing levels of demand for these skills and as a result there has been a 18-20% increase in wages in those areas,” says Fawcett.

The demand in this area has been such that waves of finance professionals from other areas have been retraining in compliance.

“We have seen a 15% increase in uptake of our courses in the UK over the past two years,” says Jonathan Bowder, compliance course director at International Compliance Training.

“We normally run two intakes a year, each with two groups but we have had to increase it to three groups. Historically firms have paid for their staff to go through the training but we have seen a massive surge in people self-funding the training in a hope to secure roles in compliance. Those with no experience in compliance are coming to us to get the qualifications and we also have senior level compliance professionals coming for further education to secure roles on boards.”

But that isn’t the only strong trend that can be seen. Banks may be scaling back on their permanent positions but there are still roles which need to be filled and projects which need to get underway. Contracting has emerged as an answer to this problem.

“The contracting market is still fairly robust and that is for two reasons,” continues Fawcett. “Workers like being paid that way, it shields them from the uncertainty of bonuses which have generally dropped. Contractors tend to get paid extra to compensate for the lack of bonus. Also people are far more comfortable with contracting than they once were. It was once seen as something you did in-between jobs but now you are seeing people choosing it as a preference.”

Highly-paid contractors are finding their place in this new post-crisis reality and employers also benefit from the use of contractors as it provides them with a more flexible cost base until they are ready to invest in permanent hires again.

As we can see there are opportunities in different places for professionals who still want to stay in the City and it isn’t all doom and gloom. There are a number of positives which can be seen from the perspective of job-seekers as long as they are willing to embrace change.

Employers are also seeing the benefits. If you look at the technology sector there is a massive skills shortage with growing companies battling for top talent to join them. The same could once have been said of the City but the good news for employers is that when they do come to recruit again, there is a raft of top talent available. The boost in contracting has created more liquidity in the market which will be of great advantage when the time comes to invest in talent again.

There is no way of saying how quickly the economy and with it, London’s mighty financial sector will recover. The growth prediction change all too often for us to say for sure. But one thing we can say is that the City is robust, it may have had a hard few years but there is hope on the horizon.

“A lot of the banks are at skeletal staff levels,” says Fawcett. “They are now looking at positive plans of how they can grow their businesses and we are starting to see some of that come through. We don’t have a crystal ball but we are hearing the right kind of noises from employers. There won’t be a quick bounce-back, a slower recovery will be the trend for the next couple of years and that’s exactly what the regulators want.”