House

HOUSE, Issue 21

Welcome

....to the final edition of House in 2016 and in what has consistently been described as a challenging year, we highlight some positive developments and our predictions for the year ahead.

2016 HIGHLIGHTS

Fragmentation creates opportunities. Front office investment bankers and traders left the bulge bracket institutions in droves, whether voluntarily or not. Many have joined smaller corporate finance boutiques, payments firms, private equity funds, hedge funds, HFTs and FinTech start ups. This will surely lead to some really interesting opportunities for compliance officers to develop their careers at smaller, more entrepreneurial firms with a n a less silo-ed environment

Consulting.The wave of regulatory and technological change, the digital revolution and the rise of ‘regtech' has seen great opportunities in consulting. We have seen a wave of regulatory consulting firms start across Asia and achieve critical mass quickly. Many regulatory professionals performing in-house roles have seen their skills required in these firms, where they are often seen as front office, revenue producers.

Flexible working came to Asia. With the rise of the ‘millennial workforce’, working mothers, technology enablement and flexible working arrangements, 2016 really heralded the end of the 9-5 or, in some cases, the 9-9 culture in Asia. Several banks in Asia have looked to retain staff by becoming the employer of choice for women.

Technology. Whether it be Cyber, Artificial Intelligence or FinTech, the digitalisation of the regulatory industry has created a new wave of interesting and diverse opportunities for technology firms both large and small. Interestingly, we have been asked by two technology firms to help build their offerings in Asia Pacific this year and both were specifically looking for candidates from in-house compliance or financial crime prevention teams; “individuals who had been there and experienced the issues our products are designed to solve...”

PREDICTIONS FOR 2017

Relaxing of Regulations?

Trump’s election campaign suggested there will be a relaxation of regulation but so far he has asked New York District Attorney, Preet Bharara, to stay, whilst Debra Wong Yang is being touted as favourite to chair the the SEC; a hardliner with a reputation of going after large corporates. This suggests more continuity, after all, being tough on corporate America remains popular...

Quality. Volume hiring of regulatory professionals has come to an end. The profession has become established in the same way as finance, legal, technology and accountancy functions. There is now a very large community from Manhattan to Manila that didn't exist 5 years ago. The focus going forward will be on real quality over quantity.

How do firms identify talent? Managers and headhunters who have a deep understanding of their candidate pool, can touch talent not actively looking and gain informal references and insight on candidates will be crucial in building out and sustaining high quality teams.

Cross fertilisation of talent. Arion House estimate some 80% of global regulatory talent currently sits in the banking sector. The US regulators appear to be looking to take a more ‘lenient’ line towards the sector and initial feedback suggests that many banks will be reducing the size of their compliance functions. This is likely to create a surplus of compliance professionals, but where will they go? Asset Management, High Frequency, Hedge Funds and Private Equity. The indigenous population exists and there will be some highly qualified and more importantly experienced compliance officers with some crucial ‘war experience’ who should make up the bulk of compliance staff in these growing sectors from 2017 and beyond.

Artificial intelligence. The role of the compliance officer will become more automated and many of the compliance officers of the future will be robots. A compliance officer who knows the rules, can learn new rules and work with a business and remain devolved of conflict and emotion could be the answer that regulators are looking for? We don’t really think this will happen immediately but it will be interesting to see which firms embrace this technology first and how much they use it to counteract regulatory risk...

 

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