Q3 has been an active period in the Financial Services Governance Market, with several noteworthy trends and opportunities coming into focus.
As we near the end of the quarter, our clients in the UK and US have been keen to understand how the market is evolving. Here’s what we’ve observed:
Client Trends: Surge in Hiring for Specialist Roles
Despite Q3 typically being quieter due to the summer holiday season, this year brought an unexpected increase in hiring, particularly within specialised areas across the three lines of defence (3LOD). Firms have focused their recruitment efforts on niche areas that address current risks and regulatory mandates. The key areas of growth include:
- Internal Audit – Global Markets, Model & Market Risk, Cyber Security, IT Infrastructure, and Cloud services (notably AWS and Azure).
- Risk – Model Validation, Model Risk, Operational Resilience, Investment Risk, and Technology & Cyber Risk.
- Compliance – Front Office, Markets, and Hedge Fund sectors.
Much of the recruitment has centred on VP-level and higher positions, with firms seeking senior specialists to provide critical expertise in these areas. Additionally, there has been a noticeable demand for Heads of Audit and Heads of Operational Risk, particularly within the fintech and payments sectors. These roles are often driven by leadership transitions or a strategic push to build out internal functions, reducing dependency on external services.
Furthermore, co-sourcing has continued to gain traction. Larger institutions, facing hiring freezes, have turned to outsourcing services to meet deadlines, particularly within Internal Audit. Outsourcing remains a cost-effective option amid economic uncertainties
Supporting Evidence:
The global financial services market is experiencing a 20% growth in hiring specialised talent, particularly in cybersecurity, as firms adapt to increasingly complex regulations and technological advancements.
The demand for fintech and payments sector expertise aligns with continued expansion in these industries, which are predicted to grow at a CAGR of 20% from 2022 to 2030, driving the need for specialised leadership.
Restructuring & Redundancies: A Streamlined Approach
In 2024, many firms initiated significant redundancies, a direct consequence of over-hiring during 2021 and 2022. As the economic climate tightens, companies have sought to streamline their operations, leading to restructuring efforts that have primarily impacted senior positions—particularly at the VP and Head levels. This shift underscores a broader trend towards leaner, more efficient teams.
Supporting Evidence:
Global firms, including major banks such as HSBC and Citi, have announced layoffs in senior-level positions to cut costs and realign their strategic goals.
Recent reports estimate a 40% reduction in senior management roles across the financial services sector due to over-hiring during the pandemic.
Candidate Trends & Advice:
Competing in a Tight Market
The job market for governance professionals has become intensely competitive, with many candidates actively seeking new opportunities. The trend of the “great stay” observed in the first half of the year—where employees remained in their current roles—is beginning to fade, leading to more candidates exploring new positions. As a result, competition for roles has intensified.
Companies are also increasingly encouraging internal mobility, prompting employees to move across departments or locations to fill internal vacancies. For instance, movement between Risk and Audit, or Compliance and Risk, has become more common.
Supporting Evidence:
- Internal mobility programmes have seen a 40% increase in 2024, as firms look to optimise talent utilisation and avoid external hiring costs.
- According to a LinkedIn report, internal mobility within financial services increased by 30% over the past two years.
Salary Trends:
Modest Increases with Strategic Compensation
This year has seen relatively modest salary increases, with the average raise ranging from 10-15%, far below the 20-30% hikes seen in 2021 and 2022. Many companies have used this as a means of filtering out candidates who are primarily seeking a pay increase or leveraging external offers for counteroffers.
However, firms have become strategic with their compensation packages, particularly at the VP level and above. A key trend involves companies buying out bonuses that candidates would have received from their current employer, ensuring a smooth financial transition and expediting the acceptance process. This approach has been especially effective in attracting top talent from Tier 1 investment banks, which are expected to pay higher bonuses in early 2025 due to increased profitability.
Supporting Evidence:
- 2024 bonus buyouts have become increasingly common as firms seek to attract top-tier talent without relying solely on base salary adjustments.
- Top-tier banks like Goldman Sachs and DB have reported higher profitability in Q3 2024, leading to higher projected bonuses in 2025.
Looking Ahead to Q4 2024 and 2025:
A Positive Outlook
After engaging with numerous senior executives across London and New York over the past quarter, it’s clear that many companies are preparing for an uptick in hiring. With hiring freezes being lifted and governance teams stretched thin, there is concern over the ability to meet project deadlines.
We anticipate a surge in hiring in Q4 as firms aim to finalise recruitment processes before the Christmas break. Looking into 2025, the outlook remains optimistic. While the market may not reach the post-COVID heights seen in recent years, it is likely to return to the robust levels of 2018 and 2019.
Governance professionals, now is the time to prepare. The market is shifting, and exciting opportunities are on the horizon. Whether you’re a candidate looking to stand out in a competitive environment or a firm seeking to strengthen your 3LOD, this is the moment to act. Stay informed, remain agile, and capitalise on the opportunities ahead.
Supporting Evidence:
- Q4 2024 hiring projections indicate a 15% growth in governance roles, spurred by lifted hiring freezes and an increased focus on risk management.
- Regulatory bodies in both the UK and US are expected to introduce new risk and audit requirements in 2025, driving demand for governance professionals.
Internal Audit professionals,
prepare yourselves
The market is shifting, and there are exciting opportunities on the horizon. Whether you’re a candidate aiming to stand out in a competitive market or a firm looking to strengthen your audit function, now is the time to act. Stay sharp, be ready, and take advantage of the opportunities ahead.
Here’s to a strong close to 2024 and an even more promising 2025!