Nothing spreads the jitters faster than a big news story about job cuts, and there’s been plenty to go around over the past week in bank IT circles.
State Street was the latest bank to make cuts, this week saying it’s trimming 850 IT positions through a mix of outsourcing and layoffs. Earlier this month, HSBC said it would cut more than 800 jobs, with more than a quarter coming from IT. The Wall Street Journal today reported other job cuts at banks as part of broad expense reductions: Credit Suisse has let go about 600 investment bankers, Morgan Stanley plans to let go some of its retail brokers and Goldman Sachs intends to cut 1,000 jobs.
But the news isn’t all bad, as overall hiring trends suggest the displaced will have an easier time landing than during the recession, when the bank IT market was in full retreat. Sans any impact from a possible U.S. default, the bank IT job market is as healthy as it’s been in years and is a bright spot in the overall bank job market, which is still mixed in a tepid recovery.
“We saw a big jump in IT plans to hire and from our recruiting perspective we have not seen a reduction in hiring in bank IT,” says Steven Landberg, managing director of Claymore Partners, a financial services search firm and consultant. Landberg says hiring is still selective, competitive and slow to conclude, but bank IT workers are getting placed. “It’s steady and growing from our experience. We do not see a downturn in banking and financial services as they were decimated over the last few years.”
Claymore’s quarterly hiring index for spring 2011— the latest report that’s available — shows a major upswing in finance IT employment in 2011, to make up for shortfalls from years of retrenchment, as well as big outlays for compliance, new digital channel development, security and risk. Up to 68 percent of execs are planning to hire IT staff, which is up sharply from 31 percent in the fall of 2010, and much higher than the 28-34 percent range in quarterly surveys over the past three years. Risk management, which is closely tied to IT, is also up to 71 percent from 41 percent; and operations hiring is up to 61 percent from 35 percent. The firm says these trends will place pressure on firms to retain top talent and revamp recruitment approaches, a marked change form the past few years, when most executives in and out of IT were staying put or were out of a job entirely.
Marc DeCastro, a research manager at Financial Insights, says the State Street downsizing doesn’t portend a larger spat of cuts across banking. “Really, State Street is ina unique situation anyway, they don’t have the retail footprint that other banks have,” he says.
Analysts say there is an evaluation of internal operations at most banks that will shift technology duties and change the kinds of IT jobs that are available at banks. “Needs will shift more toward vendor support and risk management,” DeCastro says. “If you start outsourcing, you still need that IT background, people who understand the underlying fundamentals.”
Aite Senior Analyst David Albertazzi says there are certain sectors of bank IT in which there’s heightened demand, including treasury management — which still lags retail banking in terms of automation and where there’s more robust business growth. “Corporate banking is still a growth area. Mobile banking in the corporate area is also growing,” he says.
Wealth management should be another source of strength, as IT investment creates potential career opportunities for tech experts, especially those with experience developing new channels.
Ovum says global spending on IT by the wealth management will top $32 billion by 2015, a growth rate of 6.5 percent over a five-year period. The analyst group says the increasing of spending in that sector is marked by a return of wealth consumers to investment markets.
Ovum senior analyst Jaroslaw Knapic says the recession has had a big impact on the wealth management industry, and it’s one of the sectors that has borne the brunt of the fall-out, resulting in growth in tech spend slowing considerably. Knapic says that with recovery now underway, the outlook for IT investment is much more positive.
Knapic also says there will be a need to create websites and applications that allow customers and financial advisers access to company websites via mobile devices such as smartphones and tablets will drive growth in internet spend in wealth management. Much of the rest of the IT demand will come from upgrading online services with personal financial management tools and closer integration of the online channel with middle and back-office technology such as product origination, customer information, or investment and portfolio management systems.
There will also be expansion connected with the growth in mobile banking — including training of non technology staff and the maintenance of the enabling technology itself. “There will be a retooling for customer service reps to be able to answer more calls, or face more calls regarding the use of technology,” Albertazzi says.
There is some cold water — not all IT investment actually creates jobs. Some projects are designed to decrease redundancies. Also, more IT work, including project management and other management jobs, is being outsourced. And
Albertazzi says some of the IT growth will come from outsourcing, which could weigh on bank IT job growth. He says his recent research found that banks are considering jobbing out more IT functions, including operations, call center and compliance. “The banks just can’t keep up with all of the regulations,” he says.
Analysts say the impact of cloud computing on internal bank IT hiring is still limited, particularly since the embrace of cloud computing has primarily been private clouds for limited purposes — anything involving customer or corporate data is still managed in-house. “It depends on what pieces a bank puts into the cloud,” DeCastro says, adding a bank still needs internal IT resources to manage relationships with the cloud provider.
