If there were ever a dispute as to the growth of compliance jobs in investment banks, the annual report of BNP Paribas should lay it to rest. Unusually among banks, BNP breaks out the number of people employed in its compliance division. The expansion is unequivocal: in 2014 there were 1,732 working oin compliance for BNP; three years later, that number had increased to 3,770.
It’s an expansion that was mirrored across the industry. And the backlash is now also being felt across the industry as banks try reeling their compliance spending back in.
“There was a massive inflow of people into the compliance function after the financial crisis,” says the former head of compliance for a U.S. bank in London. “Banks had failed, and boards overreacted and rushed to hire people in. There was no strategic thinking – it was just adding people to mollify the regulators.”
One of those who arrived with the high tide in compliance was Sam (a pseudonym), who works as a compliance officer at a Swiss bank in London. Now in her late 20s, she says the compliance function is full of others like her: “They hired so many young people after the financial crisis that everyone now has the same level of experience and we’re all trying to get the bigger jobs. There are salary cuts at a lot of firms. People are thinking 'screw this' and changing industry.”
If compliance salaries are falling, recruitment firms are failing to spot the trend in their salary surveys. In 2018 Robert Walters said compliance salaries in London had plateaued and Robert Half's compliance salaries for this year look similar to Robert Walters' for last. Ian Black, a compliance search consultant at Hammond Partners, says it’s not so much that compliance pay is being cut as that banks are cutting jobs at the bottom of the pyramid and have less need of people further up: “The majority of banks have already done most of the heavy lifting regarding their compliance programmes and so there are fewer new roles.”
This alone is taking some getting used to. The recently-retired head of compliance says people in his function have had a halcyon existence for the past 10 years: “You will have enjoyed an incredibly buoyant market and developed unrealistic expectations about the pace of growth and your job security.” That’s now coming to an end.
Credit Suisse CEO Tidjane Thiam was one of the first to signal the rain coming to the compliance parad at the bank’s investor day in 2017. "The reason costs in banks have been so stubborn is control costs," said Thiam, noting that Credit Suisse wanted to cut compliance spending by 12% in the next 12 months by increasing spending on compliance IT. Other banks are all rushing to do the same. If once compliance was all about throwing bodies at the problem, it’s now about automating as much as possible. At Credit Suisse, Thiam said he foresaw compliance headcount falling by 45% - 20% through process engineering, and 25% through "digitalization." The halcyon days are indeed in the past.
And yet not everyone in compliance is wallowing in gloom. Many of the compliance professionals we spoke to for this article were surprisingly upbeat, seeing the automation of the compliance function as an opportunity rather than a threat.
"There will always be a place for good compliance officers, whilst we may not be able to code we should have the knowledge to tell people what we want the automation to do," said a senior compliance officer at a U.S. bank. "Front line advisory jobs are some way off from being automated," said a VP in compliance at another U.S. bank. "They still have a human element (e.g. relationship management and subjective analysis) to their core which cannot be replaced by the pure logical "if statements" that automation depends on."
Although compliance jobs like surveillance and anti-money laundering may be suspectible to being automated out of existence, the expectation, then, is that compliance product advisory roles (where specialist compliance officers provide advice on trades) won't be. Nor will roles relating to the implementation of new regulations. And given that there could be an increase in regulatory complexity post-Brexit, several of the people we spoke to are expecting a post-Brexit compliance jobs boom. One former trader who moved into compliance last year already says he is contacted by headhunters touting new roles on a weekly basis.
To really future-proof your compliance career, however, you might want to learn how to code. A compliance junior at Goldman Sachs told us he's already "future-proofing" his career by teaching himself VBA, Python and SQL using YouTube videos.
And if it doesn't work out? The former head of compliance points out that a career in banking compliance sets you up for a career in all sorts of other industries. "If you've been a trader there aren't many jobs you can do afterwards, but if you've been in compliance you can take those skills elsewhere. There are a lot of other industies that need to get their governance right."
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