House Issue 40, August 2018


…to the 40th edition of House! and some fascinating moves have happened recently across the globe, with senior hires in the pharmaceutical sector, crypto and consulting. The big news is that investment banks are starting to hire compliance officers again! We have seen an uptick in demand from banks in both Asia and Europe to hire experienced compliance officers again. We have also seen a real push for near shoring in the UK and some interesting data on the hub of choice for compliance departments in the UK. Technology is also discussed in this month’s issue with Data still driving to be the word of 2018.


Too much technology is never a good thing
RegTech seems to have taken over the compliance airwaves in recent years, to the point where we are now learning that it can be difficult to separate the wood from the trees. If you ask most CCO’s or MLRO’s, one of the most frustrating parts of their day is the shear volume of calls they field from software vendors. A simple google search of the term, ‘compliance software’ throws up almost a full page of articles claiming to have the “top ten vendors of 2018”. The due diligence process involved in multi-million pound deals like the selection of GRC (Governance Risk and Compliance) software is basically a job in itself so it is not surprising that we are seeing more and more clients use senior contractors to come and run the rule over any proposed systems changes. While this does raise the risk of the working knowledge leaving the building, a project format guarantees a clear and concise report on the current state of play and unbiased evaluation of the best solution which can help guide the vendor when trying to adapt an off-the-shelf solution to the individualities of each institution.


Data Data Data (but not GDPR)
We have spoken at length about regulation in this area so we won’t beat that particular path again here. What we have seen recently however, is a sharp rise in the numbers of our clients looking to add data specialists to their ranks and not surprisingly Financial Crime has been high on the list of departments hiring. With a proliferation of technologies in the space all purporting to do a better job of the same task, the job of the MLRO has, in some senses, become much like a traditional mathematician - one of “proving the question”. By bringing in analytics experts to their Financial Crime business units, businesses can better capture, sort and disseminate findings from the data they are collecting, allowing for more accurate monitoring functions and provide a clearer picture of how effective initiatives have been towards their intended goal and the ability to visualise these metrics into digestible insight can be invaluable in driving cultural change.


Near Shoring Still Ongoing in UK
For almost a decade we have seen financial institutions search for savings by moving non-core business units away from major financial centres. Property costs are much higher in London than Birmingham or Manchester for instance, and the cost of living for employees is also more arduous. While the short-term pain of relocating management or rehiring in a new location can be high, in the long term the ‘indigenous’ professional population will grow and the cost of employment will fall. Historically it was support, operational and some finance functions moving but due to technological advance and ongoing cost pressures, we are seeing an increase in financial crime departments moving headcount to regional locations around the UK. We looked at approximately 20 retail banking institutions for this piece and only 8 count London as their primary UK location for compliance and financial crime headcount. Edinburgh is the second largest compliance and F/C community in the UK with Bristol, Belfast, Milton Keynes and Coventry all housing relevant functions. Arion House is currently work with one retail institution looking to create a regional team of 15 financial crime professionals; please do get in touch if you would be interested in discussing the insights gained.