Josh Warren, Service Delivery, Client Services at Société Générale spoke to Business Leader about the future of the talent pool in the financial services sector in a post-Brexit economy.
The UK financial services and investment banking industry has always relied on talent from within the European Union. Pre-Brexit, a significant number of hires into UK based financial services organisations came from the EU. However, Brexit has complicated the process of hiring from abroad, with many in the sector now questioning whether it is more prudent to focus on home-grown talent.
Cost of hiring
With the cost of an individual immigrating to the UK totalling up to £10k per hire, plus relocation costs in many cases, the financial impact for banks hiring from the EU will increase. Before Brexit, sponsorship was usually reserved for talent outside of the EU. Banks are now facing these costs for people anywhere in the world for any level or position.
There is no reason to expect that the initial process from identifying talent right through to making an offer will be particularly affected, but visa processing times – which can be up to three months – will result in an onboarding process that many will deem problematically lengthy.
The combination of increased cost and reduced agility through the recruitment process is likely to result in a widespread reappraisal of Eurocentric hiring strategies.
Prior to Brexit, London was the EU financial services capital, however, the European Central Bank has put guidance into place that prohibits certain functions from being performed in the UK. For example, to carry out a sales, trading or revenue-generating position with a client base targeted in a specific country within the EU you must be based in that country. As a result, many roles have moved to EU member countries and the talent has remained in the EU. Subsequently, the EU is targeting UK based candidates for these EU positions, further decreasing talent in the UK. This has further added to the pressure on the UK’s financial services industry to recruit locally.
Many Asian and American financial services organisations have responded by setting up hubs in the EU. 87% of US investment banks’ EU staff were traditionally based in the UK, we expect this proportion to decrease as some roles must move to EU countries.
Talent attraction at a grass-roots level
Previously, many organisations in the UK that were of an EU origin were able to take advantage of the Voluntary Experience Scheme (VIE). VIE is an HR device for international mobility specifically aimed at Early Talent. Under VIE, individuals would come to the UK to train, work and hopefully be offered permanent positions. Right now, this is no longer possible and changes in immigration post-Brexit mean that it is unclear when or if this will return.
This means that building higher education networks and university relations is more important than ever. Tailored campus offerings are a vital way of targeting early career talent as part of a wider talent acquisition strategy. With lingering uncertainty around the viability of sourcing talent from Europe – early career talent will be essential for the future competitive UK financial services industry.
London will, of course, remain a substantial player in global finance. By moving its focus beyond the financial hub it is now more comparable to the likes of New York and Singapore than Frankfurt.
Brexit impact on immigration rules will not mean that banks won’t hire from the EU anymore, but it does mean that local talent pools are more likely to be the first port of call, especially when building pipelines of early career talent. As a result, the hiring landscape is likely to become exceptionally competitive. This means that talent pools need to be nurtured and developed – with long-term hiring strategies in place to keep the process on track. We also expect to see greater focus on internal skills mapping, cross-training and succession planning with companies set to develop future skills from within.
There can be no doubt that this will provide a shock to the hiring orthodoxy for most banks, but it also presents a unique opportunity to reset hiring processes and re-invigorate commitment to social mobility. This can also be the trigger for re-energising diversity, equity and inclusion programmes to help financial institutions hire and retain diverse talent.