Why consider a career in Compliance? - Part 2

A few months ago, I posted a blog introducing the prospects of a career in Compliance, including what the job typically entails and how it fits within financial services.

I would now like to delve into what Compliance offers as a career pathway, including its growth and development potential, what type of skills and background could be a good match, and also some of the drawbacks which people should perhaps take into consideration.

1.  What is the career growth potential?

Similar to some other functions the Compliance Officer of the future will benefit from being more technically capable to utilize the various new programs and systems that contribute to the company’s control framework. Major banks are already employing Data Analytics for risk-based audit assessments, and Internal Auditors are increasingly required to possess technical skills in these areas. There is also the likelihood that digital tools could be brought in to further enhance the 1st and 2nd lines of defense.

Compliance could then become more of a hybrid function, which occupies an increasingly significant spot at the heart of the organization with close connections to Legal, HR, Operations & Technology, Risk & Audit, as well as the Business. Depending on the role, the responsibilities and scope are likely to span across many of these areas, with roles that are diversified and foster personal development. 

The general slowdown in hiring across banking is not simply down to technologies replacing jobs, but also because there is a growing diversity of financial companies offering a wide range of services, which has been incrementally taking business away from traditional institutions. 

Profit margins are being squeezed, which is leading to cost-cutting and more efficient reorganization of labor. However, where some of the big banks are shrinking, newer players are building momentum. These range from innovative payment providers, such as PayPay or Paidy, to investment management providers such as Betterment or Money Design, to global digital banks, such as Revolut and NP2. These are attracting people away from traditional brick-and-mortar banks by offering low fees, user and tech-friendly interfaces, global connectivity and a one-stop shop suite of services.

The benefit for people working in Compliance is that as these Fintechs scale their operations in the current complex regulatory environment, there will be a strong emphasis on building robust internal control frameworks early on in their development. At many of the newer financial companies we work with in Japan, the key hiring requirements are within IT / Tech, Sales and Control, which includes Compliance, Risk, Audit and Legal. 

The line between the banking and technology industries is being blurred even further by major global tech companies, such as Google, Facebook and Amazon, which are diversifying their services into finance.  Combine this with the growing regulatory spotlight on Data Privacy - another major frontier in the development of controls and governance as seen in BCBS 239 - and one can see a lot of career scope for Compliance in the broader, cross-industry context.

The trend has been for people working in financial services, especially investment banking, to have an easier path migrating into other industries rather than the other way round. If this continues, and the skills and experience of working at a high level in financial services maintains its standard, then specialist Compliance officers – particularly those in core / central functions - might see growing mobility opportunities to branch into other industries in the future.  

2.   Who is Compliance suited for?

Given Compliance’s core purpose is to protect the organization, it is an obvious fit for those with a good risk mindset and interest in problem solving and/or conflict management. Personal characteristics could include being astute and prudent, and having a high attention to detail, as well as the ability to think rationally and logically.

The work involves maintaining high ethical standards, and people need to have the fortitude to directly challenge any issues that arise if required. Compliance officers therefore also require excellent interpersonal skills, as it involves a great deal of internal communication with various stakeholders, as well as external ones in the form of regulatory and other public authorities.

3.   What’s the catch?

Within banking the surge in compliance jobs that was witnessed 3-5 years ago has slowed. This hiring spree was principally a result of banks having to swell their ranks in Compliance to meet regulatory requirements, and the lack of specialised compliance officers led to numerous hires from areas such as the front office. Now that compliance departments are more or less steady in traditional financial institutions, the focus is more on up-skilling and fine-tuning the department – as seen in the growth of new Compliance Testing teams.

The demand is for the next generation of compliance specialists: ideally, those who have started in the field as new graduates or are making the transition at a junior-mid career level and with lots of room to develop/grow. The key sticking point is that those who are mid- or late-career might find it more challenging nowadays to make the move into Compliance unless they are bringing a specific skill that is a focus for the role. Compliance hiring managers are more expectant of people having the prerequisite knowledge or experience, and so have less flexibility than they did previously. 

Also in Japan at least, and especially at foreign financial institutions, there is a strong emphasis on strong language and communication skills in both English & Japanese. This is chiefly because requirements include facing local regulators, such as the JFSA or BOJ, as well as being able to interact effectively with regional and global colleagues within compliance.

Nevertheless, those at an Analyst, Associate or AVP level within banking who possess good bilingual ability and are interested in forging a career in Compliance can make the transition, especially those in Operations, Finance, Risk, Audit, HR and Legal.

Compliance is an occupation with a lot of career advancement potential. It often covers interesting work with an important objective to protect the organization from within. Salary levels are also attractive compared to Operations, Risk and administrative Legal positions. In general, we see good work-life balance, as well as the opportunity to interact with various internal stakeholders which provides more insights to the business as a whole.

If you are interested in learning about a career in Compliance please feel free to connect with me to learn more about the market in Japan and current opportunities available.