Financial services sector relying on record numbers of interim managers
The financial services sector is relying on record numbers of interim managers to help deal with the raft of changes sweeping the industry – it is now employing three out of every five private sector interim management roles, says Interim Partners, a leading provider of interim managers.
Interim managers are usually appointed at senior management level, to help with major restructuring or change programmes on a short-term basis.
Figures* show that in the second quarter of 2013, 59% of all interim management roles in the private sector were in banks and other financial services businesses, up from just under half (48%) in the second quarter of 2012.
Interim Partners says that this record demand comes as the industry continues to grapple with a prolonged period of major change triggered by the financial crisis, with requirements for such senior short-term expertise being further fuelled by the recent break-up of several big banks, such as the splitting of Lloyds TSB and RBS’s divestment of its “Project Rainbow” branches.
Angela Hickmore, director at Interim Partners, said, “Banks are faced with two huge challenges – dealing with a bewildering level of regulatory change and trying to deliver profits from the new business model that has been forced on them since the financial crisis. It is hard to do justice to the scale of these twin challenges.”
“There is very little light at the end of the tunnel for senior managers within the financial services sector – as regulators and politicians just keep piling up the work. Heavy use of interims is one the only ways that these banks can keep up the pace and prevent themselves being swamped.”
“There are now very few parts of the financial services sector that have not had to be reengineered either because of regulatory threats or the need to cut costs.”
“Interims with specialist financial services knowledge have always had a big role in this sector. They are also the only resource that can be increased and decreased so quickly it’s not surprising that they are taking on such big role in the transformation of the big banks.”
Recent and ongoing regulatory challenges facing the financial services sector include: AIFMD, BASLE III, the Mortgage Market Review, FACTA and Dodd Frank.
Interim Partners points out that banks’ PPI remediation programmes continue to be heavy users of interim managers, who come in as programme directors to make sure that these programmes are running as efficiently as possible. Some of these interims are lean manufacturing and six sigma experts,** who have very specialists skills in improving efficiency.
New banks driving demand
Hickmore says that new start up banks are using specialist teams of interim executives to help them get their banking licence. Once they have a licence, start-up banks also tend to be heavy users of interim managers to accelerate their growth.
She says, “Interim managers have been instrumental in launching some of the new banks that have entered the market, and in helping them to grow by setting up their infrastructure.”
“We’re also seeing high demand right now from a lot of new community banks preparing to launch. Some of these plan to do a lot of business lending and are using interims to prepare their credit risk processing systems.”
Growing numbers of interims hired to devise growth strategies as economy recovers
Interim Partners adds that the gradual pick-up in the economy is starting to be reflected in financial services firms’ increasing use of interim managers hired to devise growth strategies to boost business performance.
For example, Interim Partners notes that a sign of emerging confidence in the sector is the growing trend for retail financial service organisations hiring interim managers to start developing strategies to improve their digital services to customers, as online banking continues to grow in popularity.
Says Angela Hickmore, “Although the financial services sector is still in the process of responding to the changes wrought by external pressures, we are also starting to see banks and other businesses in the industry start to focus more positively on the future again.”
“We are signing signs that some are starting to tap into interim management talent to help them plan for growth and position them to capitalise on the strengthening recovery. Having this kind of top-level expertise at their disposal for as long as they need it helps give businesses a fresh perspective as well as the in-depth knowledge that they may need to take the steps required to move forward.”
Hickmore adds, “Although demand for interims in financial services is high and is likely to grow further, there is still a huge call for interims in other sectors as many businesses across a range of industries begin to think about shaping future growth strategies.”
** Lean manufacturing is a process pioneered by Toyota that seeks to reduce waste and simplify service delivery whereas six sigma seeks to eliminate errors in a process and