Banks’ pledges to bolster their audit and financial crime functions in light of the global financial crisis have also buoyed hiring trends for candidates with the right experience.
While investment banking jobs have dried up or become more competitive, banks are increasingly spending millions each year on boosting the amount of staff in other areas to comply with regulators. This comes on the back of a shift to electronic trading desks, with high-frequency trading firms poaching investment bankers, as new rules banning proprietary trading at banks loom large.
“Since the financial crisis, banks have certainly turned more risk-averse,” says Jared Barlow, associate director of admissions at the W. P. Carey School of Business.
Jared says that regulatory compliance now includes higher capital charges and assessment of systemic risk from newly formed financial regulators. “As such, financial institutions have a high number of individuals employed in the compliance, auditing and risk-assessment functions,” he adds.
Standard Chartered, the British bank, has doubled the number of staff in its financial crime unit and has increased legal and compliance headcount by 30% in the past year.
But there are also opportunities for business school graduates to make their mark in professional services firms, which service the financial sector in these areas.
“Compliance auditing, as well as financial-reporting auditing, are major service lines by large accounting firms,” says Jared, whose business school graduated 13.6% of its MBA cohort into financial services last year, second only to the technology sector.
“The Big Four and other large international public accounting firms are engaged in assurance in many areas, including internal-control adequacy [and] sustainability accounting.”
Banks have been forced to increase hiring in these areas after finding themselves in regulatory hot water. StanChart was forced to pay a multi-million dollar fine in August, while BNP Paribas, France’s biggest bank, was fined billions in June by US regulators after violating sanctions on some countries.
BNP has said it has increased its compliance staff by 40% to 1,600 in five years. It has pledged to bolster its compliance, legal, audit and risk management functions further in light of recent sanctions.
William W. Sihler, a professor of finance at the Darden School of Business, thinks that regulators are driving banks to employ more staff. “Just dealing with the regulatory scrutiny is taking considerable time and cost,” he says.
HSBC is spending between $750 million to $800 on its compliance and risk program, up considerably from $150 million to $200 million last year, and Macquarie, the Australian bank, has tripled the amount it spends on direct compliance in three years to about $300 million.
“It is true that a certain risk aversion can be read in recruiters’ strong preference for candidates with substantial prior experience,” says Pascal Michels from the career services team at IESE Business School. But he adds that as the economic climate improves, appetite for career-changers may return.
But while he says that IESE’s MBA students are mainly hired in investment banking divisions, he thinks there is a private market for compliance, risk and auditing roles. “Undoubtedly there is a real appetite in these areas at the experienced hire level, and MBA candidates with the right profile may find it an option to tap into,” adds Pascal.
However, while business schools like HEC Paris have this year sent large numbers of MBAs into front office positions in corporate finance and capital markets areas, knowledge of compliance and regulatory issues is increasingly demanded in interviews for jobs in a variety of areas.
“They are increasingly being challenged in interviews on three topics in particular: ethics, compliance and regulation,” says Jacques Olivier, director of finance programs at the French business school.
He adds that there has been an increasing trend at banks to hire more staff in compliance and risk management, but this has not been immediately reflected in HEC’s raw employment figures.
While the crisis has prompted banks to adapt, so too have business schools in the teaching of their MBA and master’s programs.
Jacques says that ethics and compliance play a major role in the design of the finance curriculums at HEC, for example. A new dual MBA-MIF degree, launching next year, has made ethics and corporate responsibility a compulsory learning component for all of HEC’s MBA candidates.
Dual degree students are also required to take a course on bank regulation, and a course on ethics and compliance taught in collaboration with the CFA Institute. “HEC Paris takes these topics very seriously,” says Jacques.
At IESE, students can opt for electives in enterprise risk management and ethics and finance, taught by Prof Jan Simon who is a former director of Goldman Sachs.
“These electives in particular would definitely be an asset for any compliance and risk management team,” says Pascal.
The CFA Institute, which administers the CFA exams which are increasingly popular with financial sector employers, has changed its curriculum – between 10% and 15% of which is now focused on ethics.
Kate Lander, head of education for EMEA at the CFA Institute, says the CFA qualification is becoming increasingly useful for risk management roles. “Clients want credibility, and employers want to hire people who have a good understanding of risk and regulation,” she adds.
Beyond compliance careers at banks, Jared says that “financial forensics” has emerged as a lucrative service line in many large professional service firms – areas that are “huge issues” in business.
“Students from Master of Accountancy programs that include coursework on forensic accounting, internal-controls evaluation, corporate governance and sustainability accounting are attractive to employers,” he adds.
However, even in less niche areas MBA candidates will need to have the right experience. “While opportunities in compliance, risk and audit may abound, these will generally require considerable previous experience in that function,” says Pascal.
While such regulatory costs are putting pressure on banks, and forcing them to hire more staff, the trend shows no sign of abating – several of Europe’s top banks including UnitCredit, Société Générale and Deutsche Bank say that they face US scrutiny over sanctions.
I have met the most competent and diverse batch in this school. These people not only thrive on their own but also makes sure that you are doing it with them. The professors will take your had and walk you through all milestones and make sure you are not left behind. I have found their extracurriculars extremely engaging. There was always a room to have social life after academic life. The only hindrance is the location of the school, it is slightly outside city and living in city is expensive.
Internationality and diversity of opportunities
About my programme I would say it is very international and flexible: we have the opportunity to choose exactly the courses we want. But at the same time, the frame of the campus is crucial in students' life and enable us to create friendships.
Great selection of people
While HEC's MBA is highly selective, I really enjoy the type of people HEC's selects to make sure everybody gets the best out of their MBA experience and networking opportunities. Not only it's an incredibly diverse pool of people (~60 nationalities) but most importantly they make sure to let in friendly empathic and curious people.
Best in France for Grande ecole
A prestigious business school. Languages are important. It is better to have a scientific baccalaureate with excellent grades in high school and good assessments. The courses are well designed as per the latest trends and practicality of learning in stressed upon. Overall, a very good experience.
Diversity and quality of fellow students
Very international and interesting place to be and opens a lot of opportunities, however the administration is very french and facilities are subpar (gym, classrooms) meaning the academic affairs is pretty much useless and lastly we are graded on a curve which can create a toxic environment because of the competition. With that being said the pros outweighs the cons by far.
The quality of the teachers, the campus, the clubs
The school is very international indeed, we have courses with international students and share things with them within the extra academic life (in the social clubs especially). We have great career prospects if we prepare ourselves well - however, the global curriculum is still very finance-oriented, which is a pity for other interesting domains of the company world, which does not rely on finance only. The social clubs are good practice for the management and for now, are quite independent.
HEC Paris awaits you
HEC Paris is really a nice place to do a master's in business. Many classes are useful and interesting (corporate finance, financial accounting, contract law…), some are less - but the curriculum is to be reviewed in the year to come. Regarding the student life, it is incredible, with about 130 clubs, lots of great parties with even greater people. The Jouy campus offers a lot of opportunities to do sports, and you can breathe fresh air every day. HEC also helps a great deal to find an internship or a job.
A dream institute
Enrolling in the HEC MBA was by far the best decision I made for myself. The people and faculty are great, with lots of opportunities to meet people and expand your horizons. Very nice campus where I have had some good running sessions. The alumni network is superb and very helpful. It also has a good support system for entrepreneurs. Would definitely recommend it!