Shift eastward as demand rises once again

As the aftershocks of the financial crisis continue to ripple through world economies, and uncertainties in the eurozone prompt fears of a double-dip recession, one sector is experiencing resurgent demand – financial training.

Driven by financial market revival, renewed hiring, increasing globalisation and growth in emerging markets, banks and other financial services companies are increasing their training budgets.

As a result, financial training companies and business schools are fielding a wave of applications for their courses.

At AMT Training, this summer’s business will be up 30 or 40 per cent over the previous year, says Alastair Matchett, the company’s co-founder and chief executive. “We’re seeing very strong demand for training. It snapped back about three months ago and we had a record March,” he says.

Patricia Sparacio, managing director of the New York Institute of Finance (NYIF), part of Pearson, which owns the Financial Times, says: “We are definitely seeing it picking up domestically and internationally – both on the entry level as well as the continuing executive education side of the business.”

The sharp rise in business for many financial training companies comes against the background of a dismal previous year for many in the sector, as banks and other financial services providers cut back on both recruitment and investment in employee development.

Some programmes remained popular, particularly specialised training, as well as the required certification courses and topics such as accounting, fixed income, portfolio management.

“We saw a tremendous rise in people coming for risk management programmes, as the whole idea of risk management and getting back on track became important,” says Ms Sparacio.

However, as many banks had shelved recruitment plans, they did not need to run entry-level training programmes. Meanwhile, to save money, many condensed their programmes, running single instead of multiple streams.

With the strong revival of the markets last year, the financial services industry has embarked on a wave of hiring, prompting the need for training.

“Things are very much returned,” says Rick Bryant, adjunct professor of industrial administration at Carnegie Mellon University’s Tepper School of Business, which since 1994 has run a Master of Science in Computational Finance.

“Our current students haven’t found difficulty in finding summer internships and full-time students who graduated in December are 92 per cent placed.”

John Benson, founder and chief executive of eFinancialCareers, a jobs board for the industry, says his company has seen banks starting to increase headcount significantly over the past six months, as well as reconsidering the functional areas to which they want to deploy executives already working in the organisation.

“Banks have either got people in the wrong role and want to reposition them into a different department or they’ve brought in more people from outside,” he says. “The combination is likely to lead to banks looking to increase the skill sets of their people.”

A renewed focus on knowledge and values is also emerging in an industry that, in the run-up to the financial crisis, had been growing at breakneck speed.

“You had banks running not just one stream of 100 people, but three or four streams of 100 people,” says Mr Matchett. “And the sheer scale of that means the cultural identity and the values can get lost.”

Demand for online courses is also rising. By May, the number of applications for the 2010 MS Finance programme at Indiana University’s Kelley Direct – the Kelley School of Business’s online MBA division – was greater than for the whole of 2008, the previous record year.

For many financial training companies, this year’s improvement in business is also riding on the back of growing demand in emerging economies, such as India, China and South Korea.

“We are seeing growth in our domestic and international businesses, but the opportunities in Asia are really keeping us busy,” says Ms Sparacio.

Meanwhile, Asian revenues at AMT Training, which operates from regional centres in Mumbai, Singapore and Hong Kong, are projected to double this year.

The company is busy recruiting trainers in the region. “The centre of gravity is moving eastwards,” says Mr Matchett.

In South Korea, in particular, the opening up of markets, accompanied by the emergence of new financial products, has sparked a wave of interest in financial training.

As Asian institutions enter global markets they want their executives to receive training not only in their home markets but also overseas.

The site visits to financial institutions and trading floors organised by NYIF have proved particularly popular with Asian students. “They want a good theoretical background but they also want to see the practical side of how it’s done,” says Ms Sparacio.

The challenge for financial trainers in the Asian market is its complexity, however.

A multiplicity of currencies and diverse regulatory issues exist across the region, as well as requirements for different financial statements.

“In Asia we have to recognise that it’s more heterogeneous,” says Mr Matchett. “There’s a lot of complexity you don’t find in Europe and the Americas, and, increasingly, people want to have courses taught in the local language.”

In addition, with cross-border activity on the rise, the financial executives of the future will need to be versed in an increasingly complex set of rules.

Significant changes are taking place in the regulatory environments for financial services industries around the world, but these will vary for different national jurisdictions.

“You’re likely to see a multi-level regulatory environment,” says Mr Matchett. “And companies will need help navigating that.”

The increasing globalisation of the sector is also prompting an internationally mobile cohort of financial executives to seek the skills that will allow them to work in any given region.

Meanwhile, companies are moving their operations to where the action is – particularly Asia.

In the process, they need to train local hires and bring their non-local teams up to speed on local regulatory environments. All of which create an increasing demand for financial training.

Nevertheless, Mr Matchett sees a need for corporate leaders to pay more attention to financial training.

“Senior people need to get more involved in training programmes and emphasise that understanding what you do at work is very important,” he says.

“And that this is not just a quick way of making a buck, but that you fundamentally need to understand what’s going on.”

Banks have certainly witnessed the dangers of relying on teams of executives taking on risks that they did not understand and selling complex financial derivatives, such as collateralised debt obligations (CDOs), whose technical intricacies they were un­able fully to grasp.

Even so, Prof Bryant sees a continuing demand for executives with the skills to price and manage complex structured products.

“Certainly, CDOs as we once knew them aren’t going to come back, but we’re seeing a range of structured products being reintroduced,” he says.

“Over the long term, the demand for these more complicated structured products isn’t going away.”