It has been a decade since the worldwide deregulation of the banking sector was blamed for a global crisis that shook the financial world to its core. In the intervening years the industry has been forced to tighten restrictions, ushering in an era of conformity to governance compliance.
However, recent reports show that banks in Japan have been slow to respond to this international trend, with unequipped and understaffed compliance units seen in many of the smaller financial institutions to this day. According to Marc Burrage, Managing Director of Hays Japan, the last 12 to 24 months has seen an institutional shift in Japan’s banking industry, which is seeing huge growth in the compliance sector.
”Amid pressure from Japan’s top regulatory agencies, firms are now aware that they are under the microscope, both at home and overseas. They now realise that they are expected to grow their compliance units in order to strengthen the infrastructure and make sure that they are compliant,” Marc explains
“Of course some firms in Japan may have large compliance teams, but there are smaller companies with just two or three professionals for the entire compliance unit. That is an inappropriate level of security for firms dealing with billions and billions of dollars, so pressure has come from the regulators to add more staff to ensure that compliance is being implemented correctly.”
As this movement towards compliance has been both recent and explosive, there is a pronounced paucity of true compliance professionals in Japan, which is leading to a candidate short market. Some estimates show that there are three or four jobs per candidate, forcing companies to seek out clients in unorthodox areas, particularly from the operations sector. When candidates are found, decisive action is taken.
“When companies find a candidate with either the required skills or level of potential, they are very aggressive, progressing rapidly through the interview process and offering competitive packages,” Marc says.
“Historically compliance has not been considered as the most attractive area, but as it becomes a number one priority for banks, staff from other areas of the industry are seeing compliance as a way to improve salaries, find a better work life balance, benefit from more flexibility in career development, and be visible in an integral aspect of the organisation.”
Once they have candidates from other sectors in position, banks are implementing training systems in order to bring new employees up to speed in their new roles, however there is still a huge onus on the candidates themselves to keep abreast of any regulatory changes that occur.
Although this upskilling of candidates from non-compliance backgrounds is likely to continue over the next 12 months, banks are still seeking out highly qualified compliance professionals.
“Companies are still hoping to find candidates who are able to hit the ground running, with little to no training required. A candidate who has a combination of experience in a regulatory body as well as having worked in a securities firm - those with knowledge accrued on both sides of the compliance coin - should have no problem in finding a position to suit all of his or her needs.”
An overview of what other trends have been observed in Japan’s banking sector can be viewed below.
- Following the recent licencing of 11 crypto currencies by Japanese regulators, one of the biggest talking points in Japan’s banking sector is how they will work with the Japanese yen in the coming year, and how they will be adopted by a populace who is so pronouncedly credit card averse.
- Although banks are finding it difficult to engage talent in a candidate short market, rather than making themselves as attractive as possible, many firms display a superior attitude, expecting candidates to be grateful to work at such exalted institutions. This is particularly prevalent with international banks.
- Japanese banks are having difficulty attracting international experience in the compliance sector as the requirement for native-level Japanese precludes many compliance professionals from abroad.
- This has meant that international experience is being sought in the form of Japanese working abroad. However, this is proving problematic, as many of those who have gone overseas to work are often unwilling to return.
- Returnees and overseas candidates are unlikely to be enticed by standard long-term contracts and are thus hired on roiling annual contracts that may have salaries at 25 to 30 per cent higher.
- Despite the government’s push to see more women holding managerial positions, current progression in this respect is so slow as to appear non-existent in the banking sector, particularly amongst domestic banks.
To find out more about the Banking & Financial Services industry, please read our Inside Story of the sector in Japan here.