Some find it hard to imagine financial services beyond the city, entering the hustle and bustle of London signals the start of a promising career in financial services to many, particularly for aspiring graduates. Before entering the heart of London’s financial district to start a new job it's easy for ambitious men and women to picture themselves walking along Threadneedle Street among the throng of City folk sporting pinstripe suits and hand-made English shoes, with the belief that there is no financial services beyond the city of London.
Despite public perceptions though, the Square Mile is not the only place for career development in the financial services industry. Many sectors such as banking in particular, have adopted to having hubs for their financial services beyond the city as it is beneficial not only for employees, but companies are also seeing benefits from the shift.
Financial services outside of London
Many of the “mega-Banks” we know today were created from a merger of a London based bank and regionally based counterparts. Scottish banking was centred on Edinburgh before Bank of Scotland and Royal Bank were subsumed by Lloyds and NatWest respectively. There is a still a thriving local marketplace, with Nationwide, for example, remaining one of the biggest employers in both Swindon and Northampton where financial services beyond the city is thriving.
In many cases immediately post-merger consolidation of staff to London was seen as a way to cut costs, with office space being reduced and overheads reduced. However, this has now proven a false economy in the medium term, and the banking crisis of the last few years has forced firms into a reverse direction, shifting their financial centre outside of London.
Moving financial services back to the regions
Heavier regulation, more risk averse banking and an ongoing squeeze on profit margins, sees financial services institutions taking advantage of lower office rent and salary demands elsewhere. They have been moving not just back office functions but key financial services operations outside of London to other centres across the UK.
There are clear financial advantages to banks for migrating their financial services beyond the city. Major institutions, like Morgan Stanley, BNP Paribas and Barclays have even received government grants for moving to regeneration areas in Scotland for example. The potential savings on regional salaries for banks are huge too. The average bank employee in London can demand between 25-30 per cent more than their counterparts in some northern cities.
Since three of the biggest global investment banks in London - Bank of America, JP Morgan and Deutche Bank - announced plans in late 2012 to move 3,000 jobs away from the city, 'near-shoring' (moving financial services away from London or back to the UK from abroad) has picked up pace. The relocation of operations to regional financial centres like Glasgow, Leeds, Bristol and Edinburgh has been welcomed by those cities with open arms after the previous consolidation into London.
Chris Cummings, chief executive office of financial services lobby group TheCityUK has said, “the industry is about far more than just London”. He added that in cities such as Belfast, Birmingham, Brighton, Cardiff, Edinburgh and Norwich, more than ten thousand people are employed by the financial services industry, with these figures growing every year.
London remains the largest financial services jobs area and the South-East is the largest region for financial services employment outside of London. However every region of the UK can boast a major financial services employer, as decentralisation continues.
More than simply reducing costs
The hunt for options outside of London is not just about cheaper staff and space. Moving financial centres in the UK away from London opens up a whole new market of staffing potential. Access to a wider pool of human capital is especially useful in times when banks are vying for the best talent in high demand recruitment areas such as risk and change management.
It's not just young graduates taking financial services career paths outside of London either. There is a rich seam of banking talent at all levels looking to develop their career. Some moved to escape the bustle and expense of London, while others have worked in the fore-running banking institutions. For these experienced executives, seeking contract or interim work offers a rewarding way to utilise their skills.
Comment on financial services beyond the city
The nearshoring trend looks set to continue according to a report by PricewaterhouseCoopers LLC which estimated that financial services could create 265,000 new jobs by 2020, with fewer than 20 per cent in London. For those with an open mind and a taste for something different than financial services beyond the City, there are plenty of opportunities across the UK to develop a successful career in financial services outside of London.