The rapidly-evolving regulatory environment is fast becoming a top-of-mind challenge alongside key business priorities which companies have historically placed heavy and almost exclusive emphasis on, such as profitability and costs. A new global research report from recruitment firm Robert Half, shows that the greatest challenge appears to be in Hong Kong where 96% of respondents within the financial services sector find the regulatory regime challenging to manage.
Compared to 35% of companies globally, 46% of Hong Kong respondents are expecting to increase in their budget, including capital expenditure and labour costs over the next 12 months as a result of regulatory changes.
When asked which department is taking the lead on managing regulatory change, 39% of Hong Kong companies said finance, 15% said compliance, and 13% said technology.
In addition, regulatory change is having direct impact on workloads. Globally, two-thirds (66%) of respondents anticipate rising workloads as a result of regulatory change. In Hong Kong, nearly three in four Hong Kong respondents (72%) report that regulation has increased the day-to-day financial workload for financial services companies. To manage and accommodate the additional regulatory workload, 43% of Hong Kong companies will hire contract or interim staff, and one in four (23%) will add to their permanent headcount.
“The 2007-2009 global financial crisis marked the beginning of a period of significant change for the financial services industry," says Pallavi Anand, Director, Robert Half Hong Kong. "From a business perspective, this created a new set of challenges as senior company executives are forced to re-focus on corporate restructuring, cost cutting and risk management, all under the watchful eye of regulatory bodies and general public scrutiny.”
“The shortage of skilled professionals has resulted in opportunities for mid-level staff to assume roles of greater seniority, as well as rising demand for specialists who are often brought in on a permanent or interim basis to manage initiatives such as regulatory compliance.”
Despite concerns over Eurozone, the outlook for the future among respondents across the financial centres is generally positive. This is particularly apparent in Germany, where nine in 10 (90%) of respondents reported confidence in their national economy followed by Singapore (85%), Hong Kong (82%) and the US (82%).
Profitability (37%), business costs (35%) and increasing regulatory issues (27%) were highlighted as the three biggest internal business concerns. External concerns that are high on the list for Hong Kong respondents include the global and Asia economies (both 39%) and China’s economy (38%).
In Hong Kong, the areas of regulation that have had the biggest impact on businesses are AML requirements (35%), Basel III (31%) and anti-corruption requirements (24%).
“Many of the recent changes such as AML requirements and Basel III have created unprecedented challenges for senior financial services executives, including finding and retaining professionals with the right skills to cope with the regulatory workload. Organisations that proactively address these issues and develop long-term business and people strategies are best positioned to succeed in the future,” continues Anand.