Banner Default Image

Credit Risk: Year-End Update

About our Risk Recruitment Team:

Selby Jennings has been providing expert level recruitment services for the financial services industry on a global scale since 2004 with a business model predicated on being sector-specific specialist. Since breaking into the US market in 2013, we have opened seven offices, all of which have seen unparalleled growth due to our ability to deliver top talent in a timely fashion. As one of the most established search firms in the risk management domain, Selby Jennings has continued to execute and streamline niche searches for large corporate and start-up clients alike.

Our candidate database consists of over 400,000 risk professionals who work in roles including but not limited to corporate credit risk managers, credit strategy analysts, risk data scientists, and more. Many of these relationships have been built and maintained over the last 15 years, and we are the agency of choice for our world-class clients looking for help solving their number one business challenge: sourcing and retaining talent.

Our global presence spans North America, Europe and APAC. The risk team is one of the most expansive teams in North America with specialists recruitment consultants who sit across New York, Boston, Charlotte, Dallas, and San Francisco. This report will provide high level insight into trends that we are seeing across the credit risk vertical including: consumer & commercial credit risk, model risk and fraud risk analytics. Additionally, we provide some insights into what banks, credit card issuers, and FinTech’s are doing from a hiring perspective to corner market share and outperform their competitors.

Implications and Trends from 2020 – Consumer Credit Risk

At the beginning of 2020, the consumer lending space had a promising outlook with a stable economy and steady hiring for the new year. However, due to COVID-19 and the subsequent economic volatility, hiring declined and consolidation was trending across the industry with thousands out of work and an unemployment rate that peaked at nearly 14.5%. The entire landscape of the retail lending space was swiftly changing, and many lenders were forced to accelerate their transition to fully digital operations.

As restrictions were slowly reduced, unemployment rates decreased, and economy-wide confidence increased. Once again, there was a gradual shift towards hiring. As a result, we have seen an uptick in hiring across multiple areas of consumer credit and fraud risk analytics. Notable trends we are seeing in the marketplace include:

Consumer Credit Risk Trends

As the economy gradually began to recover and restrictions were tentatively lifted, we noticed most hiring pertaining to credit card, mortgages, personal loan, and small business loan product coverage:

  • Mortgage hiring has been higher given the increased forbearance rates. We have seen most of this taking place in Dallas or Chicago, especially with restructuring being far less distressed.

  • Cards hiring has been taking place mostly in San Francisco, Wilmington (DE), and Dallas.

  • Personal loan hiring was relatively steady throughout 2020. Higher unemployment rates led to increased requests for personal loans, which required the banks, card issuers, and FinTechs to hire more credit risk professionals with unsecured personal loan product coverage.

  • Small business credit risk professionals have been in high demand since the beginning of the summer. Considering the negative effect COVID-19 brought upon the small business community, there has been an increase in small business lending. Several global organizations have been increasing headcount on the small business lending and commercial card side, including American consumer banks and card issuers.

  • Credit Card Issuers prioritized hiring for their Fraud Risk and Collections business lines throughout most of the year. Additionally, there was sporadic hiring
    within commercial card credit risk as the nationwide requests for small business loans increased.

Fraud Risk & Analytics

  • With the entire market pivoting to build out digital banking, personal finance and payments platforms, new methods of fraud were presenting themselves daily with rapidly increasing numbers. The gradual shift to digital payment platforms and implications from COVID-19 made banks and lenders more vulnerable to fraudulent activity. In response, FinTechs and banks have begun to recruit top talent within fraud analytics with a specific focus on machine learning and artificial intelligence.

  • We have seen a very high demand for candidates with cards experience, as they typically work with big data sets and have the most transferable skills.

  • We have seen a lot of financial services firms recruiting talent from the top technology and software companies across the globe to assist with their facial recognition technology to decrease the likelihood of fraud; something that was unheard of this time last year.

  • Although it is not credit risk centric, we noticed consumer banks and credit card issuers hiring Risk Managers covering fraud from an operational risk perspective.
    Given the overall implications COVID-19 had on the fraud market, it was common for banks and card issuers to seek senior-level risk talent to enhance frameworks on the operations side as well.

Implications and Trends from 2020 – Wholesale Credit Risk

The economic shock from COVID-19 affected the Wholesale Credit Risk market as well. However, the hiring trends were far different than those in consumer credit risk. Given the volatility in certain sectors, there was a major push for hiring within counterparty credit risk, specifically within non-investment grade/leveraged transactions.

General Trends
  • Most of the commercial credit risk hiring occurred with the American investment banks. The American investment banks were hiring for multiple positions at the VP-level and above as early as May 2020.

  • The international banks suffered long-term hiring freezes because of COVID-19. Several high profile, international banks have moved towards leaner team structures.

  • Banks who were holding onto the unsecured debt of national retailers unfortunately had to layoff experienced talent.

Workout and Recovery Risk
  • Given the likelihood of default across multiple commercial sectors, there was a big movement to move talent into workout and recovery functions to support distress industries.

  • You can expect the big banks to continue hiring in this vertical, given the volatility on the horizon and the high probability for additional distressed debt across various sectors.

Credit Risk Leverage Lending
  • As stated previously, most hiring in this space was within the major American investment banks. These banks were hiring for positions at the VP-level and above, as early as May 2020.

  • Several American investment banks are continuing to move their Commercial Credit Risk groups to lower cost cities, such as Salt Lake City, Dallas-Fort Worth Metroplex, and Tampa.

  • Credit/loan review is another major area of hiring given the anticipated changes to banking and lending guidelines. This can be a very crucial function for any bank looking to navigate through a volatile economic climate with most of the talent coming from underwriting/portfolio management functions.

  • The most active credit risk hiring verticals within commercial credit/leverage lending were across Industrials, Retail/Consumer Goods, TMT and Healthcare

Counterparty Credit Risk
  • The beginning stages of the pandemic had every corporate bank allocating headcount to their loan workout and restructuring functions. The uptick in counterparty credit risk hiring began at the tail end of Q2 and remained relatively active throughout the rest of 2020. The most active market was the hedge fund credit risk space with several banks looking to build out their teams in New York City. Given the economic volatility, hedge funds were looking to capitalize on distressed markets and turned to the banks for additional cashflow and low interest rates.

Wholesale Risk Modeling/Model Validation

  • In this space, most of the hiring is taking place in the low cost of living areas such as Texas, Arizona Florida, etc. With the previous administration, banking restrictions were rolled back which led to far less of a need for validation and governance teams, especially for DFAST banks. However, with the FinTech space emerging as a real threat, model development/data science talent has been put at a huge premium and has made a competitive market (especially with remote flexibility on the table).

COVID-19 and its Impact on Hiring:

As banks continued to make a push to move teams to lower cost of living areas, they faced issues sourcing talent who were comfortable committing to relocating in the future. These are new regions being built out, and often the necessary talent is going to be asked to relocate from the northeast.

To alleviate these issues, the FinTech space became increasingly open to allowing full-time remote flexibility, with no obligation for candidates to relocate in the future. This helped candidates feel more at ease and showed the commitment FinTechs had to keep their employees safe. However, banks continue to ask prospective candidates to relocate when the time comes.

2021 Market Outlook & Predictions

Consumer Credit Risk
  • Hiring within consumer credit risk will be very active in the upcoming year. At this point, it is industry standard to onboard and train remotely. We expect most hiring in Q1 to be at the mid-level, given that candidates with 3+ of experience require less of a learning curve than fresh graduates.

  • We expect the acquisition and collections markets to be most active to begin the year. Acquisition risk hiring was relatively quiet through 2020, but we expect banks and FinTech firms to increase acquisition efforts in 2021 given how quiet the prior year was. Additionally, because of the implications from COVID-19, collections hiring is going to stay active. Many smaller and regional banks prioritized contract hiring for collections but are now focusing on making full-time hires given the full-time attention needed on that line of business.

  • As the vaccine becomes more accessible and the banks begin office rotations, you can expect the regulatory and second line teams to return to the office first. First line teams will likely be one of the last groups to return to the office given that they have been performing well from a remote capacity and there is less cross functional work.

  • With regards to the consumer lending space, we anticipate that the fraud risk/analytics hiring will continue to trend upwards. Since lenders and borrowers are accelerating the shift to the digital banking world, the way fraud is targeted and identified will constantly be changing. Fraud analytics experience across all product types will be in very high demand.

  • Additionally, portfolio strategy and optimization will be a huge area of need as business look to adapt to the everchanging climate. Candidates with experience developing and reengineering approaches to acquisitions, underwriting and collections will be crucial for business growth.

  • As the vaccine becomes more readily available, delinquent borrowers will hopefully return to work, and thus be able to pay back their loans.

  • 2021 will bring light to new forms of lending and pave the way for the digital banking era which will lead to new ways of evaluating fraud and credit risk. FinTechs and banks will be in a talent war over the next six months to assure they have the best candidates in place to protect their capital while helping inhibit growth and drive revenue.

Wholesale Credit Risk

  • On the commercial side, we anticipate leveraged lending to continue trending upward, specifically in consumer & retail, healthcare, and TMT. With regards to functionality, underwriting and loan review experience are at the forefront of hiring demands.

  • Expect to see a majority of corporate lending credit risk hiring in lower cost areas. These teams will be working closely with the front office on transaction due diligence.

  • Regulatory modeling and stress-testing hiring will be very active in Tampa and Dallas.

  • What to Watch For: As global organizations continue to relocate teams, combined with bonus uncertainty for 2020, we predict there to be more senior-level vacancies within commercial and counterparty credit risk. Many senior-level individuals who have been with certain banks for 5+ years are not particularly keen on the short notice for relocation, so there has been higher proactive looking at the Director/MD level this year than there had been previously in 2019.

Top Skill Sets Heading into 2021:

  • Data analytics – SAS/ Tableau/Python/R – Right now, since the banks, FinTechs, and card issuers are hiring and onboarding remotely, they are looking for candidates that have the slightest learning curve. As a candidate, it will be important to be very skilled in SAS and Tableau (data visualization) prior to the interview process. SAS is the main programming language in consumer credit risk and Tableau is the main data visualization tool, so managers will be keen to make sure than you are skilled in this department prior to extending an offer. However, FinTechs and tech-driven consumer banks are beginning to leverage Python or R more frequently, so you can expect proficiency in Python or R to become necessary for credit strategy and modeling roles in the near future.

  • Machine Learning –Many fintech firms and Consumer Banks are starting to prioritize hiring for candidates with skill sets in machine learning given how necessary it is to gain a competitive advantage in the market. Effective machine learning techniques give banks and internal edge and will look for candidates who can use machine learning to improve lending decision making at the enterprise level.

  • Leveraged Loan Experience – We expect the leveraged credit risk market to continue being active. Many banks, especially American Investment Banks, will be on the lookout for mid-level candidates with leveraged loan product knowledge.

  • Optimization Techniques – Banks will actively be hiring first line credit strategy professionals with experience optimizing underwriting or acquisition strategies to maximize profitability. Given how much of a setback 2020 was to the consumer space, the bank’s will be looking to increase the bottom dollar from last year significantly.

  • Fraud – Fraud is going to be one of the most active hiring verticals in early 2021. The skills in Fraud and Portfolio Management are transferrable, but the banks, card issuers, and FinTechs will heavily value past work experience for this business line.

Tips for employers in today’s hiring landscape:

  1. Be prepared to Discuss Long-Term Trajectory when Interviewing Candidates: COVID-19 forced global organizations to go into hiring freezes, eliminate teams, and restructure specific functions, which made most candidates in the market more risk-adverse. Overall, candidates will need a clear understanding of the position, and what upward mobility opportunities they will have if they are going to leave the comfort of their current employer.

  2. Conduct introductory phone screenings via video conference: Although most interview processes have been fully digital, many organizations still do hiring manager phone screenings via phone call. However, candidates find more security and commonality with managers who conduct video screenings at the beginning of the process. This shows candidates that specific employers are engaged in the process and are interested in learning about the individual rather than just filling a vacancy. Prioritize video conference interviews over phone calls at any point of the interview process.

  3. Be clear on how your team communicates: It is a daunting task to ask a candidate who is used to working onsite, to start working for a new organization through a computer screen. Clear communication is necessary to building an effective risk team. During the interview process, make it clear to candidates how you delegate work in a remote capacity, how ad-hoc requests are done remotely, how you utilize video conferences, etc.

  4. Promote Remote Activities for Mental Health and Internal Networking: Full-time remote work unfortunately takes away some of the exciting aspects of starting a new position, such as meeting your new teammates in an informal setting. It could be beneficial for hiring managers to explain to candidates how they can further network with their new teammates and familiarize themselves with the new culture. For example, making time after work hours for a Zoom activity will lead to new starters feeling much more comfortable with their new colleagues.

Top 3 tips for Job seekers in the market in today’s hiring landscape

  1. Prove that you are a Self Starter: Hiring teams are prioritizing candidates that require the smallest learning curve. If you are a fresh graduate or unemployed, it will be important to specifically highlight what you have done to better yourself during this unprecedented time period. Which coding classes have you completed? Which certifications have you received? Be prepared to discuss how you have built upon your skillset and how it directly applies to the position you are interviewing for.

  2. Show the Results: Now more than ever, hiring teams are looking to get more information around what you have done in your daily job to improve revenue, efficiency, decrease losses, etc. Clients are very keen on seeing resumes that provide metrics and tangible results. For example, if you are working on a credit strategy team covering credit cards, how much did your strategy affect profitability? Did it decrease fraud losses? Being able to provide results will give employers confidence that you know what is expected of you and that you will not need to be micromanaged from a remote capacity.

  3. Stay Professional: Continue to wear business professional attire when interviewing in a remote capacity. 2020 has been the year of loungewear, but it still does not have a place in a professional setting. You can assume that a hiring manager is not going to show up to an interview in a sweatshirt, so it is your responsibility to pitch yourself as an equal, and dress nicely to show respect and professionalism. In the normal world and remote world, first impressions are key.

About us

Selby Jennings is a leading specialist recruitment agency for banking and financial services. For more than 15 years, we have given clients and candidates peace of mind that the recruitment process is in expert hands. Our continual investment in best-in-class technologies and consultant training enables us to recruit with speed, precision and accuracy. Today, Selby Jennings provides permanent, contract and multi-hire recruitment from our global hubs all over the world.

We pride ourselves in keeping our professional network up-to-date with any changes that will shape the future of work or affect the hiring process. Visit our website to discover more invaluable insights, including exclusive research, salary guides and market trends.