The Chancellor's acceptance yesterday of the Vickers Report, which recommended banks separate their retail and investment units in the interests of stability, will require billions of pounds of IT and operational investment from banks.
The move will create thousands of IT jobs, as banks strive to bring about a complex technology separation. But financial IT experts warned that there will not be a jobs boom for at least the next four years.
"The interesting question is the timeline that banks will be willing to commit to. The legislation will not be fully drafted until 2015, with implementation by 2019. It would not be surprising to see an extended planning period of analysis and design before industrial strength implementation begins," said Laurie Boyall, chief executive at financial recruitment firm McGregor-Boyall.
"Much could happen politically, economically and financially during this period," he added. But if the work does happen, he said, the projects will be "gigantic" and require "extremely large amounts of resource".
Chris Skinner, chief executive at financial think-tank Balatro, agreed that the IT planning stage could be complex and drawn out before any changes are effected.
"In a number of banks it'll be a very fine line between what technology serves the investment bank and what serves retail," he said. "With Barclays, for example, it seems that Barclays Capital would be separated with a clearer line from Barclays retail bank, but with banks such as RBS - where the investment arm is more a complement to the main retail bank, with some crossover - it's especially tricky."
Yesterday, Chancellor George Osborne confirmed reports that he was also downsizing RBS' investment arm.
Skinner said the banks would then face questions of exactly how far to go in separating the systems. "They will also be asking themselves just how far they have to go with IT separation, whether they mirror a system in the different units - with different data - or whether they run a completely separately configured system."
Mathew Wells, a managing consultant at financial advisory firm Hudson & Yorke, agreed that the proposals "will require a significant change programme, especially where those affected by the proposals are required to not only separate IT systems but also face the possibility of entire IT operations being restructured".
The work will provide well-paid jobs for those with core business change and technology change expertise, firstly in the area of analysis and planning, Boyall added. With a potential "pressure" on the market to find enough skills, he said, this will "drive up" pay rates. "When this project is happening with other regulatory projects (such as Basel III), the pressure is amplified."
It remained unclear how much of the work will be outsourced, Boyall said, but much of the early planning and implementation phases are expected to be in the UK with some later software development offshore - a common arrangement.
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