Bratislava: Capco, the business and technology consulting firm dedicated to financial services, aims to double the size of its Slovakia-based near shore operations in the next two years.
The firm believes that Bratislava is poised to become a leading financial centre in the Central and Eastern European (CEE) region. The city is already home to 27 banks and subsidiaries of foreign banks, 20 insurance companies, a major credit card processor, a global reinsurance business and several wealth management companies.
Strong educational qualifications, excellence in language skills, proximity to the financial centres of Western Europe and highly competitive costs form many of the ingredients making Slovakia an attractive proposition to financial consultancy companies, Capco says.
Many of these businesses have opened offices locally and are growing native workforces to meet growing demand for services across Europe and beyond. This trend is set to accelerate with the growing industrialisation of the global banking sector.
In 2012, Capco chose Bratislava as the base for its near shore operations, adding to its established network of offices in financial centres on four continents. Claus Hintermeier, Head of Capco's near shore operations, says, "We initially chose Bratislava for three key reasons: ease of travel to any Western European financial centre, the lack of currency exchange risk as Slovakia is part of the Eurozone and the high percentage of German speakers in the labour market."
Growth in demand for financial services consultancy skills boosts employment
In its first year alone, Capco has hired almost 50 employees in Bratislava, and continues to grow.
"We aim to double our size within the next two years," says Hintermeier. Capco recruits — and is continuing to attract — individuals with a strong educational background, excellent language skills, experience and potential to help optimise and transform services delivered by global banks. By recruiting locally, Capco also contributes to the local economy.
Capco also anticipates a revolution in the Slovakian financial sector as banks around the globe adapt to new rules issued by regulatory bodies. Already dubbed 'the new normal' this demanding regulatory environment, alongside fast-changing client requirements, is driving a wave of deep transformation across the financial services industry. Hintermeier adds: "We believe that banks will narrow the scope of activities around their core business. This typically results in increased outsourcing and additional investment in automated processes — with a corresponding rise in demand for financial services consultancy."
This is already happening in the major banking groups. For example, one leading global bank has optimised its internal processes so it can now serve five times as many operations as other banks. "In banks in the CEE region we're also seeing the merger of similar functions into so-called regional hubs. Our own experience as a consultancy indicates a growth in tasks such as impact analyses and implementation of regulatory changes, complex trading platform consolidation, IT migration projects and back office operations optimisation projects. These activities apply to practically every bank in Europe and so we anticipate a substantial wave of additional activity," says Hintermeier.
Bratislava has the potential to become a major European financial centre
Slovakia also has enormous potential to increase the supply of value-added services in addition to its established call centres and service centres. Hintermeier says: "Bratislava is well-qualified to participate in financial services consultancy. There's a strong local understanding of bank processes and technology as well as good language skills and wider professional experience."
In the past, it was thought that rising labour costs in Slovakia would lead to a decline in the local economy as jobs associated with low qualifications moved to other countries. This did happen in the IT sector, where many companies moved their services from Bratislava to Asia. But in recent years, the IT sector has evolved quickly, especially in banking where the focus has switched to added-value services.
In the next five to ten years, Capco anticipates the Bratislava service sector for financial institutions to grow substantially. "I can imagine that a decade from now there will be many more high-rise buildings filled with graduate-qualified professionals in the area of consulting services and solutions. There's no reason why Bratislava shouldn't eventually resemble the spectacular skylines of other European financial centres such as Frankfurt or even London," says Hintermeier.