The global financial services consulting market grew by more than 7 per cent last year, to a value of $23.96bn, meaning that the sector accounts for more than a quarter (26 per cent) of the entire global consulting market, according to new research.
The report from leading global consulting market analysts, Source Information Services (Source), says the largest markets for financial services consulting are the US ($8.58bn), the DACH region ($2.8bn), and the UK ($2.2bn). But the fastest growth is found in developing markets, which can grow very quickly, even if from a smaller base: Financial services consultants in the GCC and the burgeoning markets of East and West Africa have all been experiencing growth of around 20 per cent, and can expect further strong growth in the year ahead.
Regulation is driving the use of consultants in financial services and is now estimated to account for up to 80 per cent of all consulting work in the sector.
Alison Huntington, a Senior Analyst from Source Information Services, said: "The changing regulatory landscape has completely transformed this industry in recent years with financial services institutions being forced to transform themselves, not just to stay on the right side of the law, but also to find new ways to be profitable and competitive. And so while a lot of the consulting work happening here is simply about going into an organisation and making it compliant, it's not uncommon for these compliance initiatives to be treated as an opportunity to make larger changes to the business."
Banking leads the way
With ongoing regulatory changes since the banking crisis of 2008, it is unsurprising that Banking ($9.39bn) was the largest user of management consulting services in 2013, with Insurance ($6.77bn), Private Equity ($4.21bn), and Capital Markets ($3.08bn) also significant users. Source predicts that the Banking sector will grow by 7 per cent in 2014.
A strong market for technology consulting
The report also says that technology upgrades often play a critical role in fulfilling regulatory compliance requirements, and improvements to existing technology in the financial services sector look set to make this one of the strongest services lines in 2015.
A senior client from the Operations sector interviewed for the report, said: "We have a major transformation project happening right now. We need to change our behaviour because regulations and the market are changing, and that impacts us. We're simplifying, removing bureaucracy, introducing new technology platforms across the group, and changing how we interact with clients."
Alison Huntington added: "The financial services sector shows no sign of losing its status as the engine of the consulting market and if anything looks to be expanding."