A shifting workforce landscape
The contract hiring model has dominated financial services for much of the last decade and longer. It offered speed, flexibility, and access to specialist skills without long-term commitment, and for fast-moving transformation programmes operating under budget pressure, that logic held.

But the market has matured. And the assumption that contract is the default answer is one that a growing number of firms are quietly paying the price for.

The question in 2026 is not whether to use contract or permanent hiring. It is whether organisations are being deliberate enough about which model serves which need, and whether that question is being asked early enough to make a difference.

What the data reflects

The picture is more nuanced than a simple swing in either direction. KPMG data shows 55% of financial services firms planned to increase headcount in 2026, with permanent labour availability rising at its fastest rate in four months at the end of last year. More recently, the KPMG and REC UK Report on Jobs from April 2026 pointed to a renewed preference for temporary recruitment as economic uncertainty increased, with permanent hiring decisions being deferred at a number of firms.

Both trends are real. They point to a market where the right workforce model depends on the role’s actual requirements, and where getting that decision wrong can have significant consequences.

Where contract hiring remains the right answer

There are plenty of situations where contract hiring is clearly the right call. A project with a defined scope and a clear end date. A specialist skill needed for a fixed period. A gap that needs filling while a permanent search runs alongside it.

In the SimCorp and Avaloq implementation programmes we support across European financial institutions, contract consultants are often exactly the right answer during the delivery phase. The work is project-based, the expertise is highly specific, and once the programme reaches go-live, the engagement concludes. That is the model working as it should.

Where the model quietly creates problems

The risk emerges when contract becomes the default rather than an active decision.

Compliance hiring data from Taylor Root confirms what we see in practice: contractors work well for time-limited regulatory projects, but when a function needs someone to genuinely own it long term, that is where the cracks start to show. In 2026, with regulators moving from simply checking that controls exist to scrutinising whether they actually work, that distinction has become more consequential than ever.

Roles with ongoing financial crime, AML or KYC accountability need someone embedded in the business, someone who is still there when the regulator comes back with questions. A contractor who has moved on to the next engagement cannot provide that.

We see this pattern regularly. Firms come to us having used consecutive contract hires in functions that quietly needed permanent ownership all along. By the time that becomes obvious, the cost in lost knowledge, repeated onboarding and disrupted delivery has already built up.

The same is true in core banking transformation. Programmes running on Temenos, Avaloq or SimCorp span years, not months. Every time a key contractor leaves, something goes with them. It rarely shows up as a line item on a budget. It shows up later, when delivery slows and nobody quite remembers why certain decisions were made.

The question every hiring leader should ask

Before determining the model, the most effective hiring strategies begin with a single question: does this role require someone to own the outcome, or deliver into it?

Ownership requires permanence. It requires an individual who will carry accountability beyond the programme, who will be present when regulatory scrutiny increases, and whose knowledge compounds over time. Delivery, in many circumstances, can be contracted effectively.

Conflating the two is where workforce model decisions most commonly go wrong, and where the consequences take the longest to surface.

The approach that is making a difference

Skillfinder works exclusively within financial services technology and change, placing both contract and permanent professionals across investment management, core banking, compliance and trading systems. That focus means we see workforce model decisions up close, across clients and markets, and the patterns that emerge are consistent.

The firms navigating 2026 most effectively are those bringing the permanent versus contract question to the table before a role goes to market, not after. That clarity consistently produces stronger outcomes: better hire quality, faster time to placement, and a workforce model genuinely aligned to what the business needs.

The firms carrying the most risk right now are not necessarily those moving too quickly. They are those that have not revisited the question at all.

Speak to our team about your hiring plans