IT contractors in the financial services industry are seeing double-digit pay rises as improved market conditions allow banks to shift focus away from regulatory spending, according to recruitment firm Robert Walters.

The recruiter's annual survey report highlighted a 13 percent year-on-year salary growth for financial sector IT contractors, outpacing the five percent increase in the wider private sector.

The growth came as banks were able to free up funds to spend on revenue generation, the recruiter claims, rather than focusing on addressing the burden of regulatory and compliance demands in the wake of the financial crisis.

"In the past two years within banking, contract roles have almost exclusively been for regulatory requirements, but in 2013 the range spread more widely across projects as trading conditions improved," the report stated.

It added that another indicator of improvement has been the increase in front office IT recruitment, with a "steady stream" of Java, C++ and C# recruitment and a "notable increase in Scala requirements among e-commerce-focused organisations and investment banking".

Development languages like Python were also in demand from banks, quantitative trading firms, media companies and smaller start-ups.

The report highlights increases in spending outside of the London, with the Midlands and North West witnessing pay increases of up to 12 percent and six percent respectively, across all sectors.

The pay growth is partly attributed to the shortage in key skill areas, with SAS analysts, mobile developers and front-end developers, and VMware consultants in particular in greater demand.

"It was a positive year in IT recruitment: the marketplace improved and for the first time in many years IT professionals had confidence in the job market," said Natasha Brooks, head of IT Recruitment at Robert Walters.

"The number of vacancies increased steadily over the year and the demand for contractors increased as organisations willingly invested in high profile projects. With the increase in job opportunities and continued skills shortages, salaries are expected to rise for the best candidates."