Chirantan Barua, senior analyst for UK Banks at Bernstein Research, called it last year. Banking jobs are becoming more stupid, said Barua. As banks succumb to regulation and automation, 'worker ants' are taking over: “The industry doesn’t need and can’t afford the brains any more. They will suffer the most. It will be a kind of slow death.”
Eighteen months later, it's not that bad: banks are still hiring the best and the brightest for their graduate training programs. In an industry with thousands of applicants, brains are clearly still valuable as a signalling mechanism, if not as a necessary ingredient for performing the tasks required of the job, but things are changing below the surface.
Some of the most exciting finance jobs now in technology, says Hans Geiger, Professor Emeritus of Banking at the Department of Banking and Finance in the University of Zurich: "Jobs in banking are being replaced by machines.But you still need someone to programme those machines."
As regulation and automation sweep across the industry, these are the job finance insiders say you might want to avoid now. And their higher value, smarter, alternatives.
Once upon a time, banks hired armies of product controllers to calculate traders' P&L on a daily basis. While the job wasn't exactly dumb, it could be incredibly boring. "Friends who went into product control hated it," says one equity researcher. "It was tedious and you had no status. You were forever pushing back against traders who hadn't marked their trades to market properly and they'd insist that you'd just lost the bank millions."
Nowadays, many banks have off-shored their most 'vanilla' (simple) product control jobs, says Tom Stoddart, director at London-based recruiters Eximius Finance. This is good news if you work in product control and want to escape the grind - you can now manage a team of product controllers doing the grunt work in India or Budapest instead. Equally, the product control jobs that remain in London or New York are more complex and focus on derivatives traders.
Less promisingly, it means there are fewer finance jobs available to accountants who want to get into banking - even if that does mean taking a 'dumb' job in product control. "Banks aren't hiring juniors in the numbers they once were," says another accounting recruiter. "Nowadays, the junior talent is all in India."
Ever since regulators revealed reams of inappropriate chatroom messages between traders and brokers who were trying to fix LIBOR and foreign exchange rates, banks have stepped up their scrutiny of traders' communications. For some people, this still means listening in on traders' communications. "I spent years monitoring the real time electronic communication of bankers and traders," says one compliance surveillance professional who now runs his own consulting firm. "It was relentless and there were a lot of things that I obviously couldn't sign off, but I wasn't listened to." He argues that banks often employ low level employees who aren't up to the job: "Management purposely puts clueless employees in place so that they do not understand what is going on and thus never find an issue."
Nowadays, the tedium of listening in to traders' chat is being alleviated by machines. Goldman Sachs, for example, is currently hiring an 'analyst developer' for its surveillance team. Erkin Adlov, an ex-Goldman Sachs equity researcher, has founded 'Behavox', a company whose software uses behavioural precursors like laughing on telephone calls to alert banks to employees’ potential wrongdoing. The interesting jobs in compliance monitoring are therefore not in policing communications yourself, but in building behavioural screening programs so that computers can do it for you.
As the M&A market has rebounded, so banks have found themselves in urgent need of juniors who can work on live deals. A growing number of firms have been advertising jobs for 'execution-only analysts' who provide support for deals as they take place. This may sound interesting, but it isn't always. As an execution analyst, you can find yourself doing a lot of the bureaucratic grunt work surrounding the deal - preparing data room and roadshow materials, uploading documents, working on PowerPoints, and copying and pasting a lot of material from one place to another.
Even if you're ok with that, recruiters say the fundamental problem with execution-only jobs is that you don't get much exposure to the marketing/pitching process through which banks win deals in the first place. And given this process is usually managed by senior bankers, this lack of exposure can inhibit your ability to progress.
The best way to avoid the execution-only trap may be to avoid an execution-only role in the first place. Banks like Rothschild stress that they don't have "separate marketing and transaction teams." At smaller firms, you'll do everything.
If you're an 'editor' of banks' equity research and written products, you might think you'll have an interesting role working with equity researchers to fashion interesting research notes. You'd be wrong, says Bruce Packard, a former banking analyst who's been working on a report into the disruptive technologies changing banking. "These people are called editors, but their real role is to tidy up the English of non-native speaking analysts who can't express themselves very well," he says.
Instead of editing, the more interesting job is clearly working in equity research itself. For this, however, you'll need a sector specialism and a CFA qualification, at least.
If you have a high bureaucracy-threshold, you might want to be a 'request for proposal' writer. RFP writers are on the frontline of communication with prospective clients. When clients request information, it's up to them to provide the documents and data that support the clients' request. The role does require understanding of investment products and regulation and it does involve interaction with clients and relationship managers. However, it's also highly repetitive and about as administrative as it comes.
The good news is that RFP responses are increasingly being automated and stored on 'RFP' databases. In future, you might want to be a super-high powered RFP writer who can develop the templates that go into these databases, or you might want to be a developer working on database development.
Lastly, and as we've suggested on previous occasions, the role of the execution trader is not as intellectually challenging as you might hope. Execution traders Chris Apostolu, founder of search firm Arbitrage Search, says execution traders are "overpaid and overqualified administrators." At worst, the role of the execution trader can be simply to execute trades as dictated by analysts or algorithms. At best, however, execution traders are experts in 'market timing. ' Yes, they're simply executing a preordained strategy, but they're doing it in such a way that it has the highest chance of success.
The most skillful execution traders work in illiquid markets where timing is everything, says Apostolu.
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