Investment banks are losing technology talent to the hot world of fintech start-ups. Forget foosball tables or Hawaiian shirt days, fledgling technology firms offer the chance to work on innovative ground-up IT projects, competitive salaries and, potentially, lucrative stock options.
However, before you rethink your career and send off your CV to a fintech start-up, consider this fact – most will be reluctant to hire you.
A lot of investment banking technology hiring currently is focused on the replacement of those who have departed for fintech start-ups, according to analysis of the City job market by recruiters Astbury Marsden.
“[efc_twitter text="We’re already seeing the smaller fintech companies snapping up some of the best technology staff from the investment banks"],” says Adam Jackson, director at Astbury Marsden. “Banks do not just have to compete with their peers for these staff, but also have to find a way to make the roles they have to offer more attractive than those opportunities being created by this new breed of start-ups.”
The buzz surrounding fintech start-ups currently is palpable. In London alone, 46,000 jobs in the sector are predicted to be created over the next ten years, financial services organisations are providing accelerator funds following beauty parades of the next potential big innovation in fintech or are mimicking the workspaces of more agile firms. Transferwise, the London-based fintech start-up, is reportedly valued at $1bn following a $50m investment from US venture capital firm Sequoia Capital.
Investment banking techies, however, are not the always the most natural choice for fintech hires. “We're hesitant to hire from banks,” says Andrew White, CEO of FundApps, a fintech firm that helps asset managers ensure they’re compliant with the slew of new regulations. “On the one hand financial services experience is useful, but on the other [efc_twitter text="people who have been in banking for years can have a hard time adjusting to the pace of start-up life"] and the necessity to create your own destiny on a day-to-day basis.”
Meanwhile, Kirat Singh, the former head of Bank of America Merrill Lynch’s Quartz programme, who launched his own firm Washington Technologies earlier this year, says that the hierarchy within investment banking tech teams – that keeps people in “internal silos” – makes it difficult to justify hiring from this pool.
“As a start-up we prefer people who are well versed in all aspects from the business to the technology,” he says. “So sometimes it's better to hire a fresh pair of eyes because we can provide the experience they need. But that's just where we are at right now. Most of our hires have been interns or web and cloud developers.”
Technologists also have to make sacrifices in order to move to a fintech start-up. Recruiters suggest that the average salary for a Python developer at a fintech start-up in London is £50-55k – with the potential for equity – while the equivalent role in investment banking pays £80-140k, according to figures from recruiters Thomson Keene.
“The drop in salary is likely to be a strong reason to stay put, especially if they have family, mortgages or other financial commitments,” says Alastair Paterson, CEO of cyber threat intelligence start-up Digital Shadows. “That said, [efc_twitter text="the lure of working in a small, talented team doing exciting things and taking on the world can be a strong magnet"]. We only want to hire people that are excited by those things above purely financial reward, so in a sense they are a self-selecting group.”
Both White and Singh said they had seen a noticeable uptick in interest from investment banking and other financial services technologists over the past few months. Money is not the main motivator for those looking to change their career track, they suggest.
White says that most people looking for an ‘out’ are those seeking fresh challenges and nimble internal structures. “There’s no internal politics or people putting their own hidden agendas forward,” he says. “Banks are still using antiquated software and tools, at a start-up you are free to use the best tools for the job. If you discover a better way of doing something you can immediately use it, no need for ‘IT approval’.”
“Folks are interested in a start-up because there are no silos and they get to work on all aspects of the platform, from interacting with users to coming up with the tech strategy, and of course solving interesting problems in new ways,” adds Singh.