It was Daniel Pinto who said it. Writing in J.P. Morgan's recently released 2017 annual report, Pinto said technologists at J.P. Morgan have been elevated to the same plane as the revenue-generating employees in the bank's front office: "Our technologists and our product people work side by side, in the same rooms and at the same tables. They’re fully assimilated," Pinto declared. He added that the old divide between revenue generators and the rest, "is no more."
Pinto clearly meant what he said. But plenty of technologists - at J.P. Morgan and elsewhere - would disagree.
"There's still a very strong distinction between technology and front office roles," says a senior technologist at a U.S. bank in London. "A lot of my former mates from university went into the front office and they give me a lot of information about what it's like there - they get paid significantly more than I do and the company exalts their contribution far more than it does mine," he adds. "It would be nice if banks marketed their tech roles more honestly - slogans like, 'We're a tech company,' are just misleading."
Both Goldman Sachs and J.P. Morgan like to boast of their tech-company credentials. Goldman Sachs employs 9,000 engineers and spends $897m on tech annually. J.P. Morgan employs 50,000 and plans to spend nearly $11bn this year. The two banks are hunting down talented STEM students and they're not alone: almost every bank is prioritizing tech this year, and those that aren't are picked-up on it in analyst calls.
However, not all tech jobs are equal. While Goldman boasts that 70 out of 100 hires for its new equities market making platform have a tech background and UBS shifts 80 people into a fancy new corporate bond artificial intelligence unit, most tech jobs in banking are more prosaic and therefore less well paid. "The roles where you're automating traders out of existence or building-out platforms to interface directly with clients are limited compared to the overall tech headcount," says one J.P. Morgan technologist. "Most roles are still 'run the bank' or regulatory or just building normal tools for traders and salespeople," he adds.
This might be why, for all banks' expansive talk about cherishing tech staff, the pay gap with the front office doesn't seem to be closing. This is particularly so when it comes to bonuses. In our recent compensation satisfaction survey, 70% of tech respondents said their bonus wasn't increased last year, compared to just 37% of staff in the front office. Goldman Sachs increased technology salaries for juniors by 20% in 2017, to $100k and Citi insiders say the bank recently followed suite with a 25% hike in salaries for its second year tech analysts in London (to around £55k/$74k). However, the discrepancy with the front office remains notable: investment banking division (IBD) juniors are on around £90k by year two and technologists are the poor relations.
After working in the industry, some junior technologists in banking say low pay is inevitable. "Tech is not revenue-generating in a bank, so the bigger compensation for revenue generators is justified," says one. "It would just be nice if they would admit this up front." Further down the line, however, the discrepancy grates. "I don't have a luxury lifestyle, but paying a mortgage and nursery fees for two kids is way above my compensation level," complained one 30-something finance technologist in our survey.
There are routes to higher pay in banking technology. One is to become a "strat" - a hybrid technologist/quant role pioneered by Goldman and now prevalent elsewhere. Strats earn a lot more than technologists, especially if they're aligned to the front office rather than areas like HR - but even strats have been known to complain about low pay.
Alternatively, you can always quit banking for a tech firm. Facebook paid its average UK-based employee £216k ($290k) last year. Headhunters say Palantir Technologies has been known to dangle huge pay to attract programmers, even though average compensation in its London office for 2016 (the last year for which figures are available) was just £62k.
True or not, the myth of higher pay at technology companies fuels dissatisfaction in banks' technology ranks. So too does the notion that the work in tech firms is more valuable and interesting. "At Google, you get to work on cool products like self-driving cars, AI developer libraries and AI assistants," says a junior technologist at one bank who's recently quit for the tech giant. However, technologists already at Google can be found complaining on Glassdoor that the work in areas like Google's, "Ads Professional Services Department," is as mundane as any tweak to a piece of finance software.
Ultimately, all technologists may be doomed to dissatisfaction. One senior programmer at Google tells us he's received an offer from Goldman Sachs that would substantially increase his pay. "Maybe I'll just take it and become an MD in banking," he muses. The banking technologists who see Google as the promised land might want to take note.
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