The sweeping changes to the financial services sector have been a double-edged sword for banks. Finance has struggled to attract new talent as reputations have been damaged – but innovation in areas such as payments, digital services and investment banking is poised to recapture some of banks’ allure.
The industry is now tightly regulated, less global and more capitalized. The global financial crisis ensured financial services lost much of its lustre among the “millennial” generation.
According to 2014 survey by Deloitte, fast-moving consumer goods has replaced banking for the first time as the most popular career for business students worldwide.
This includes for more senior managers. At London Business School, for instance, the percentage of MBA graduates going into financial services fell from 46% in 2007 to 28% in 2013.
Work-life balance is now students’ top career goal, according to professional services firm Deloitte.
Lloyds Banking Group, Standard Chartered and American Express have all axed jobs as costs have been cut. Citigroup, HSBC, Barclays and GE Capital have also wound down their international operations.
But as investment in technology and innovation opens up new career paths, some areas of finance have begun to look more attractive.
Financial services groups have begun to pivot towards digital service offerings as the banking sector faces a cocktail of tight regulation and enhanced competition.
Ultra-loose monetary policy implies income has to be generated outside of traditional banking areas, according to Rune Fiskaali Ernst at the department of financial management and control at ESADE Business School.
“Financial innovation has probably become more of a focus area [today],” he says.
The digital challenge has hit investment banks particularly hard. Trading is moving into the electronic realm.
Areas like fixed income and currencies are becoming more like equities trading, where transactions are conducted electronically, instead of banks acting as market makers and charging a spread for their risks.
Banks say they are spending billions of pounds a year on improving technology. According to data compiled by Fujitsu, an IT services provider, 28% of financial services organisations’ IT budgets are now spent on “innovation”.
Banks and funds are now looking for students with prior relevant experience and, increasingly, digital skill sets.
“It’s a skill that recruiters across industries are looking to fill,” says Adila Khan, career advisor for finance at Oxford’s Saïd Business School, requiring more specialist training.
The digital revolution has taken hold of finance, says Paul Schoonenberg, MBA careers manager at Aston Business School. "Skills in this area are enormously valuable," he says, including digital, programing and development skills.
According to figures from Celent, the research company, Asian banks are devoting the highest proportion of all IT spending to new investments – about 30%.
But even the US behemoths are looking to technological innovation to drive growth.
Brian Ruggiero, vice president of global campus recruitment at American Express, shudders at the thought of the financial services company being referred to as just a “bank”.
Amex is in the midst of a “digital transformation” and growth is being propelled by innovation in mobile payment technology, he says – one of Amex’s focus areas.
“This presents endless opportunities for MBA grads,” says Brian, including working on Apple Pay, a service that allows customers to make payments by waving their iPhones over a terminal. “Employees have the opportunity to develop and deploy ground breaking technology,” he adds.
Careers managers say analytical, team working, communication and leadership skills are the most desirable among finance recruiters. But Amex seeks candidates who are also fluent in code, understand parallel processing, data clustering and statistical analysis, says Brian.
“These skill sets are very different from the tones you would expect from American Express, but being successful in the digital payments industry means we are hiring and training differently in order to innovate and grow,” he says.
While having to cope with stricter rules, a tougher capital regime and a fall in revenues, many banks have become vulnerable to technology-savvy competitors.
The digital revolution means that barriers to entry have fallen down, as online trading platforms open up new opportunity for both large institutions and smaller firms.
Tony Somers, director of the Career Management Centre at HEC Paris, a leading French business school, says hiring at the crux of finance and tech – so-called “fintech” – will become a recruitment trend.
“Smaller companies are hiring more,” he says, particularly financial services companies in the leveraged debt funds business, due to a resurgence in leveraged buy-outs.
According to Astbury Marsden, a respected recruitment firm based in the City of London, hiring at financial services companies in the City last year was being driven by investment in digital.
Adam Jackson, director at Astbury Marsden, says there has been a sea change in how banks view IT investment, with tech now seen as a “key to unlocking better long-term profitability”.
“This next wave in the digitisation of banking sector processes is already having a profound impact on hiring activity at the large investment banks,” he says.
He adds that smaller firms are beginning to poach staff at investment banks, such as high-frequency trading houses.
"While IT spend continues to rise in the finance sector, it is now more diversified between the traditional banks and the start-up businesses," says Paul at Aston.
Gil C Yancey, executive director of the David Fowler Career Centre at GWU Business School in the US, says increased regulatory requirements and cost efficiency are driving a demand for MBAs that combine their business knowledge with digital skills.
“Credit card and consumer banking departments are experiencing increased demand for digital technology skills,” he says, necessary to gain an edge over competitors.
Tech will also play a big role in communication between customers and firms, says Piotr Danisewicz at the department of accounting and finance at Lancaster University Management School.
As technology begins to improve client relations, more job opportunity has opened up in wealth management and private banking areas. “We are currently seeing a rise in hiring in private wealth management,” says Tony at HEC Paris.
The UK’s Lloyds, for instance, is trialling a scheme that allows customers to talk to an adviser via video, while Spain’s Caixabank has devised a mobile application that lets private banking customers interact with wealth managers through video calls.
“This area should continue to grow as many functions formerly done in person will be done via [smart]phone apps,” says Gil at GWU Business School.
This trend is part of banks’ efforts to bolster their digital services, as they face an onslaught from new competitors such as peer-to-peer lenders, technology firms and even supermarket retailers.
Communication between recruiters and potential hires is also being given a digital refresh.
While financial institutions prefer to have candidate referrals, many are starting to use social media to get to know potential candidates prior to the interview process.
“Positioning American Express as a leader in digital commerce has required us to change not only the structure of businesses, but our recruitment strategy as well,” says Brian at Amex.
The problem with technological innovation in financial services is often security.
Banks’ data, including at JP Morgan Chase and Morgan Stanley, has been targeted by hackers. Experts have warned that commodities and futures traders may also be a target for cyber criminals.
As such, corporate venture arms have more than doubled their investment in cyber security in the past two years, according to data compiled by CB Insights.
“Cyber security is another force increasing the need for MBAs with digital technology skills in their toolbox,” says Gil at GWU Business School, adding that financial technology companies like Bloomberg are hiring recent graduates.
Adaptability, business acumen and relevant experience will always be key for financial services recruitment – but, increasingly, there is a need for digital innovation in banking.
“Managers should have a grasp of information technology. Such skills are a necessity,” says Piotr at Lancaster.
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