Financial technologies such as cryptocurrencies once had a niche following. Today, they are backed by some banks, money managers, and other mainstream financial institutions. Business school students are also climbing aboard the fintech bandwagon. A growing number of them want to work at firms that are pioneering innovations that could reshape the future of finance.
INSEAD added a fintech category to its MBA careers report. Some 11% of its students joined the burgeoning field last year, according to Katy Montgomery, global director for careers. Around 5% of MBAs from IE Business School in Madrid joined fintech firms in 2017. That's up from zero in 2016.
According to CB Insights, $4.7 trillion of revenue generated by financial services firms is at risk of being displaced by fintech startups. The large scale of potential impact is luring business students to the sector. “Historically, banks and other intermediaries added value because they were trusted and could navigate complex markets,” says Christine Parlour, finance professor at the Haas School of Business in California. “Now, markets and virtual platforms can take the place of intermediaries.”
Matthew Applegate, former director of the Wharton Fintech Club and now a financial services consultant, says: “There are many fintech career opportunities available to MBAs.
“Students can join a startup and work in roles like business development, operations, data science or marketing. There are also opportunities to pursue careers within the innovation arms of financial services incumbents. Alternatively, MBAs can enter the industry in an investing role.”
Prominent business school alumni have founded successful fintech startups, such as Giles Andrews, who setup peer-to-peer lender Zopa after getting an MBA at INSEAD. Jeff Lynn and Carlos Silva developed crowdfunding platform Seedrs during their MBA at Oxford’s Saïd Business School. According to PwC’s Global Fintech Report 2017, funding of fintech startups has increased at an annual growth rate of 41% over the past four years, with $40 billion in cumulative investment made. Investment has generated job opportunities.
Niels Turfboer is UK managing director at Spotcap, the Berlin-based online lender. The IE MBA graduate previously worked at ABN Amro and ING, the Dutch banks. “What I saw at Spotcap was a massive opportunity to fill a hole between what the customer wanted and what was delivered to them,” he says.
“We operate in a more customer-centric way than banks,” Niels adds. “Banks have become so big that sometimes it’s difficult for them to deliver that in the same way that fintechs do.”
While career opportunities are growing in the fintech industry, there are not yet established recruitment tracks like in investment banking or consulting, says Charles Labelle, assistant director of employer engagement at INSEAD.
“This is an area that is getting quite popular among MBA students and we have started to see firms recruiting MBA talent,” he adds. “Large banks, for example, may assign some of their summer associates and subsequent full-time hires to the groups covering fintech. However, it is not yet a dedicated recruitment process and candidates go through the regular MBA recruitment cycle.”
Another downside to working in fintech: the pay. According to Transparent Career, MBA graduates can expect to earn around $99,000 at a startup that has not raised finance. At Stanford’s Graduate School of Business last year, students entering the financial industry earned $150,000 median starting salaries, on average. They also got $44,000 signing bonuses.
“Startups can’t compete on salary,” says David Morris, head of technology careers at London Business School. However, financial rewards are no longer the number-one priority for the majority of MBAs. The ability to generate impact is now king. Expect disruptive fintech to continue to draw more business students, to the detriment of staid banking and professional services jobs.