The financial sector is at something of a crossroads in the U.S. and all over the world. Major banks, lenders and brokerages with internationally known names (Citigroup, JPMorgan Chase, HSBC, Goldman Sachs and Santander, to name just a few) still have a massive presence in the field, while many people continue to rely on regional or local banks. On the other end of the spectrum, fintech firms structured around new ways of meeting individuals' financial needs – aided by groundbreaking technologies and novel uses of well-established devices or networks – are blazing a noteworthy trail for themselves.
Organizations in the latter category represent a competitive force that their more traditional counterparts in the market quite simply cannot ignore. Banks looking to bring on tech-savvy new staff who might ordinarily go to a fintech need to get creative to win the arms race of talent.
Examining the issue of perception
Nearly all financial institutions consider the management of risk a primary objective – to some extent for clients, but also (and always) for their own bottom lines. While this is an entirely understandable approach from a dollars-and-cents perspective, such a mindset can bleed over into other aspects of operations, driving them to play it safe even in contexts that might benefit from a bold gambit.
Jay Tuli, executive vice president of Leader Bank, explained in an interview with Banker and Tradesman that this bet-hedging among banks may be driving away some fintech talent.
"It's a real obstacle," Tuli said to the news provider. "Banks aren't known for technology innovation. [Imagine] if you have to put yourself in the head of a star talent on the other side. If you think of a star developer or a star product manager, working for a bank is not going to be the first thing that comes to mind … They have to really believe in what they're building … that it's a really meaningful thing, and that it's exciting or it's going to have real value to people."
Creating opportunities for innovation
According to a 2018 survey of 40,000 programmers conducted by HackerRank, a significant number of tech pros – 43% – said that the opportunity to solve interesting problems was what they desired most when seeking new employment. As such, American Banker noted that it may not always be possible for banks to appeal to experienced programmers, software developers and engineers.
Why? Because the idea that the server rooms and labs of traditional financial organizations are where the most intriguing conundrums are being tackled may be a hard sell for them. Indeed, that premise is by no means always true, especially in comparison to tech giants like Microsoft or Google. Even those who have a natural talent for (or interest in) numbers and finance might still be more inclined to choose a fintech startup than a traditional large or small bank.
With this identified as the issue, it thus becomes clear that banks may need to start thinking like fintech firms to attract tech talent away from them. American Banker suggested that banks encourage their existing engineering teams to participate in developer community gatherings (both virtual and in person), so they're always exposed to the most radical ideas on a constant basis. Not only can such incitements to creativity potentially lead to new initiatives that attract high-echelon tech talent, they may also strongly benefit bottom-line revenue.
Preparing to factor in the impact of automation
Over the course of the three years from 2018 to 2021, artificial intelligence is projected to have developed the capability to entirely oversee 30% of the work currently done at a typical bank, according to an Ernst and Young report from its Bank Governance Leadership Network. Expectations of this kind may engender some concern among existing bank employees that their jobs might be on the line. And unlike certain other industries whose workers fear such outcomes, there is a reasonable likelihood of staff cutbacks occurring in banking and other traditional segments of the financial sector.
On the other hand, the increased presence of automation in banking may help create a number of new job opportunities, and almost all of them will be for individuals with skills in high-level aspects of tech such as AI, machine learning and blockchain. It stands to reason that as these technologies gradually become the norm in banking and finance, there will inherently be more opportunities to develop bolder, more unique projects – which these institutions will be well-served by taking. Doing so may bolster perceptions of traditional financial organizations as forward-thinking and, in turn, attract some of the best tech talent.
Developing a truly remarkable development team that rivals any fintech startup may ultimately be a waiting game in some ways. In the interim, however, leaders of financial institutions should do all they can to create environments that foster the sort of innovations the best tech professionals will want to be part of.