How can banks tempt coders away from the big tech titans or the exciting start-up world of unicorns, centaurs and ponies? Chris Skinner ponders the problem.
I had an interesting discussion with a banker the other day about hiring technology people into banks. The challenge of finding top coders is a big one, as there are so many other firms to join out there.
You could join a hot fintech unicorn (valued at $1bn-plus) such as Monzo, SoFi, Stripe, Ant Financial, Ping An and many others; or you could join some of the ‘ponies’ (under $100m valuation) and ‘centaurs’ ($100m to $1bn). There are many others that could attract tech talent, such as tech titans – so why would you join a boring old bank when Amazon and Tencent are calling?
The benefits of banks
Several reasons, the banker told me. First and foremost, not everyone can join a FANG company (Facebook, Amazon, Netflix, Google). Therefore, there will always be talent that doesn’t join the technology titans.
You may wonder why you wouldn’t want to be there. There are many reasons, with location being a key one. If you’re joining an Apple or Amazon, then you’re West Coast-bound to Silicon Valley, where the average house price is $1.4m. Not everyone wants to be based there – and many cannot afford to be there if they’re just starting out in a coding career.
Second, for every unicorn, a thousand ponies die. There are thousands of start-up firms with great ideas trying to bloom, but their burn rate is high, and finding the capital to maintain operations can often be difficult. Even unicorns die – witness Powa Technologies, a UK-based company known for its commerce, mobile commerce and e-commerce services – so you are taking a chance when you join a start-up.
Third, many people are motivated by doing something that can make an immediate difference to their friends and family. If you’re involved in a start-up, it may be years before you see users using your code. If you join a FANG or a big bank, you’ll see the difference it makes that week. The satisfaction is huge.
Fourth, it may well be that you want to change the world and how best to do that? Attacking from the outside with something unproven, unused and unknown; or attacking from the inside, with something being used by millions and trusted by all?
Last, a banking career is looking more attractive because the big banks are hiring. There may be a hangover from the global financial crisis and the anger of the 99%, but if you can code and code well, a job with a bank is a good job.
Follow the data
I reflected on this and, as usual, did some sniffing around to see what the internet thought. The first thing I found was someone asking the question: why would software engineers work in finance instead of technology?
And the main answer was that they would join because banking is where the money is. Another said that banks are tech companies, so there you go.
On that last point, they may be right. Goldman Sachs CEO Lloyd Blankfein has said the bank is a tech company and roughly one-quarter of its 33,000 employees are engineers. JPMorgan is estimated to employ about 50,000 technology workers, twice the number of employees at Facebook.
However, according to research, the main motivation of developers joining a firm is not the money or the perks; it is to ‘solve interesting problems’, which goes to the heart of my banking friend’s point number three. Developers are drawn to companies that have big data sets to analyse using data analytics. It’s all about the fact that data is not ‘oil’, as many pundits claim, but ‘air’. Oil is a fossil fuel that has limited life; data is the oxygen that allows banks – and all other technology firms – to breathe. Without good data, a firm will suffocate. And a developer is driven by taking good data and turning it into good service.
Tech to the fore
So a bank looking to get good talent really needs to focus upon what problems they can solve with their data, and how to motivate developers to understand their data needs.
Nevertheless, going back to my internet debate, one person stated: “I’ve worked for ‘cool’ tech companies and for a financial company. I quit the financial company after three months … in a financial company, you’re a cost of doing business. In a tech company, you are the business.”
My conclusion is that banks may want good coders as a priority for their business, but they need to recognise that their culture needs to be about coding, developing and technology to ensure these individuals are treated as core and not peripheral to the business.
That’s a good message to take to the management team.
Chris Skinner is an independent financial commentator and chairman of the London-based Financial Services Club.
