The War for Talent: Emerging Technologies Create New Needs

The financial industry has always been competitive by nature—some may even say Darwinian—in its thirst for the very best and the brightest. Typically, the compensation on offer has been sufficiently grand to attract and keep them, too.

But given recent shifts in the marketplace landscape, regulation is now dictating agendas and emerging technologies—such as artificial intelligence (AI), distributed-ledger technology (DLT), cloud computing and the issue of big data—are dominating the conversation. These changes have ultimately given way to the birth of regtech and a surge in fintech firms across the globe, putting a further squeeze on a shrinking talent pool.

The difference in compensation has also shrunk to such an extent that many would-be Wall Street tech types may be minded to head to Silicon Valley, rather than the City—a 2018 study by headhunters Morgan McKinley found that, for most IT developer positions, the salary gap between finance and other industries is often less than $10,000.

“I think we are all seeing and experiencing the same level of competitiveness across the board, where it is challenging to hire,” says Armando Gonzalez, CEO of Ravenpack, a data analytics provider. “I don’t think anyone, without exception, could say that it isn’t challenging for them. So I think we all share the same struggle there.”

It’s hard to understate the scale of the challenge, with market experts saying the talent race now resembles an amphitheater where firms are left to battle it out for the best and brightest. 

The Battleground  

To add to the pressure, fintechs and financial services firms are also competing for talent with the likes of the heavyweight tech giants that they rely on, such as Google, Microsoft, IBM, and Amazon. Many financial services firms are also establishing and reestablishing themselves as technology businesses, blurring the lines between two industries that are often targeting the same skilled workforce. This limited talent pool is commonly made up of science, technology, engineering and mathematics (STEM) graduates.

“I think you also have to know the STEM population is not a big population, and you have large industries coming in and switching gears—like financial firms thinking they’re now technology houses—and you have more startups, more fintechs, etc. Those are new and exciting, and attracting these candidates from a small pool,” says a European head of graduate recruitment at a global investment bank.

These fintechs and startups are increasingly popular among younger generations given their reputation for being dynamic, innovative, fast-paced and offering a quicker pipeline to progression. The appeal extends to their often flexible work hours and the ability for each individual employee to greatly impact the growth of a small firm. 

Ben Nielsen, co-founder of Finbourne, a startup and provider of asset management solutions, says he believes that although some larger financial institutions can award higher salaries, a growing fintech can offer candidates more opportunities to learn and play a crucial role in the in the success of the company. 

“We like to think we can offer a different—and potentially, better—quality of work at a smaller company and what really matters for a lot of people is seeing their work actually put into action,” he says.

Ravenpack’s Gonzalez says people are eager to invest themselves in a startup that enables them to take greater responsibility and ownership of projects. He highlights that younger candidates are now focused on alternative rewards, such as the culture and the lifestyle that a firm can offer, and ancillary benefits, including a desirable location to live. In recent years, there has been increasing pressure on employers to satisfy the demands of the less-patient generation of tech talent by offering more immediate results in terms of work, growth and moving up the ranks. 

As the marketplace expands, firms across the board are also having to up the ante on what they can offer employees. In some cases, particularly for larger institutions such as investment banks that have highly stratified hierarchies, this can prove difficult in terms of speeding up the path to progression, given the size of the organization, various levels of approval required, and the time it takes to meet the criteria to advance. After all, one does not become a partner at Goldman Sachs after only a few years as an associate.

“They expect their career to progress instantaneously,” says the head of graduate recruitment. “They want something every couple of months, every year—and I’m not sure that financial institutions have necessarily adapted themselves to that, or can adapt to that, because in essence, experts are grown over time.”

Gemma Jackson, global product manager for IT operations and automation at Credit Suisse, who has over 10 years’ experience in recruiting for technical analyst graduate programs, says she believes that the hiring landscape has changed due to the “fintech explosion,” and that larger institutions are pushing to distinguish themselves as attractive employers. She explains that larger banks and financial institutions are having to adapt to these changes by trying to market or rebrand themselves as more innovative and exciting places to work. 

“[Candidates] may perceive us as being more rigidly structured as a financial services company,” she says. “We have to make sure that we go out there with that brand to make sure that we do keep attracting [talent]. So I would definitely agree that we need to make sure that we highlight that we do operate in a pretty innovative way.”

As the financial industry is pulling its socks up to hone in on the best talent the market has to offer, underlying concerns remain, not just over attracting new blood, but ensuring that those who do enter the industry are equipped to deal with emerging technologies that are gathering pace. 

The Skills Gap

The market has witnessed major advancements in complex technologies in recent years with the ongoing development of AI, DLT, cloud services and analytics platforms, to mention a few, and a concomitant rise in the need for staff to manage those changes. One example is the shift of fintechs and financial firms toward cloud services operated by companies such as Google and Amazon. But another issue is that, even leaving aside the general talent crunch, there are not enough skilled graduates or candidates equipped to understand the technology itself and both maximize and capitalize on its advantages. 

“I think [cloud services competency] is a skillset that is still lacking very much, and it’s extremely valuable because those individuals can turn around an organization very quickly in terms of how they go about taking advantage of their own internal data and how they are able to build solutions for the customers that are more effective and less costly, so that makes it more competitive,” says Ravenpack’s Gonzalez.

This is a common concern across the industry as firms increasingly switch to the technology to manage their data. One explanation is that many students are often more interested in studying and specializing in other technologies that are seen as more exciting, making it more difficult to recruit experts for areas that are perceived as being mundane by comparison, such as cloud. 

“Someone who knows about cloud—it’s really hard to get these people because everybody wants to be into AI and big data and all of that,” says Elise Hauge, chief human resources officer at vendor SimCorp. “And that’s hard. It’s hard to get people there regardless of where you look in the world.”

As pressure mounts to find the right talent to develop, operate and scale these complex technologies, many believe there should be an emphasis on training and educating both future and present employees to fill the skills gap. 

Charlotte Wood, head of innovation and fintech alliances at Schroders, is one such advocate. She emphasizes the importance of bridging the skills gap and upskilling the workforce and argues that each organization is responsible for offering their employees the necessary training to become experts in their roles and the technologies they work with. 

 “It’s sort of our responsibility as an innovation practice, or transformation [practice], to help people have the right access to technologies, to knowledge, to tools so that they can innovate within their own areas,” she says. “So we really need to enable people to take on that knowledge and then apply it within the company.”

Curiously, however, it seems that the very technologies that banks and institutions are having trouble hiring talent for, are increasingly doing the hiring.

Breaking Down Barriers 

Indeed, fintechs and financial services firms are having to take a fresh approach to the traditional methods of recruiting talent in an effort to fast-track the process and stay ahead of the herd. Many are, in fact, replacing headhunters and recruiters with automated systems and even natural-language processing, one subset of AI technology. These technologies are used to review multiple applications and resumés, using algorithms to match key characteristics and features with job profiles, significantly cutting down the lengthy hiring process. 

George Zarkadacis, digital lead at Tower Willis Watson, a global advisory and broking firm, says he believes that technologies such as AI have turned the recruitment process on its head. 

“So all this automation that takes place right now, I think is really exciting,” he says. “Especially if you think that some organizations are hiring graduates in the thousands. And this is what I think the new thing about recruitment is—the application of AI, particularly natural-language processing and natural-language algorithms, is revolutionizing the recruitment process.”

There is a major emphasis on speeding up the hiring process, especially for larger global financial institutions that tend to have multiple levels of approvals for signing off on employing candidates. However, one underlying concern of using AI technology to fast-track the process is that it removes the human factor, meaning that machines or algorithms are less likely to pick up on desirable characteristics of a candidate and the process can lead to repetitive profiling. 

Ronald Visser, head of human resources, UK region, at ING, explains that although the multinational bank is at the beginning stages of using automation and AI technology for recruiting, there should always be some form of human involvement to accompany the process. 

“I hope that we can still apply the human touch, because if we do everything via an algorithm, the risk, of course, is that you start to see a little bit of the principle of cloning and rule out potentially great people because they just didn’t tick the box of an algorithm,” he says. 

The Gorilla in the Room

Unfortunately, it seems that problems with accessing a wider talent pool are only set to increase, particularly in Europe, due to the UK’s planned departure from the European Union (EU) in 2019. This issue has warranted worldwide attention over the past two years given the uncertainty over the Brexit negotiations and how that relationship will play out with regards to hiring UK and EU nationals in both regions.

As multiple fintech and financial services firms are headquartered or have prominent hubs in the UK’s major cities, there has been a visible drive in recent months for businesses to have fewer dependencies on single centers and to label themselves as pan-international. Many major banks and asset management firms have responded to the Brexit uncertainty by making plans to move personnel from the UK to other financial centers in Europe—such as Frankfurt, Amsterdam, Paris and Dublin—in an effort to balance out their global footprint. 

In such cases, executives say, technologies can be utilized to break down barriers to recruiting through talent platforms, via virtual hiring or allocating teams across global centers. Both ING’s Visser and SimCorp’s Hauge share a similar perspective, in that immigration and location issues with regards to hiring talent may become a thing of the past as firms are working to brand themselves as more international and port their services to the cloud.

“I think it is maybe a bit further down the line, but given technology and also where people are, we are becoming more and more location-agnostic,” says Visser. “In Europe, of course, we have a big debate on who is the financial center of the future. But you could say that in the future—in 10 years—it is somewhat of a moot point because the financial center is somewhere in the cloud.”