Financial services firms need to give their technologists more space to innovate – including Google-style ‘20% time’ for developers to focus on their own projects – if they’re to stem the brain-drain towards digital companies.
The migration of tech talent away from financial services and towards the Silicon-Valley style IT companies has been a concern for firms in the sector for some time now. These roles attract so many applications – Google was receiving 75,000 a week last year, for example – so can financial services firms really compete?
At the entry level, it would appear not. In Europe, Google is the number one choice for IT graduates, according to a survey by Universum, followed by Microsoft, Apple and IBM. The only financial services organisations to make it into the top 30 are Ernst & Young and Deloitte.
Taking inspiration from Google
What changes do financial institutions need to make? Google famously runs its 20% time, where employees spend time on “projects that aren’t necessarily in their job descriptions” and this appears to have survived the death of Google Labs last year, even if the work is now more targeted. Financial services firms are taking note.
“Financial institutions now have to think about ways to attract and retain technology talent other than compensation,” says Adam Sussman, partner, director of research at Tabb Group. “In some cases they’re allowing developers to work on apps, or seconding them across to work on more interesting projects. Increasingly, however, companies are allowing technologists to work on their own projects away from their regular duties to give them a chance to innovate.”
But the financial sector isn’t renowned for tech innovation and, in a landscape where a greater proportion of IT budgets are being allocated to regulatory projects, can banks really convince technologists that the work on offer will be both engaging and ground-breaking?
After all, panellists speaking at Tabb Group’s Market Tech conference this week suggested that the financial sector was failing to keep pace with IT trends. They cited this ‘brain drain’ as one of the key reasons for this, though.
Money is no longer enough
Do banks need to embark on a new PR campaign to convince technologists of the virtues of working in the sector? Previously, they had one key advantage – being able to pay more than other industries – but even this is fading.
“It’s getting to the point where financial services organisations pay roughly the same as more entrepreneurial Silicon Valley companies, but the latter wins out on equity ownership,” says Sussman. “It used to be that big bonuses tipped the scales in favour of financial services firms, but this has diminished in recent years.”
You only have to look at the extended graduate recruitment schedule for technology roles in investment banking to see that they’re struggling to fill these roles. In part, this is down to the fact that banks are recruiting more graduate technologists, but the financial sector is often the second or third choice for technical graduates.
It also harks back to the fact that financial institutions are spending more money on regulatory projects or maintenance, meaning that the exciting front office initiatives are not as prevalent. In order to keep staff motivated, these Google-style days may be increasingly necessary.