Is now the time for banking technologists to target a start-up?

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IT professionals are by their nature passionate about technology, but the high-paying roles in investment banking, where it’s necessary to operate in a highly-corporate environment. Now, however, with more opportunities emerging in financial software start-ups, now might the time to switch to a more entrepreneurial environment.

One catalyst for job creation among small financial software start-ups is the tech hub in Canary Wharf unveiled this week, Level39, which aims to put firms developing products for the sector close to their customers. Then there’s the FinTech Innovation Lab, launched in London late last month, which attempts to help small IT start ups develop their products into more commercial offerings for the financial sector.

“As large investment banks pull back from hiring technologists, it’s an exciting time for them to join a leading edge start-up and work in a more entrepreneurial environment, and we’re finding that more candidates are willing to pursue these opportunities, even if it means moving laterally or taking a pay cut,” says Brent Harris, UK sales director for permanent recruitment at Aston Carter.

With bonuses small, or non-existent, in the investment banking sector, making the switch doesn’t seem like such a leap of faith. Harris says that he’s placed people earning £70-80k in an investment bank on £60k within a small financial services software company, but that 25% salary drops are common.

Smaller companies are certainly finding it easier to attract people than was previously the case. One example is Aquis Exchange, a new trading venue is due to be launched by ex-Chi-X Europe chief executive Alasdair Haynes next year.

It currently has a small team of four developers building the platform from scratch. Belinda Keheyan, head of marketing at the firm, said: “One of the major barriers to entry in the European equities market is the fixed cost involved in securing top-quality technology talent. Due to the downturn, that talent is willing to join a start-up and Aquis is in a position to benefit.”

All this coincides with a shift away from investment banking among young tech talent anyway. As we’ve pointed to previously, banks are attempting to persuade IT graduates about the virtues of working in banking, now that salaries are not as alluring.

“Banking is no longer the default career of choice for technologists with financial sector experience,” says Alistair Singleton, managing director of 7 Fifty Two Solutions. “People are thinking more about work-life balance, as well as working on projects that are genuinely innovative and enjoyable.”

If the product takes off, there’s always the chance that it will be acquired by a larger financial institution. One example is ICAP’s Euclid Opportunities project, which looks to invest in cutting edge financial services technology firms. Already this year it’s invested in OpenGamma, an open-source financial analytics and risk management solutions firm, and Model Two Zero, which creates post-trade services software.

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