The rapidly evolving IT at the heart of financial services
Technology is intertwined with financial markets, with some of the bigger investment banks employing as many people in IT as the large tech companies.
J.P.Morgan for instance has around 30,000 technology staff globally, 25% of all Goldman Sachs employees work in IT and Credit Suisse has 3,000 techies in Asia alone. Investment banks, retail banks, fund managers, brokers and insurance firms all spend billions on technology.
By the end of 2013, the banking sector alone is likely to spend $179.2bn globally on IT, according to research from consultancy Celent.
The right technology is often the differentiating factor in giving an investment bank the edge over its competitors. It also helps banks save money, and comply with increasingly onerous compliance requirements demanded by financial regulators.
The big user of technology, though, is the trading floor and everything related to it. Whether it is buying and selling financial products electronically, processing them through smartorder routing systems, or communicating to ensure trades go through smoothly, multimillion dollar technology projects are at the centre of any bank’s strategy.
“Financial markets are crucially dependent upon technology - my favourite quote is from a CEO I worked with who said investment banking is technology surrounded by people and capital,” says Alastair Brown, chief information officer, international banking, Royal Bank of Scotland.
Roles and career paths
IT roles in investment banks fall into five camps: development, business analysis, project management, infrastructure and technical support.
The developer is at the coalface of the IT department. Much of the technology is developed in-house, but when banks purchase software from third-party vendors, developers need to tailor it to banks’ individual needs. Banks also employ solutions architects, who act as the link between development, design and management and oversee the technical elements of projects.
Within products traded in large volumes, such as equities or foreign exchange, developers aim for ‘low latency’ or reducing the time it takes to execute and process a trade. The speed with which a trade is placed can be crucial to its profitability. More products, notably corporate bonds in the past 12 months, are being traded electronically.
Business analysts liaise between the IT department and the suits within the banks. Project managers will take on the new venture once it has been given the go-ahead. They have to manage a team of developers, liaise with third-party vendors, and be answerable should plans go awry.
Technical support solves problems when they arise on the trading floor: glitches could cost banks millions of dollars within minutes, and it’s often a rogue technology system that is the cause of the so-called ‘fat finger’ glitches that have hit the headlines more frequently in recent years. Traders are not shy in berating you for IT gremlins, so a thick skin is a must.
Infrastructure jobs deal with the IT nuts and bolts – from servers to operating systems to databases.
There is also the option of working for third party vendors, which specialise in providing software to financial services companies.
If you want to work for a vendor, try sending your CV to major players such as Sungard or Oracle, or apply to specialist financial services software vendors such as Fidessa, Sophis, SimCorp, OpenLink or Charles River.
Pay and bonuses
Pay for IT roles in investment banking doesn’t reach the dizzy heights to be found in other parts of the business, but it’s certainly very competitive and outstrips other industries. Generally, if you possess knowledge of more complex financial products, or have a comparatively rare skill set, your earning potential will be greater.
In northeast US, home of New York where most investment banking technologists are based, average salaries for financial IT professionals were $110k, according to the Information Week 2013 Banking IT salary survey, rising to $140k for management positions.
A business analyst working in an investment bank in London earns £60-75k ($92-115k) at the more junior end, according to figures from recruiters The JM Group, reaching £85-115k ($130k-175k) in the senior ranks.
Junior project managers are paid £60-75k ($92-115k), says The JM Group, which increases to £85-110k ($130-170k) at the senior end, depending on product knowledge. Project managers with three to five years’ experience in Singapore recruiters Robert Walters, rising to S$90-140k ($71-110k) at the more senior end.
If you work in development, being in a front-office role means more money. Java developers earn £60-80k ($92-123k) with financial product knowledge after a few years, which increases to £80-105k ($123-160k) at the upper end, while C++/Unix developers bring in £50-75k ($77-115k), but can earn £80-110k ($123-70k) with more experience. If you work in trading floor support, expect £50-70k ($77-108k) at analyst/ associate level, rising to £70-80k ($108-123k) with more experience.
In IT, the majority of successful applicants will have a computer science degree, and those who don’t tend to come from a maths, physics or engineering background. However, for less technical roles, such as business analysis or project management, banks will consider other degree disciplines.
“A successful technology professional will be self-motivated, organised and thorough, possessing strong analytical and logic skills,” says Gavin Jackson, head of rates tactical quant development at BNP Paribas. “They will want to learn quickly and be able to apply experiences to their work. They will be innovative but costaware, autonomous but collaborative: somebody that we can easily work alongside.”
If you want to move into a development role, experience with programming languages such as Java, C++ or C# is important. However, you don’t need to be a whizz kid at entry level.
Soft skills are valuable for business analyst or project management roles. Business analysts, for example, have to be able to explain the benefits and pitfalls behind a potential technology investment, without leaving non-IT people swimming in a sea of jargon.
Project managers have to be able to act as a central coordinator for disparate groups with differing interests in a particular endeavour.
More than anything, though, technologists need to be adaptable and not just survive, but thrive in, a changing environment. “The great thing about a career in technology, especially one in a fast-paced, dynamic industry like investment banking, is that if I answer a question, it’ll change in six months’ time,” says William Mitchell, head of domain-trade lifecycle, Deutsche Bank Global Technology, Cary Technology Center in the US. “Adaptability, listening and an ability to climb a learning curve are key skills for success.”
“In this ‘digital age’ there is no escaping the sheer rate of change and progress, and constantly challenging how these new developments can improve your industry,” adds RBS’s Brown.
Stereotypical IT nerds also need not apply. Banks want their technologists to be both technically proficient and to understand how their work is going to affect the bottom line. Technology is getting closer to the business of investment banking, so business acumen will help accelerate your career.