US banks rinsed technology staff in the recent bonus round. Because they could
Most large US banks have now announced their bonuses. And based upon a small but representative sample of people we've spoken to in their technology functions, it's becoming apparent that technology bonuses have been much smaller than expected.
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"Tech got rinsed," an executive director at one US bank tells us. "It's the labour market. Banks don't have to pay developers any more."
Banks don't comment on compensation, but as we reported last week, engineers at JPMorgan said the bank allocated only 3% increases for both technology salaries and for the bonus pool, meaning that if strong performers were to receive pay rises they had to be funded by removing money from weaker ones.
At Citi, there were similar complaints. One engineer at the bank said he received a 2% bonus and a 1% salary increase despite spending months working 12-hour days on a critical project that was delivered on time. "I got good appraisal ratings but I was told this was a pay decision from senior management," he says.
At Morgan Stanley, disappointment also seems to have been pervasive in the technology team. One insider there said plenty of developers there got zero bonuses and a salary rise of 1.5% or less.
What's wrong with technology jobs in banks? Insiders say the poor pay round has nothing to do with artificial intelligence (AI) and everything to do with the market for developers and with banks' cost-cutting intentions.
"Staff attrition is lower than in recent years," says one veteran banking technologist in London. "Banks can afford to pay less without risking people leaving."
He observes, too, that Elon Musk's efforts at Twitter/X have reset expectations in tech: "Musk has shown that you can cut tech headcount without impacting product."
Today's technology stock rout may mean tech talent is even more plentiful in the future. Earlier this month, Meta announced that it was cutting 5% of its lowest performing employees and identifying another 10% it could happily do without. Meta stock is up today, but Google and Microsoft are both down over 3% on the revelation that their costly AI models will have to compete against DeepSeek-R1, China's cheaper alternative.
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