The job planets have aligned giving banks and credit unions a window to ease their long-running struggle to attract the kind of tech-savvy talent they need to meet rapidly rising customer expectations.
The opportunity arrives at a crucial time with the industry accelerating its shift to modern technology in everything from artificial intelligence software to core computing in the cloud.
Recent layoffs in the fintech sector combined with a looser, more tech-friendly culture and growing pay rates in banking are enticing some workers to take a harder look at banks and credit unions.
A Window Opens:
Banks and credit unions have a rare opportunity to redirect the flow of tech talent, due to retrenchments among fintechs.
Based on the applications it sees flowing through its systems, technology job seekers are applying for bank positions “at an aggressive rate,” Art Zeile, CEO at DHI Group, tells The Financial Brand. He recommends that banks and credit unions double down on their recruiting efforts and pay careful attention to layoffs at tech companies. “I would be using that as my hunting list,” he says, referring to layoff announcements.
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Big Opportunity for Banks in Fintech Layoffs
Several prominent fintech companies announced notable layoffs in recent months. In June, Coinbase announced it was laying off 18% of its staff, approximately 1,100 employees. Robinhood announced a 9% staff reduction in April, followed by an massive 23% cut in August. Even fintech giant PayPal laid off its security R&D team that was focusing on emerging technologies.
While these layoffs are more company-specific than an industry-wide retrenchment in fintech, they add to the potential talent pool for banks, Zeile observes.
Read More: Grow or Die: The Ultimatum Facing U.S. Banks
Across the banking industry, companies are hiring a growing number of technologists with skills in automation and software engineering, according to a report by Dice, a tech jobs marketplace subsidiary of DHI. Among the increasing tech job postings in finance, some of the most commonly sought occupations include full stack engineers, back-end engineers and DevOps engineers. Listings for software engineers, the most in-demand tech job in financial services, grew 28% between January and May.
Most sought after tech jobs in finance
Top tech skills in finance
The top finance-related tech skills, according to Dice’s data, reflect the increasing migration of banks to the cloud.
Overall, the tide of tech talent has been flowing increasingly from banks and even big techs to fintechs, a trends that accelerated during the pandemic, according to data compiled by workplace intelligence company Revelio Labs. Monthly job changes peaked in March 2022, the highest figure since records began in 2011.
As in many other industries, workers re-evaluated their lives and goals during the pandemic — and career opportunities are no longer only about money. Work-life balance and better career prospects are also key drivers, said Lisa Simon, an economist at Revelio, in an interview with Bloomberg. “People have stopped and re-evaluated what’s important to them,” said Simon.
Although the recent spate of fintech layoffs won’t reverse that broad trend, it offers a timely opportunity to at least pick up some key talent.
Seeking Talent to Build the Bank User Experience
The intensifying war for talent will remain one of the top trends in banking, says Accenture. As banks scramble for tech workers, they seek skills focusing on innovation and user experience.
Zeile, who sits on the board of a public bank, notes many banks and credit unions are more focused on “client-facing” software development that requires more talent focused on front-end experience. “The banking industry is trying to fix a user experience problem. They are trying to get engineers that focus on the front end and the web experience.
They are also simultaneously trying to do more quantitatively with internal data analysis because they realize that will lead to a better experience and allow them to create strategies around their growth,” says Zeile. It’s a tall order in terms of skill-sets.
Big banks have significantly increased the hiring of tech talent in the past year. In early January 2022, TD Bank announced it would add more than 2,000 tech positions to focus on automation, machine learning, cloud, and DevOps.
Additionally, Citi announced in June 2022 that it is seeking more than 4,000 tech workers to tap into a “digital explosion.” “We’re trying to digitalize as much of our client experience as possible, front and back, and modernize our technology,” said Jonathan Lofthouse, Head of Markets and Enterprise Risk Technology, in an interview with The Business Times.
Could ‘Stability’ be the New Hook for Banks and Credit Unions?
Banks and credit unions have often struggled to attract tech talent because their traditional cultures didn’t align with that of tech workers. The cool culture and excitement of fintechs gave them an upper hand in recruiting, yet banks and credit unions may be more attractive in uncertain economic times.
While younger technologists may be willing to take a risk with startups, more mature workers with families may find more security in traditional banks as fintech companies become financially pressured. “Anyone thinking about their career right now has got to be thinking twice about the fintechs and their financial wherewithal at this point,” Zeile observes.
Not Everything Has Changed:
The security of a traditional financial institution is suddenly a big plus. But today's tech workers still expect a hybrid work arrangement.
This could put banks and credit unions in a better position, especially if they have the right culture. JPMorgan Chase Chief Jamie Dimon said in 2021 that remote work “doesn’t work,” and he still feels that way. Nevertheless he did say in a letter to shareholders that “working from home will become more permanent in American business.”
At the very least, banks need a hybrid work environment, Zeile states. He notes the cliché perception of a technologist wanting to wake up at 10 a.m. and code from home in shorts until 8 p.m. is “very much the case.” Expecting these workers to keep banker’s hours and show up to the office in a suit will only limit the bank’s ability to recruit and retain them.
Banks and credit unions that want to attract these workers must offer a hybrid work environment, flexibility, and a loose dress code. “Those are three attributes that are important to technologists, and I think a lot of things have moved in that direction, he notes. “They really do want to show up in shorts and t-shirts and flip-flops.”
While many banks already offer a decent compensation package, they may be able to increase that soon as rising interest rates increase margins. Some banks and credit unions may also find it a wise move to break off technology departments to meet cultural needs.
Zeile notes the bank on whose board he sits keeps its headquarters in Denver and opened a separate operations center in Kansas City for its technology workers. “They allowed them to have their own little satellite office in Kansas City where they can do whatever they want,” says Zeile. “That flexibility has really worked well for them.”