We asked the crop of dealmaker candidates currently making waves in investment banks and private equity shops the same question: What’s your biggest concern about the industry?
While responses varied — some bemoaned market trends, like record-low volatility and sky-high valuations — a strong current ran through the vast majority of answers that underscores Wall Street’s challenge in keeping up with Silicon Valley.
Most notably, bankers are concerned with Wall Street’s ability to recruit and retain young talent given the competition from tech giants and start-ups that offer juicy perks, a more relaxed lifestyle, and an exciting, entrepreneurial environment.
There’s a reason Goldman Sachs is rebranding itself as a tech company and trying to hire engineers in droves.
The industry has changed swiftly since the financial crisis, and the stable, predictable career trajectory calcified over decades on Wall Street has largely been thrown out the window.
“When I joined the industry 10 years ago, if you were smart and had an interest in business, chances are you were coming into finance and consulting. We were able to get the best and brightest undergrads,” one private equity standout told us. “With the advent of startups and tech — Google, Snapchat, or entrepreneurs — we’re finding it more difficult to recruit that top tier.”
A handful noted that banks, despite marked improvements in recent years, still struggled to offer a healthy work-life balance. Many of the people we spoke with in their early 30s had recently become parents, mixing that daunting responsibility into the cocktail of one of the most competitive, high-pressure career tracks out there.
Here’s what a couple others had to say:
- “There’s been a shift in terms of talent and rigor — it’s hard to get people who are super, super committed,” a banker told us. “Work-life balance is very tough. People glamorize tech startup life.”
- “There’s kind of a lost generation from 2007 to now … for a lot of reasons they don’t want to work in banks,” another banker told us. “This 10 year gap of people that should be in banking that instead chose to go to venture or startup or charity.”
And in the same vein, young financiers are concerned that the technologies coming out of Silicon Valley might further drain the pool of opportunities.
“There’s a lot of fear about how much technology can replace day-to-day tasks,” one banker told us.
Former Citigroup CEO Vikram Pandit said last month that 30% of banking jobs could be gone within the next five years from the threat of automation and artificial intelligence, though relationship-based practices like investment banking face less risk than trading operations.
“I do think we need to be better coordinated about how Wall Street will protect itself against outsiders who are going to be encroaching on the banks’ turf,” another rising banker told us, highlighting Apple Pay, Paypal, and blockchain as emerging threats.
Banks may continue to struggle to lure talent back from Silicon Valley, but they’re awake to technology threats.
Investments in private tech companies by banks have soared in recent years. Goldman Sachs is leading the charge, but Citigroup, JPMorgan Chase, and Morgan Stanley are all very much in the game as well.