For the most part, this kind of turnover is business as usual for the banking sector, which rolls through layoffs on an almost annual basis. But since the 2008 financial crisis the industry has been shrinking overall, with nearly 160,000 job cuts announced worldwide since 2011, according to Reuters. Many expect this to become the new normal in banking.
"A watershed era"
“This feels to me like a watershed era where the industry is downshifting,” says John Challenger, CEO of outplacement consulting firm Challenger, Gray & Christmas. “There are going to be fewer jobs, and they’re not going to be the kinds of jobs that we had, so they’re going to attract different kinds of people. This is an industry that’s going from way out on the edge with great rewards and a lot of risk, to an industry that’s more seen like a utility that’s part of the infrastructure of the country.”
We may actually see a return to what Challenger calls “the bankers of old,” with their buttoned-down suits and very conservative attitudes toward money and asset management.
“I don’t think people in financial services necessarily have a more difficult time than most people in shifting to the next phase of their working careers,” Challenger says. “Where they run into problems is when it’s happening all at once and a lot of people in the city are leaving at the same time. You run into a crowd because there are a lot of changes going on.”
Fewer openings, more government oversight, less-interesting work ... as a result, many one-time bankers are now leaving the industry for good. But where are they going?
A changing path
For years, the traditional banking career change formula has been simple: move to a brokerage house, mutual fund, insurance firm, private equity fund or hedge fund. Same industry, similar skill sets. But in this overcrowded job market, the traditional options are becoming increasingly competitive, and many ex-bankers are now having better luck in an unexpected industry: financial technology startups.
“We’re at an interesting intersection between the technology set and the finance set,” says Greg Neufeld with ValueStream Labs, a Manhattan-based accelerator program for financial technology startups. “The under-40 guys are understanding there’s a lot of money to be made in startups and in technology. It seems like every day I get an email introduction from someone I don’t know about someone who’s leaving their job on Wall Street and wants to know more about what’s going on in tech.”
The trouble, he says, is that many exiting bankers don’t necessarily have the needed skills to transfer into the technology sector.
“If you can’t offer anything other than financial modeling skills, you’re in for a shock,” Neufeld says. But the most successful career changers these days are those who are able to put their soft skills to work.
“It’s usually their natural outgoing personality that’s the most helpful,” he says. “Because that’s the majority of what you need in business development, being willing to talk to anybody and everybody. Having that personality and having been on a number of deals will give them the broad strokes about business development.”
For Alex Orn, the transition from finance to entrepreneurship just made sense. After spending two years in investment banking and another three in private equity, he was faced with a decision in 2012 to either get his MBA or find another line of work. He chose the latter, joining Street of Walls, a New York-based startup that’s developing a standardized test of sorts as a screening program for potential Wall Street job applicants.
“We want to connect very qualified people with investment banks,” Orn says. “And for the founders and I, that’s kind of our background. It’s where we come from, so we have experience in that arena. It’s very different [from my previous roles]. I have a bunch of hats and have various responsibilities now that I have little experience with.”
And, according to Neufeld, this Wall Street-to-technology trend is just getting started.
“Financial services represents about 18 percent of our GDP,” he says, “and the percentage of startups raising money by industry is just about 4 percent for financial technology. There’s going to be a lot of new ideas and there’s a lot more territory to cover. If you want to get out of the banking rat race, think about things that will make your current job easier. There might be a technology solution to it and that may be a business idea.”
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