'Technology hiring in banks at its lowest level since COVID began'
There's a slight disconnect between what banks are saying about technology, and what they're actually doing. They rave about modernizing their tech stack and investing into the division, but that investment doesn't appear to be reaching the employees.
Peter Wagner, managing director of Affinity North, says tech hiring in banks is "frozen," and that "the number of positions posted are at the lowest they've been since right after the pandemic started." He doesn't expect that they'll return to "hiring mode" next year, either.
It may not seem like much to shout about, but top figures at banks are shouting regardless. Bank of America said last week that it has around 7000 patents, 600 in AI. It's "invested heavily" into the data tech stack, according to CFO Alastair Borthwick. Citi CFO Mark Mason said the bank had invested $3bn in tech last quarter, "largely driven by investments in product development, platform enhancements, and improving the client experience." JPMorgan CFO Jeremy Barnum said the bank's expenses last quarter were "primarily driven by ongoing growth and front office and technology staffing."
Much of this spending is on legacy app decomissioning. Banks are ridding themselves of hundreds (or, in the case of Deutsche Bank, thousands) of technologies cluttering their stack, but the decommissioning work is presumably neither fulfilling nor lucrative.
There were also a few indications that things aren't completely great for technologists when banks spoke to investors last week. Morgan Stanley CFO Sharon Yeshaya said the bank wants to strike a "balance of investing for the future" and making sure it has, "the right expense base." At Citi, Mason mentioned that investment into automation will cause "streamlining" as it attempts to "realize efficiencies that come out of headcount reduction." While automation is coming for various other banking departments, it's unclear how many engineers will be affected by it.
The proof is in the pudding, or rather, the job listings. At Goldman Sachs, one in every four employees was once an engineer, but right now just 115 of its 791 open roles, 14.5%, are in its engineering divisions. Of those, just 31 are US based positions, where the real money is made. The same is true at Morgan Stanley, where 101 of its 890 roles are in technology, of which just 41 are in the US. As the chart below shows, most technology jobs at every bank are outside the US and are often in low cost overseas locations.
Pay has for technologists in banks been going down, too. As banks shunt jobs to lower cost locations (Goldman Sachs has Birmingham, Dallas, Warsaw and Hyderabad; JPMorgan has Texas, Bournemouth and elsewhere), the average is falling. Our 2023 compensation report revealed that the median average compensation in technology departments fell by 30% from 2021 to 2023. Engineers can at least take solace in that their working hours are down, too.
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