36 Investment Banking
Information Technology The rapidly evolving IT at the heart of financial services
Technology is intertwined with financial markets, with some of the bigger investment banks employing as many people in IT as the large tech companies.
J.P.Morgan for instance has around 30,000 technology staff globally, 25% of all Goldman Sachs employees work in IT and Credit Suisse has 3,000 techies in Asia alone. Investment banks, retail banks, fund managers, brokers and insurance firms all spend billions on technology. By the end of 2013, the banking sector alone is likely to spend $179.2bn globally on IT, according to research from consultancy Celent.
The right technology is often the differentiating factor in giving an investment bank the edge over its competitors. It also helps banks save money, and comply with increasingly onerous compliance requirements demanded by financial regulators.
The big user of technology, though, is the trading floor and everything related to it. Whether it is buying and selling financial products electronically, processing them through smart- order routing systems, or communicating to ensure trades go through smoothly, multi- million dollar technology projects are at the centre of any bank’s strategy.
“Financial markets are crucially dependent upon technology - my favourite quote is from a CEO I worked with who said investment banking is technology surrounded by people and capital,” says Alastair Brown, chief information officer, international banking, Royal Bank of Scotland.
Roles and career paths
IT roles in investment banks fall into five camps: development, business analysis, project management, infrastructure and technical support.
The developer is at the coalface of the IT department. Much of the technology is developed in-house, but when banks purchase software from third-party vendors, developers need to tailor it to banks’ individual needs. Banks also employ solutions architects, who act as the link between development, design and management and oversee the technical elements of projects.
Within products traded in large volumes, such as equities or foreign exchange, developers aim for ‘low latency’ or reducing the time it takes to execute and process a trade. The speed with which a trade is placed can be crucial to its profitability. More products, notably corporate bonds in the past 12 months, are being traded electronically.
Business analysts liaise between the IT department and the suits within the banks. Project managers will take on the new venture once it has been given the go-ahead. They have to manage a team of developers, liaise with third-party vendors, and be answerable should plans go awry.
Technical support solves problems when they arise on the trading floor: glitches could cost banks millions of dollars within minutes, and it’s often a rogue technology system that is the cause of the so-called ‘fat finger’ glitches that have hit the headlines more frequently in recent years. Traders are not shy in berating you for IT gremlins, so a thick skin is a must.
Infrastructure jobs deal with the IT nuts and bolts – from servers to operating systems to databases.
There is also the option of working for third- party vendors, which specialise in providing software to financial services companies.
If you want to work for a vendor, try sending your CV to major players such as Sungard or Oracle, or apply to specialist financial services software vendors such as Fidessa, Sophis, SimCorp, OpenLink or Charles River.
Pay and bonuses
Pay for IT roles in investment banking doesn’t reach the dizzy heights to be found in other parts of the business, but it’s certainly very competitive and outstrips other industries. Generally, if you possess knowledge of more complex financial products, or have a comparatively rare skill set, your earning potential will be greater.
In northeast US, home of New York where most investment banking technologists are based, average salaries for financial IT professionals were $110k, according to the Information Week 2013 Banking IT salary survey, rising to $140k for management positions.
A business analyst working in an investment bank in London earns £60-75k ($92-115k) at the more junior end, according to figures from recruiters The JM Group, reaching £85-115k ($130k-175k) in the senior ranks.
Junior project managers are paid £60-75k ($92-115k), says The JM Group, which increases to £85-110k ($130-170k) at the senior end, depending on product knowledge. Project managers with three to five years’ experience in Singapore
Alastair Brown
Chief information officer,
International banking,
Royal Bank of Scotland
Financial markets are crucially dependent upon technology - investment banking is technology surrounded by people and capital.
8/10 6/10 5/10 8/10 the overview
Banks employ thousands in technology, and spend billions
Financial services firms gain a competitive edge through IT, and save money
IT is high-pressured and fast-paced
How hot? Money Kudos Opportunities
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