Established finance companies compete with start-ups by looking for ways to be more innovative.
Technology at banks, insurance companies and other financial organisations is much more than a support function. It’s often at the cutting edge of change and innovation, making the fintech sector an exciting area for technologically-minded graduates with an interest in finance to begin their careers in.
Fintech, or ‘fin tech’, is a blend of the words ‘financial technology’. Essentially it refers to any technology in finance that replaces traditional ways of doing things. You’re very likely to have encountered fintech as a customer – for example, if you use mobile banking or contactless payments. However, fintech takes a wide range of other forms, including:
- artificial intelligence and machine learning, such as chatbots that respond to customers’ queries more quickly
- systems that process investment banking deals automatically, instead of bankers writing them by hand on paper tickets
- algorithmic trading: using algorithms to make complex decisions much faster than a human could
- cryptocurrencies, such as bitcoin
- open banking: allowing non-finance organisations to access bank data for customer convenience (such as apps designed to help people keep track of their spending or messaging apps that enable people to transfer money to their friends)
- online-only banks, loan providers or other financial services
- insurtech: tailoring insurance to individual customers (rather than grouping customers together based on the level of risk involved), so that policies can be priced more competitively.
There’s no single definition of a fintech company. Broadly speaking, the term tends to refer to either the backend of traditional financial organisations (such as retail or investment banks, investment management firms and insurance companies) or technology start-ups that seek to solve a finance-related problem. Capital One, for example, describes itself as ‘a tech company that does credit cards’. Sometimes these start-ups are referred to simply as ‘fintechs’.
To avoid being left behind, established finance companies compete with start-ups by adopting similar technologies and services, as well as looking for ways to be more innovative than them. Sometimes this requires a change in thinking or structure to revolve around innovation, rather than simply investing more money in technology.
Fintech graduate jobs vary as widely as the organisations that recruit for them, but some of the main routes in are:
- an ad hoc vacancy with a small or medium-sized employer or fintech start-up
- a technology-specific graduate scheme with a finance organisation such as a bank or investment management firm (or a technology company that builds financial software)
- a general or rotational graduate scheme at a financial organisation, then securing a technology role after completing the scheme.
You might also be inspired by our examples of technology job roles.
Some employers require a technology-related degree (such as computer science, engineering, physics or maths), but this is not always essential. Your experiences outside of your degree are also valuable for showcasing your skills and motivation – for example, if you’ve learned programming languages in your spare time.
Don’t worry if you don’t have much finance knowledge, although it will help demonstrate your enthusiasm for the role if you do. A willingness to learn and ability to pick up new skills quickly is more important than your existing knowledge because you will be given training on this once you start the job.
Make sure you also draw upon any unrelated work experience as evidence of your transferable skills. Some of the most valuable skills for fintech jobs include:
- communication and interpersonal skills
- problem solving
- flexibility and adaptability
- creativity, innovation and the ability to come up with new ideas.
The face of the fintech industry is constantly changing:
- Rosina Smith, head of commercial pricing at insurance company Allianz, told TARGETjobs Finance 2020: ‘The underwriting journey is changing and data is being embraced. Seeing new organisations challenging traditional methods is quite exciting from a personal perspective but also for the service we can build for customers. I expect to see more data ethics roles opening in insurance companies, especially with the proliferation of machine learning.’
- Alexander Fisher, a trader at Optiver, told a previous edition of TARGETjobs Finance: ‘In the future I think there’ll be less manual trading (making phone calls or actively clicking to buy or sell a stock or option) and more emphasis on automation (for example, pre-loading a system with the prices and what trade it should buy or sell in different scenarios). Electronic trading on screens was only introduced around 15 years ago, so things are still changing very rapidly in that area.’
While fast technological change is one exciting aspect of fintech, you should also be aware of and keep up to date with the wider implications of these changes, such as:
- the effect of automation on how finance organisations work (fewer staff needed, quicker transactions, ability to serve customers more efficiently)
- the effect of the ‘cashless society’, meaning that so many people rely on card or mobile payments that some businesses have stopped accepting cash and there are fewer ATMs available for people to obtain it. Similarly, the rise of mobile and internet banking has prompted retail banks to shut some of their physical branches. Do these changes make financial services more or less convenient for customers?
- IT glitches, how they affect customers and how banks respond to these incidents
- developments in how fintech is regulated, for example regulations on how cryptocurrencies are used or how quickly organisations need to fix IT problems
- the impact of cyber attacks, data breaches and other security issues, and what is being done to prevent these.