One debt syndicate manager at a UK bank was, a few years ago, asked in front of a group what he did for a living.
“I’m a pornographer,” was the banker’s response. Better, he said, to have people think he was in the business of flesh than the business of banking.
Joking aside, a generation of young people have emerged into adulthood amid a sea of appalling headlines about banks and their employees. Those headlines, or the barrage of lawsuits that have been hitting the industry for more than half a decade, don’t show much sign of abating.
That negative perception has been blamed for the banking industry taking in fewer graduates from the world’s best universities than it did before the crisis.
Other headaches abound for those in banking, too. Bankers complain often that regulation is suffocating them, with many saying they would think twice about taking promotion to what the FCA calls “significant management” because of the welter of rules, standards and personal direct responsibility for problems within their business line.
And even if it is a rare occurrence for a banker to be personally fined or sent to jail for a crime, it only takes a single rogue trader to reinforce the popular perception that bankers are parasitical in nature, creating no real economic or social value.
Negative headlines
“Investment banking has attracted negative headlines in recent years but they often distort what it is actually like to work in the industry,” said Sam Dean, co-head of banking, EMEA, at Barclays. “It remains an intellectually rewarding, interesting and challenging place to work despite all the things that the industry has been through. If we look back in 20 years, I think this will have turned out to be a very good time for a new graduate to come into this industry. The career proposition is still essentially the same but with better regulation and management, the result should be a better career experience.”
Rumours of banking’s demise may be greatly exaggerated. Deloitte’s annual survey of students shows that banking is still globally right at the top of the list of most desired industries. Though the sector experienced a sharp drop in popularity after 2008, it began a steady recovery until 2011, tapering off at a gradual pace through 2014, when fast-moving consumer goods took a slight lead. According to Deloitte, those two industries are all but neck and neck, and both are much more popular with students than the next two leading industries: software and computer sciences, and auditing and accounting.
Banking and finance still offers the highest median graduate level income, at £36,500, according to research firm Highfliers. And though reports have indicated that top universities in the US are sending fewer of their graduates into banking, research shows a number of banks are still among the most attractive employers.
Universum, which surveys some 240,000 students across more than 1,700 universities each year, listed four banks as among the most attractive places to work in the world — with Goldman Sachs climbing to number four from number eight in 2014.
True, in 2013, Goldman was ranked number three, behind only Ernst & Young and Google. But fluctuations in popularity occur across industries.
“There’s no doubt that in terms of popularity, the banking industry has slipped back from the pole position it held at the height of the bull market but only to what I would consider ‘normal’ levels,” says Dean.
“One has to remember that those years were the anomaly, not now. We certainly do not suffer from a lack of applications and the quality of applicants is very high. So we are not concerned about recruitment per se.”
In to the shadows
But it isn’t just consumer goods and technology that are taking talented grads away from banking. More and more, bankers say, they are competing with the buy-side and shadow banks for entry level vacancies.
“One of the more recent dynamics is that grads are looking at buyside opportunities as well,” says Lynn Maxwell, global head of securitization at HSBC, who, alongside Adil Kurt-Elli, head of CEE and Sub-Saharan Africa DCM, heads up a mentoring and training programme for the capital financing group at the bank.
“That wasn’t always a focus before, since they wouldn’t get the broad training they would at an investment bank. Before, they started in banking and then maybe ultimately moved to the buyside. Now we’re hearing more of that happening earlier. That might be due to regulations favouring the unregulated sector. We see significant growth in the buyside in Europe.”
The attraction of the buyside is more potent in the US, but it’s growing in Europe. And because today’s recent graduates are more prone to changing jobs and career paths than any other previous generations, according to studies, there is an increasing risk of losing talent just at the point when training and development should be resulting in value.
Banks can keep talented juniors engaged by removing some of the infamously mundane work analysts and associates traditionally have to slog through in the early parts of their careers.
Mark Barbour-Smith, COO for EMEA M&A, at Credit Suisse, says delegating and outsourcing some of that work, while apportioning juniors with the responsibility for the end result and giving juniors the most challenging work they can do, helps keep talent around longer.
“Our ability to motivate junior staff to spend their career with us is enhanced if we can give them the most valuable experiences possible from the outset,” Barbour-Smith says.
Next generation
Banks, then, need to understand more about what the next generation of workers want out of their careers, and highlight the broad range of experience they are able to offer ambitious students.
Barclays’ Dean, who took a sabbatical from banking in 2013, returned last year to an industry he felt was behind the times in its thinking about recruitment. The question of attracting talent had, he said, been taken for granted during the boom years, and revisited in the wrong context. All industries, not just banking, overlooked the differences between those already in the industry, and the new generation, often called “millennials” or “Generation Y”, that was entering it.
“One thing I think is misunderstood — or at least underestimated — is the nature of the Generation Y workforce,” Dean says.
Indeed, research from Deloitte and a host of recruiters put heavy emphasis on these differences when trying to tackle the question of how to keep the banking industry attractive to talented youth.
Universum’s research has shown a big increase in a desire for work-life-balance: 52% of students surveyed across 17 countries saw it as the top priority in their careers — a challenge for an industry infamous for its long hours.
In response to changing priorities, Goldman Sachs conducted months of interviews with hundreds of juniors, announcing afterward that juniors can be fast-tracked from analyst — an entry level position associated with grueling hours — to associate in two years, and a two year reduction in the time it takes to reach vice president, if performance justifies it.
And there are other areas important to Generation Y where banking can have a big impact. Career stability, mobility and training all figure prominently in students’ career priorities, according to studies by Deloitte and Universum.
“We’re at an interesting point in the demographic, where most senior people are Generation X, but the majority of the population is Gen Y,” says Dean. “This means the majority of the workplace has a different mentality to the people in charge of those organisations. It’s a time when educating each generation about the other is of paramount importance.”
Dean continues: “For example, Gen Y is looking for greater diversity of career experience and will move employers to get it if necessary, so internal mobility becomes very important.”
Maxwell agrees, saying, “Mobility has always been core to us. We have different teams in different global jurisdictions, like leveraged finance in London or New York for example, or DCM in Hong Kong, and we ensure that our juniors move around.”
Credit Suisse takes a similar view. Mobility and development are key to building better bankers and developing a more connected business, says Barbour-Smith. “Over the last five years there has been an even greater focus on both content-related and geographic mobility, and we have received very positive feedback both with our existing junior bankers and on campus.”
And millennials care more about the ability to work remotely, as well as their working environments, Dean says.
That kind of balance is something Generation X employees just didn’t expect to get from their careers, according to Dean.
Banks are beginning to deal with these generational differences in a myriad of ways. The equity floor at Barclays even has a ‘Gen Y’ room meant to provide a more relaxed atmosphere for its younger employees.
A number of banks including HSBC have developed ‘mini-MBA’ programmes. HSBC sends their capital finance graduates to a country estate near Reading for an intensive six or seven week course, training them across leveraged finance, debt and equity capital markets, M&A and project finance.
Those graduates then go on to work on different desks in the group for a year before choosing a preferred business.
That appeals to a generation of workers of whom many have seen the Great Recession destroy their parents’ careers. By providing a diverse training, banks can offer millennials a feeling of security that they won’t end up with untransferrable skills.
And it doesn’t just benefit graduates.
“If you’re structuring a CLO and your junior has done some levfin, they come with really vital expertise,” said HSBC’s Maxwell. “And they come with a wider network of people they know. It’s as important to know who to go to, not just what to do.”
