Wall Street vs the Silicon Valley : The war for young talents

“Not long ago, Wall Street attracted many of the smartest people in America — brilliant economists and mathematicians, but also the nation’s most promising college graduates. Not anymore. Five years after the financial crisis, evidence suggests that students have lost their enthusiasm for beginning careers in finance.” The banks of Wall Street used to inspire. However, since the financial crisis of 2008, a lot of people lost trust in their banks and do not want to start a career in investment banking, as they want stability and a good salary. Graduates students are sought after, but many of them are not interested anymore in the industry. They want challenge, and a platform where they can innovate. Technologies are improving and they want to be a part of that. We can wonder how the graduates’ career choices reflect the rush for the tech industry at the expense of the financial sector, and how digitalization can respond to that.

I/ A race for the Silicon Valley : An introduction of the Millennials entrepreneurs

Students, during the campus recruiting season, which occurs during the spring and fall semester each academic year, seem to lose interest in being interviewed by Wall Street banks. These banks even have adopted the strategy of “cold calling” to attract graduate students. They are therefore the ones that have to sell themselves and convince graduates to join them. “At Harvard, for example, more than 500 business students–about a third of the school and 200 more than last year–went on Westrek, the school’s annual networking trip to Silicon Valley.” Students and the population have lost trust in the banks of Wall Street and want to follow a stable path in their professional career. Banks have to reinstate this trust if they want to attract. They are struggling to attract talents, when they used to employ the “Best and brightest”. “According to a September Wall Street Journal op-ed by CME Group executive chairman and president Terry Duffy, in 2008 40 percent of Princeton’s, 28 percent of Harvard’s and 26 percent of Yale’s graduating classes headed to Wall Street”. Since the financial crisis, graduates are changing this path, and choose technologies as their career choices. They seek for more innovation, and the Silicon Valley seems to be theepicenter for that. MBA’s, which stands for Master of Business Administration graduates, seemto adopt this path as well. The amount of graduate students who joined the finance industry in2012 was of 35% for Harvard Business School. The following year, that percentage decreasedto 27%. The MIT Sloan School of Management experienced this trend as well, from 27% to16%.

This trend is also making headlines, such as in the Bloomberg Businessweek and other economic newspapers, the “Silicon Valley vs Wall Street” talent war was beginning. “American finance has always been a place for entrepreneurial risk-takers. Historically, Wall Street has been a haven for young people who are passionate about changing the world with a powerful idea. Now it seems that those young people are much more likely to head for Silicon Valley. Yet where will much of the financing for their projects originate? On Wall Street. I have deep concerns about where the financial-services industry is going if we’ve lost our ability to connect with those people”, Bankers have to go to colleges, and meet those students.

II/ A challenge for Wall Street : How to recruit, motivate and retain Millennials

How to hire college students has to be understood, there are strategies to adopt, and college hiring is considered as one of them. A good branding can be valuable both for startups looking to hire graduates and for investment banks, to reinstate trust and show that graduates can find stability, challenge and innovation in Wall Street as well. Graduates have to develop a sense of belonging, and that is what banks have to understand. They want to be a part of a community, that will professionalize them for their career. They want to write a story, their story. Millennials have to be connected with, and that connection has to be meaningful. The Harvard Business Review published in 2014 a survey conducted by College Feed, a platform aiming at helping graduates find career opportunities. 60% of the 15000 Millennials taking the survey were still in college and 40% just graduated. They were asked the top companies they wanted to work for and what they look for in a company when applying.

Figure 1 : Top 50 companies young people want to work for, by Collegefeed

Figure 2 : What millennials look for in employers, by Collegefeed

The journal mentions that the top 10 results are also those that are well known for being ranked in the lists for the best places to work, and most financial banks are far from being ranked in the top 10 of the survey. Banks like Goldman Sachs are starting to understand what is at stake. They are now recruiting engineers and are maximizing their technologies. The digital world is fast-paced, we have to be ahead of the transformation. Digitalization means leveraging technologies. This solution also is a key to attract Millennials or those who lack trust in their banks. They want to be reached, and heard. They are also leading a lot of campaigns promoting their diversity “ These days, 35 percent of its first-year hires majored in a STEM, or science, technology, engineering or math disciplines; that is up from 20 percent a couple of years ago. Goldman said the shift is logical given the role tech plays in its clients’ businesses”. JP Morgan banks seem to follow the path of the culture shift, “When construction is complete, the grandstand will offer a downtown view to staffers, sipping cappuccinos they procure from the automated barista situated nearby”.

“We have to make the case to young people that if you want a remarkable career at a company with integrity that helps people and influences the world, then come to Wall Street.” Theorganizational culture of Wall Street banks has to show graduates that they will find what they are looking for in investment banks. Wall Street has the potential to be a challenging platform which gives their employees responsibilities. Graduates have to understand that they can have an impact, and that they can modernize investment banking, if they do decide to join. They are looking for opportunities to evolve both personally and professionally, and investment banks have to adjust their platforms to the Millennials’ ambitions for their careers. «Some of the oldest and most established firms in the industry are at least trying: Just last year the New York Stock Exchange launched Big StartUp, an initiative designed to connect young companies and entrepreneurs with corporate America, and Jeffrey Sprecher, the CEO of the IntercontinentalExchange, which just bought NYSE Euronext, said the 221-year-old exchange itself “must act like start-up.”” The financial firms are learning from the Silicon Valley.

To conclude, graduates of the Millennials generations, once they have had their diplomas, have a choice to make. That choice has to validate a lot of parameters, such as a good salary and stability, and the Silicon Valley, the epicenter of technologies and startups, is more and more chosen over the financial industry since the financial crisis. Therefore, Wall Street has to respond to that, and make graduates understand that banks are still full of opportunities, and has the potential to represent the challenge that they are looking for. The banks have to reinstate the trust between them and graduates, by developing their brands and a sense of belonging. They have to show that culture matters and that graduates can have a wider appreciation of what they do. Wall Street can be a challenging platform, where they can innovate. The Fintech solution can be a response to that, as by reinventing finance using technologies and innovations, banking can be modernized. We can therefore wonder if the advantage that the Silicon Valley has over the finance industry in the talent war can be reversed. Digitalization and leveraging technologies is a solution that could attract millennials, if they are demonstrated that they can modernize investment banking.

par Orianne HIRBOD


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