Any struggling millennials desperate to escape a cycle of poor wages and crippling student debt (unemployed digital journalists, we’re looking at you) take note: Citigroup’s investment banking unit is joining the ranks of financial firms hiring thousands of coders as the ranks of equity analysts and other traditional i-banking jobs continue to thin.
Citi’s decision follows an August report that rival Goldman Sachs would shun its traditional MBA hires in lieu of an army of coders, signalling a profound shift away from hiring mostly business school graduates (who are now irrelevant in a world in which fundamental analysis is no longer meaningful), to hiring computer geeks, math PhD and others whose only contribution is making an existing tech process more efficient (read: faster frontrunning, replacing humans with algos, etc).
According to Bloomberg, Citigroup is planning to hire 2,500 programmers this year to join its investment banking unit, the latest stop in a trend of hiring more data scientists and computer experts as Wall Street struggles to fend off the onslaught of technology firms trying to force their way into traditional financial services businesses (if you need to be reminded of the stakes here, take a look at what Quicken Loans has accomplished with its popular “Rocket Mortgage” product).
Banks are also struggling to find savings anywhere they can (even among the ranks of senior management, as State Street showed us this time last year) using automation, AI and machine-learning. Citi has already used its tech workforce to automate news, analytics, pricing and trade ideas, using material gleaned from exchanges between employees and clients.
In search of savings elsewhere, the biggest US banks have amped up their spending on technology over the past decade, with the biggest banks now spending billions on tech. Citigroup spends roughly $8.5 billion on technoloy annually, about 20% of total expenses. JPM, meanwhile, spends $11 billion on tech every year, making it the industry leader.
According to Stuart Riley, Citi’s global head of operations for Citi’s Institutional Clients Group, last year, roughly 75% of trade order’s taken by the bank’s salespeople were executed electronically. Bloomberg reports that ICG will hire programmers in cities from New York to Chennai.
The hires reflect “what we are building in technology and why we are focused on making salespeople and traders more effective at servicing our clients,” Riley said in an interview at Citigroup’s Canary Wharf office in London. “Technology is augmenting what humans do by making better use of data.”
According to Riley, the new recruits will focus on building new “solutions” in the equities and fixed income businesses, coming as the bank shrinks the ranks of its traders.
In a sign that the heavy spending on tech will likely continue unabated, Citi says it’s already started to reap the benefits of its investments in recent years. The bank says it’ll save as much as $600 million in 2020 thanks to its tech investments. Translation: the company will pay $600 million less in bonuses.
The bank, which already has 23,000 technology specialists in its ICG business globally, including roles in London, New York, Shanghai, Toronto, Dublin, Tel Aviv, Pune and Chennai in India, as well as Tampa.
Citi’s announcement means that the battle for tech talent in New York is about to get much more fierce, now that Amazon is planning to increase its presence in Manhattan (leasing a space that will house 1,500 workers), and Facebook said it’s planning to hire more than 3,000 people over the next three to five years in the city.
Most importantly, Citi’s push to expand its tech workforce comes as it shrinks overall headcount, which means tech is one of the few areas where Citi is actually hiring. Citi’s global employee headcount shrank to 199,000 at the end of the third quarter. That’s down 18% from five year earlier.
Meanwhile, demand for coders is soaring: two years ago, the bank ran a Python coding class for employees that had 30 spaces. Management was inundated by requests, and it has now trained 1,600 front-office staff in the computer language.
“The delineation between traders and technologists in markets is disappearing,” he said.
If coding isn’t your cup of tea, banks also plan on growing their ranks of data scientists, making a master’s degree or PhD in that field even more valuable.
Greenwich Associates said in a study published Monday that data scientists will take up more seats and accumulate more clout on trading desks this year.
“One could argue that most, if not all, of the market’s evolution over the past decade has come because of access to data and the ability to put it to work,” Kevin McPartland, head of research in Greenwich Associates’ market structure and technology group, said in the study. “So it should come as no surprise that experts in that field are taking over.”
It used to be that prospective i-banking analysts needed little more than a rudimentary knowledge of Excel and a basic allotment of soft skills to be competitive. But soon enough mastery of Python won’t just be a differentiator – it’ll be a requirement.