IT careers in investment banks

December 2005

Hands holding a money globeMany investment banks spend billions every year on technology, which is seen as giving them a key competitive advantage. This expenditure makes them interesting places for IT professionals, according to Vikesh Harbham, currently on a work placement at an investment bank.

In this article he updates the image of the pin-striped, Porsche-driving banker and describes opportunities in finance for IT professionals and graduates. 

Definition of an investment bank

Careers-in-finance.com defines investment banks as organizations that help companies and governments issue and trade securities, help investors purchase securities, manage financial assets and provide financial advice.

Some of the high-profile investment banks include Morgan Stanley, Merrill Lynch, JP Morgan and Goldman Sachs; all of these firms have branches in London.

Banks are seeking more IT professionals

Over the last four to five years, the growth of electronic and algorithmic trading (ie using algorithms to automate the trading of financial securities) has meant that investment banks are demanding more highly-skilled IT professionals.

The need for business process and integration skills from IT staff is also growing within the financial services industry, much like it is in the rest of the IT industry.

Furthermore, 2005 was another year where many financial institutions boasted recording-breaking revenues and profits, which also explains why more IT professionals as of lately are chasing after the banks.

On offer: interesting experience and good salaries

As IT is a key driver for the operations of an investment bank, this environment offers IT professionals the opportunity to receive training and gain experience in using some of the most advanced and widely used technologies in the IT industry today.

Salaries are also becoming increasingly competitive in banking: eFinancialCareers say that a top software developer with derivatives knowledge and five years' experience on front office trading systems can expect to earn more than £140,000 per annum in the City of London.

Opportunities for graduates and interns

Financial services firms are targeting the graduate market as a large pool of talent, recruiting more graduates every year. This makes them popular destinations for students, even more so than IT firms.

For instance, the Times Top 100 Graduate Employers Guide included 18 financial institutions and investment banks whereas only five were IT or Telecoms companies.

Training programmes are also on offer, with some investment banks sending trainees abroad. Even jobs in the UK hold the attraction for new graduates being based in the City of London.

For undergraduate students there are summer internships and industrial work placements available. These are excellent opportunities to see what an investment bank has to offer.

It also allows students to build a network of contacts, which could help them progress in their career. Quite often, upon completing an internship or work placement, students are offered full-time jobs for when after they graduate.

Myths about investment banks persist

Despite the increasing number of IT professionals entering the banking world, it is still shrouded in a number of myths, such as:

  • Employees receive a very high salary;
  • Everyone works ridiculously long hours;
  • All bankers drive a Porsche;
  •  It’s mandatory to wear smart expensive suits in the office;
  • Only people with top academic grades and financial experience get hired.

My experience of working with people in the finance industry shows that these myths do not convey the reality. Personally, I think most people who work in investment banks have a work-hard-play-hard attitude.

Let's look at the myths versus reality and how they relate to banking in IT:

Salaries are high but pressure is intense
It's true that salaries are high but with this comes responsibility and pressure. According to jobstats.co.uk, finance is usually among the top five sectors offering the highest average rate for IT; plus there are bonuses.

Long hours are not typical for IT departments
Traders who deal securities in markets usually start early at around 7-8am and leave around 5:30pm. However, IT departments in most financial services firms are more flexible; core working hours are usually 9am-6pm.

More bankers travel by tube than Porsche
Given the congestion charge and lack of parking space, as well as high parking costs, driving in central London has become expensive and less appealing. Therefore, you’ll probably find more bankers using the London underground to travel into work rather than driving in.

Business casual is the norm in IT departments
Sure, you need to dress smart for client-facing meetings, particularly if your client is the CEO of a multi-million dollar organization. But in IT and most other areas of investment banking, business casual is usually the preferred attire.

Good qualifications and financial experience help open doors
Financial services firms prefer to hire the best people for IT positions, though most do not require candidates to hold a Masters degree or even have many years of financial experience. Usually a computing, engineering or science related 2:1 degree is preferred, but not essential. Nevertheless, a network of business contacts and experience of working in financial services definitely helps.

Two main areas of work: business or infrastructure

Technology is seen as a key competitive advantage to investment banks, which is why many of them spend billions on technology every year.

Within investment banks there are usually two divisions within IT or two paths you can choose to take: Technology Business or Technology Infrastructure. These areas will vary across firms and both can easily overlap.

Technology Business is aligned closely to business needs, which involves harnessing existing and new technologies in an innovative way to provide business benefits.

It could include developing and supporting systems and applications for specific business units. For example, an equity development team might build risk-reporting and pricing systems for traders dealing in equity markets.

The other area of IT is aligned to the technology infrastructure within the organization. This area is primarily concerned with operational, deployment, engineering and support type work but can also include programming and application development.

Database administrators and network engineers work within this area of IT, and their ability to manage and repair infrastructure is critical. For instance, many banks use blade and/or grid computing to automate the trading of securities in e-trading markets such as Eurex and e-CBOT. 

A competitive speed for executing these transactions is vital and even a few milliseconds slower than the firm’s competitors can result in the company losing trades. Therefore, maintaining and monitoring the performance of the hardware that these systems use is essential

In my opinion, if you begin your career at one of the high-profile investment banks, you will most likely be overwhelmed at the sheer complexity and size of their technology infrastructure.

This is why most new joiners face a steep learning curve. Nevertheless, the experience they receive is invaluable and their efforts are well rewarded.

Vikesh Harbham wrote this article in December 2005.