The Job Boom in 'Fintech'

world economics. finance...

How hot is "fintech?" It's so hot that even bankers are jumping ship for jobs at startup companies devoted to developing innovative financial technology products.

Then again, they'd better jump before they're pushed. The "fintech" industry is likely to produce applications that replace many of the humans now working for the big banks.> Find a job in finance
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"Fintech" has been shorthand for "financial technology" for a while now. However, it is only since 2008, with the near-collapse of the global banking system, that fintech emerged as the buzzword for a whole new wave of products that aim to revolutionize the way that financial matters work, for consumers as well as bankers.

Virtually all of these projects are being doing by small independent startups--about 12,000 of them now, according to a report by Bloomberg News. Not surprisingly, most are located in Silicon Valley or New York City.

There will be more. A recent report for the City of New York by the consulting firm Accenture estimates that global fintech investment has tripled since 2008, to nearly $3 billion, and will rise to $8 billion by 2018.

They are re-thinking the technology that drives the whole range of financial services, from lending to payments and billing to wealth management, personal finance, and digital currency.

In part, this is about replacing the big banks' clunky and outdated in-house systems with better-designed and more intuitive web-based platforms, for use by the bankers and their customers. The big banks will be among the customers for fintech products.

But the opportunity goes much farther than the 125 or so commercial and investment banks doing business in the U.S. Fintech aims to create products that can be used by a wide customer base that only the internet could have made possible: hands-on personal investors, crowd-funders and angel investors, venture capitalists and virtual bankers.

At the top, senior bankers are "keenly aware that the digital revolution is a threat as well as an opportunity for their industry," the Accenture report notes.

For examples, look no further than Forbes magazine's list of Fintech Startups to Watch in 2015. Wealthfront offers investing advice based on proprietary algorithms. AstroPay markets fraud-reducing credit cards in emerging markets. Tipalti created technology that simplifies payment processing.

It's even more important for the rank and file at the banks. It's about their jobs.

Four of the biggest banks based in the U.S. and Great Britain have reduced their collective headcount by nearly 350,000 since the banking crisis hit in 2008, according to an analysis by Bloomberg. More cuts are expected this year.

Whole divisions, particularly those involved in debt trading, were shut down. Credit departments shrank. Banks generally blamed a new and stricter regulatory environment that made it harder to make a profit.

At the same time, executives started seeking fintech products that could handle tasks like risk management and data analytics better than error-prone humans.

And many of those humans, according to Bloomberg, are hoping to move on to fintech, even if they have to give up their high paychecks for the opportunity. "Seven out of 10 conversations I have with investment bankers now end with them asking me to keep them in mind for jobs in technology," a fintech recruiting executive told Bloomberg.

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