Accustomed to the convenience, efficiency and cost-effectiveness of purchasing their tangible goods from online retailers, consumers have come to expect an equally high-caliber user experience when they buy financial services. It's well-known that fintech firms offering cheaper online alternatives in lending, wealth and asset management have made incursions against brick-and-mortar stalwarts. But fintech firms and traditional banks don't only compete for customers: they also target the same talent pool for both businesspeople and engineers.

Long the favorite sector for undergrad business students globally, banking was overtaken in 2014 by the fast moving consumer goods (aka consumer packaged goods) industry, and, if current trends hold, it will also be surpassed in popularity by software and computing services by 2022, according to the Deloitte Talent in Banking Survey (2015). MBA students have similarly made a shift away from investment banking and toward consulting and technology. For tech talent, banking was never a go-to sector, and it's not for lack of investment in innovation.

There are four key reasons why, in the reality of recruiting, fintech and traditional banks are not operating on a level playing field:

  1. Careers in banking no longer promise fat paychecks. In the wake of the 2008 crisis, banks are heavily regulated, which impinges on their ROE from two angles. First, banks can no longer participate in certain high-revenue businesses like proprietary trading and owning substantial stakes in private equity and hedge funds. Second, the very process of complying with thousands of pages of regulations is costly. While startups and mid-stage fintech firms tend not to offer rich cash compensation, early employees are often awarded equity stakes that afford substantial upside.

  2. It's not all about the money anyway. Top software engineers, sitting in the proverbial driver's seat with less than half the unemployment rate of the general population, command outsized salaries and perk packages. But the high-tech set is motivated also by the opportunity to change the status quo, a possibility only at a company with a disruptive mission and the ability and willingness to evolve in the face of change. A common and appealing theme that runs through the credos of top fintech companies is access: enabling new audiences to transact more affordably by automating processes and cutting out unnecessary layers. Engineers and business types alike are also focused on personal growth. For the former, there is the prospect of creating an entirely new “product,” as opposed to building on years of accumulated legacy software. The latter may aspire to create new firms of their own.

  3. Increasingly fluid career paths put startup stability in context. Even those without entrepreneurial aspirations are not as inclined as they once were to stay put in a position for the long haul. Forget about your father's 30-year stint at the company store and the pension he earned. Even four years is now considered by some to be an extended stay. In banking, furthermore, large-scale layoffs are more the norm than the exception. In this context, the possibility of picking the wrong early stage firm seems less like a trauma and more like an opportunity to grow.

  4. The culture and camaraderie are second to none. An ambitious and high-minded mission can be a great motivator, but identifying the right problem will only get you so far without the right colleagues and a supportive environment within which to solve it. Earlier stage firms benefit from a positive feedback loop that legacy organizations are hard-pressed to develop: companies that are reputed to embrace diversity tend to attract people from a plurality of backgrounds. In contrast to the title-obsessed culture at many banks, newer firms tend to run flat organizational structures. When building a company from scratch, the decisions are too many and too critical for any one person's voice to go unheard.