Inside the FinTech Industry
Finance has always been one of the hottest MBA industries. In fact, at many top schools such as the Booth School of Business and NYU Stern, over 30 percent of MBA graduates go into the financial industry each year. Why? Because it’s lucrative—the average Finance MBA earns $121,000 a year compared to $104,000 for other specialties—and well respected. However, until now, one thing that an MBA in finance did not offer was innovation.
The finance industry is one of the oldest and most prestigious industries around. It’s built on a foundation of history and careful research; after all, no company wants a CFO who makes decisions based on gut instinct. But, recently, a new side of the financial services industry has started to gain traction: FinTech.
What Is FinTech?
FinTech, also known as Financial Technology, is an “industry composed of companies that use new technology and innovation to leverage available resources to compete in the marketplace of traditional financial institutions and intermediaries in the delivery of financial services.” (Wikipedia) Basically, FinTech is “innovation in financial services” and is mainly composed of startups and established financial and technology companies looking to enhance or replace traditional financial services.
Why FinTech Matters
So, why should you care about FinTech? It’s rapidly evolving the financial services industry. It started about two decades ago when PayPal drastically changed how services were paid for online and has continued since. Now, there are crowd-funding sites such as GoFundMe and CrowdRise and other online payment services such as WePay (named 62nd overall on the 2015 Inc. 5000 list of America’s fastest-growing private companies).
“Long seen as a highly technical, highly regulated industry dominated by giant banks that resist disruption—other than the occasional global meltdown—finance is now riding an entrepreneurial wave,” explains Inc. “Demand for upstarts’ services is strong, piqued by widespread frustration with big banks; supply is growing, fueled in part by financial types itching to do something other than toil inside those same mega-corporations.”
And while, as of yet, no FinTech company has truly posed a threat to the Bank of Americas and JPMorgan Chases of the world, they are gaining a very strong foothold. Already, there are a number of digital-only banks such as Monzo, Ally Bank, Atom Bank and Tandem that are making a splash, according to Business Insider.
A Career in FinTech
So, what about a career in FinTech? It’s not the same as working in banking. In fact, many FinTech companies prefer not to hire from the investment-banking world. “As a start-up we prefer people who are well versed in all aspects from the business to the technology,” Kirat Singh, the founder and CEO of Washington Technologies, told efinancial careers. “So sometimes it’s better to hire a fresh pair of eyes because we can provide the experience they need. But that’s just where we are at right now. Most of our hires have been interns or web and cloud developers.” According to Singh, the inherent hierarchy within investment banking teams makes it difficult to justify hiring from this pool.
Instead, most FinTech companies look to hire individuals who are seeking fresh challenges and nimble internal structures. Unlike the traditional financial services industry, FinTech is about creating your own destiny on a day-to-day basis, which can be uncomfortable for many individuals with a conventional banking background. So, how do you start a career in FinTech? An MBA is a good start.
The MBA and FinTech
MBAs have had a long love affair with investment banking, and FinTech is the perfect new opportunity. It combines the financial sector with technology, and some of the top MBA programs in the country are starting to jump on board.
For example, NYU Stern just hosted the inaugural FinTech Conference for researches, business practitioners, alumni, and students to debate and discuss the future of FinTech. They were also the first top business school to establish a FinTech specialization in its MBA curriculum.
And at The Wharton School, students can participate in the first student-led FinTech initiative: Wharton FinTech. The initiative connects thought leaders, innovators, academics, and investors to help reinvent global financial services. Wharton FinTech offers speaker series, hands-on projects, and panel discussions.
As for the MIT Sloan School of Management, last year they launched a groundbreaking course called FinTech Ventures. The course covers financial technology applications in the United States and was one of the first graduate-level courses of its kind. “The class is part of a major effort to promote FinTech on campus, and the Competition will be a huge incentive for students to continue with their ideas,” said Carlos S. Altable (MIT Sloan MBA ‘16).
There’s no doubt that as the FinTech industry continues to grow that more and more MBA programs will begin offering courses dedicated to FinTech. And while entire degrees dedicated to FinTech are still rare, the McMaster University’s DeGroote School of Business recently began offering an EMBA in Digital Transformation, which focuses on the use of big data to produce analysis and make decisions, and that’s pretty close.