Most MBA grads today are thinking about working in tech. Finance is fighting back

Ayelet Slovin Palmore finished up at the gym and headed for her desk to do some work before dinner. It was about 6:30 p.m. at the offices of software giant Adobe.

“I kept having to jump up to trigger the lights because no one else was on the floor,” she says. “That’s never happened in any firm that I’ve ever worked at.”

Technology companies today are hotter than ever in the eyes of business school graduates, thanks in large part to perceptions that they offer better culture — including more palatable working hours — and more meaningful work. The sector has commandeered the attention of most MBA graduates, including those who have worked in finance. A LinkedIn survey of 540 such professionals found that 54 percent are interested in moving into the tech sector.

The shift has implications for traditional financial services companies that have to compete, for a tech sector that’s growing at breakneck speed, and for business schools that need to cater to expanding optionality in students’ career aspirations.

“MBAs in particular, if they had any level of financial services experience prior to receiving their MBA, they really want to parlay that into strategic or operational roles within the tech sector,” says Deepali Vyas, global co-head of financial technology at the talent search and recruitment firm Korn Ferry.

Recent graduates with finance experience point to several factors that attract them to technology companies, including potential equity upside at privately held startups, the culture of the workplace, and the work’s substance and impact, according to the LinkedIn survey. And interviews with 20 recent business school graduates painted a portrait of tech increasingly gaining mindshare among young professionals around them.

See full results of the LinkedIn survey here

Even a pillar of Wall Street, multibillionaire Steve Schwarzman, conceded in 2015 that he would head to Silicon Valley if he were 30 years younger. “I would have moved to California and done something in the internet space,” said Schwarzman, the leader of the world’s largest private equity firm, New York-based Blackstone Group. “There’s so much disruption and so much amazing value creation.”

At the Wharton School at the University of Pennsylvania — often viewed as a top feeder of MBA graduates to the finance sector — 15 percent of the class of 2018 accepted roles at technology companies, according to figures published by the school. While that pales in comparison to the 37 percent who were funneled into financial services, it’s up from 11 percent five years ago and just 5.6 percent a decade ago. In 2008, about half of Wharton grads went to financial firms.

“Even for a school like Wharton, which is known as ‘the finance school,’ the breadth of stuff we do actually is really large these days,” Dean Geoffrey Garrett said in an interview with LinkedIn earlier this year. “There's been a diversification in what our students want to learn because of the careers that they want to go into. Traditional finance has shrunk. Other stuff — entrepreneurship, data, analytics — are now incredibly important.”

Tech sweeps campuses

In interviews, recent MBA graduates described a wealth of new resources at business schools for tech-minded students. Newly introduced courses, swelling tech clubs, updated case studies on “unicorn” startups, and San Francisco immersion programs are becoming the norm.

“It was so popular that people were waitlisted,” Wharton alumna Yanmin Lee said of the Philadelphia-based school’s recent addition of a semester in San Francisco. “It’s a pretty competitive program and now it’s a permanent fixture. It’s a big attraction.”

Last month, Bloomberg Businessweek shook up its ranking of U.S. and global business schools by adding a new category of evaluation: entrepreneurship. Several schools tumbled down the list from 2017 to 2018 as a result.

As they find an increasingly receptive audience, tech companies have ramped up on-campus recruitment at business schools. Amazon, in particular, stood out to Balaji Ananthanpillai, a 2017 graduate of the University of Chicago Booth School of Business. Figures published by the school show that the Seattle-based technology giant hired 26 graduates for full-time roles that year, second only to consulting stalwart McKinsey, and 33 students as interns, more than any other company.

“Amazon is playing a huge role in shifting things, making more and more folks interested in technology,” says Ananthanpillai. “They’ve been recruiting left, right, and center at most of the business schools. They are changing the entire landscape.”

To be sure, more than a quarter — 26 percent — of recent MBA grads with finance experience are uninterested in shifting to the tech sector. “Never say never, but I knew going in [to business school] that I only wanted to work in private equity coming out,” said a 28-year-old Harvard Business School alumnus who asked not to be named because his employer, a New York-based private equity firm, has strict rules regarding speaking publicly. “I definitely had friends get swept up in recruiting by the Googles and Amazons, and they’re there now. I just knew what I wanted. A lot of my classmates did.”

Finance fights back

The overall growth of tech as a sector is even changing the workforce composition of entire cities, including the world’s financial hubs. According to data from LinkedIn’s Economic Graph, finance skills account for 21 of the 100 most unique skills listed by professionals in New York, down from 35 three years ago.

Financial services companies are paying attention, and more than that, they’re taking action. Some even see an opportunity to ramp up their messaging to recruits as “big tech” competitors such as Facebook and Google face increased scrutiny by users and lawmakers, says Korn Ferry’s Vyas.

(Photo: Facebook CEO Mark Zuckerberg arrives on Capitol Hill in Washington, April 10, 2018, to testify about the use of Facebook data to target voters in the 2016 U.S. election. Pablo Martinez Monsivais/Associated Press)

“Financial services is really starting to fight back in the talent war,” Vyas says, “because the shine has worn off of some of the larger tech players.”

Big investment banks and asset managers first turned to low-hanging fruit: Dress codes were relaxed (“In large swaths of finance, no one’s wearing a tie anymore,” says Vyas); late-night and weekend work was curtailed; and floor plans were reworked to foster collaboration and encourage diverse ideas.

“The culture of all-nighters, the culture of working to your bone — it’s on the way out,” says Heather Hammond, co-head of the global banking and markets practice at executive-search firm Russell Reynolds Associates. “The firms have become more empathetic around flexible working and work styles.”

BlackRock, the world’s largest asset manager, has made several such changes to attract tech-minded talent. In addition to relaxing its dress code and altering its office layout to allow teams to be more agile, the company allows new hires to choose their types of laptops, computers, and mobile phones.

“We continually need to be tweaking the culture to manage a culture of innovation,” Rob Goldstein, BlackRock’s chief operating officer, said in an interview with LinkedIn earlier this year.

Mission is the message

Equally important to innovation, if not more important, is a sense of mission for young professionals considering different career avenues, according to interviews with them. A 24-year-old investment banking analyst in New York, who asked not to be named to avoid retribution from peers and his employer, said in an interview that after business school he plans to apply for strategy and operations roles in the tech sector in order to “feel like my work is having a positive impact on society, on ordinary people.”

Says Garrett, the Wharton dean: “Millennials and mission — it’s alliterative, but there’s something real to it.”

So after the low-hanging fruit, financial services firms are turning to their messaging, branding, and execution around mission. Work for us, they say, and you can improve financial inclusion and wellness for millions of savers and investors.

“Once they’re presented with the opportunity, the conversion rate is really high,” says Rob Falzon, vice chairman of the insurance giant Prudential, which stresses to potential recruits that they would be working on meaningful issues such as the retirement savings gap and the underinsured population. “They’re looking at what we’re doing and saying, ‘OK, we can actually have an impact on the strategy of this company and the execution of that strategy.’ If they go to work for one of the large technology companies, the reality is it’s a factory.”

While executives in both finance and technology often refer to hiring today as war, the reality is that many see the two sectors benefiting from one another. More than three-quarters — 81 percent — of the young professionals surveyed by LinkedIn believe that having peers with finance experience in the tech sector can lead to innovation for financial services and other traditional sectors.

Not only will they benefit from one another, says Hammond of Russell Reynolds, but they will become more similar to one another as well. And that may allow both to emerge victorious.

“All of the banks and asset managers and insurance companies of the future will want to be known as technology companies before they are known as financial services companies,” Hammond says. “If they follow that path and support that with training and development, then they have a fighting chance.”

—With assistance from Jaimy Lee, Neil Basu, Artem Chelovechkov, Jenny Ying, and Greg Lee.

Join the conversation. Share your own experience or views of the finance-tech talent war in the comments below.