LONDON - The investment-banking industry is heading into a digital revolution that could redraw not only its business model, but also the traditional image of its staff.
Stuck with dwindling profits in an era of poor returns and heavy regulation, the likes of Goldman Sachs, JP Morgan Chase and HSBC are battling to hire the best software programmers, systems engineers and data analysts, to help them get ahead via new technology and cost-cutting.
With information-technology expertise now a must for the boardroom, banks' conservative workplaces are likely to undergo cultural change as they welcome ambitious, differently-minded people.
"Traditionally, banks have been a lot more narrow in their (hiring) focus. Now, collectively, they have realised the need to be more creative," said Mr Jeffrey Wallis, managing partner at SunGard Consulting Services, specialising in financial firms.
Adopting new technology is an evident strategy for industries in economic distress and investment banks have already spent billions to overhaul systems and cut staffing costs - 60 to 75 per cent of equities now trade electronically, according to industry estimates, and that proportion is expected to continue to grow.
Tighter regulation post-financial crisis has also prompted banks to overhaul their risk-management systems - Goldman Sachs said it can now track and account for six million positions each day.
But the latest wave of technology hires has come about because banks are aiming more specifically to grow revenues by developing tailor-made products and mobile applications based on clients' trading patterns.
To do that, they need to attract the top quantitative analysts and software developers - which may mean allowing some of them to work in shorts and T-shirts from Palo Alto, California, rather than in suit and tie from a skyscraper in London's Canary Wharf.
"In the 1980s, there was an influx of technology people into financial services. There was a real wave of people and a new-age way of thinking came in. That injection of new talent and thinking hasn't really been coming in for a while," said Mr David Boehmer, managing partner of the Americas' financial-services division for executive-search firm Heidrick & Struggles.
Spending on banking and securities IT is expected to top US$471 billion (S$601 billion) this year, up 14 per cent from 2010, and rise by a fifth again to hit US$563 billion in 2017, Gartner estimates.
The need to overhaul IT systems has been underscored by regular evidence that those systems struggle with the complexity of modern-day trades.
JP Morgan, which is close to concluding a four-year overhaul of its platforms, took a US$6-billion hit last year from a scandal that was in part due to flawed valuation systems, while the May 2010 "flash crash" in United States stock markets took regulators five months to root out the cause.
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