The image of financial services has always been dominated by the frenetic energy of the trading floor, where people dart and weave en masse like schools of fish waving little pieces of paper. It’s a depiction with remarkable staying power, but it’s increasingly antiquated. Today, finance is dominated by those sitting behind powerful computers, writing trading algorithms that take advantage of minute inefficiencies at unfathomable speeds. Technology has become a central pillar of finance – just as it has with every other industry.
“Where something like artificial intelligence becomes relevant is in its ability to allow funds to analyse huge data sets quickly, and to extract from them the relevant signals which could be used to make faster and more accurate predictions”, says Professor Nir Vulkan, a market design expert who teaches online programmes for professionals seeking an introduction to bleeding-edge fintech topics. He cites real-time satellite and social media data as two kinds of data that will have a profound impact on the finance industry.
At Oxford Saïd, Vulkan, along with associate fellow David Shrier, leads the Oxford Fintech Programme, an online programme designed to give financial services professionals insight into the future of their industry from theoretical topics like “The Future of Money” to helping students identify potential disruption targets. The goal behind the programme, and others like it, is to make fintech education accessible to anyone with a computer. Vulkan also teaches the Oxford Algorithmic Trading Programme, a six-week programme where participants explore the inner workings of the new theoretical trading models and how they’re used in trading today.
Those practical skills may be the difference between thriving or getting left behind. In 2000, major investment banks had 600 traders on the American equities desk. By 2017, it was closer to two. Traders were replaced by an army of computer engineers tasked with automating the firm’s trading behaviour. And it’s not just the trading floor that experienced a technology-driven pivot. One big American investment bank now employs roughly 9,000 computer engineers all over the world, good for a third of the company’s workforce. It’s a stunning and rapid shift in staffing, and programmes like Shrier and Vulkan’s at Oxford Saïd are instrumental in giving mid-career professionals a chance to bridge the skills gap.
This focus is key. Today’s talent fissures have the potential to impact the financial sector’s bottom line. One recent report found that legacy financial institutions could see their profits dip by as much as 60 percent by 2025 if they don’t keep up with technologically-focused upstarts. Those disruptors are also siphoning top-tier talent away from financial institutions. One CNBC study found that only 10 percent of millennials and Gen Zers are interested in finance as a career path, versus 45 percent who are drawn to the tech sector. That widening gap should concern anyone looking at the future of financial services and the role that the generation will play in filling critical positions.
Lastly, financial firms need to adapt to the changing nature of work writ large. According to a 2018 report, banks will increasingly rely on talent that spans disciplines and will encourage fluidity between teams and concentrations. Those blended skill sets will rely on a robust educational infrastructure, which is where online learning platforms like 2U play a key role.
There has been a profound shift in the workforce powering the world’s financial industry over the past two decades. But it’s nothing compared to what’s looming just over the horizon. To remain competitive, companies and individuals alike will have to learn and adapt to emerging technologies like artificial intelligence and blockchain. This is why education will be central to the evolution of finance.
“Everyone understands that we need more quantitative skilled workers and better programming abilities, in order to express and execute these ideas that we’re talking about,” says Vulkan, who acknowledges that this process will take time. “A lot of people in finance still feel intimidated by algorithms and as a consequence don’t really trust them. We’re trying to change that in our algorithmic trading programme.”