Anthony Malakian: Wall Street's People Problem

When I was in college I studied journalism. This is somewhat rare as many of my colleagues majored in other subjects before becoming reporters.

While writing for Plattsburgh State’s student-run newspaper, Cardinal Points—hands down the greatest college paper in the world—I learned how to lay out the paper by hand. Sure, we had a computer program that could do this, but my professor felt it was important that we learn the old techniques in addition to the high-tech ones.

Even though I’ve never had to do it in my professional career, give me a protractor and some graph paper and I can design a newspaper. So while I may only use newer technologies, in a pinch I can still revert to, and understand, the old-school ways of producing a paper.

Greatest Challenge
Believe it or not, this anecdote ties into Big Data and financial technology as a whole. During Waters’ recent Big Data Online Summit, I asked Intel’s Daryan Dehghanpisheh what the greatest challenge was facing the industry when it came to this new paradigm. He says the industry had something of a people problem.

“On the one hand, you have these innovative engineers being popped out of Stanford and the technology world where they’re working with the latest and greatest, and they’re not used to being saddled with legacy processes and stacks that an enterprise or institution might have, such as those that reside in the financial services industry,” he says.

Much of the talk surrounding Big Data is about the latest and greatest in technological advancements for collecting, storing and analyzing mass quantities of data. But those new systems and technologies are working alongside old, legacy banking systems. While college kids are familiar with the former technologies, there’s a dearth of knowledge when it comes to the latter. This has created a talent gap, says Dehghanpisheh. 

Steven Sadoff, executive vice president of agency broker Knight Capital Group, expressed a similar sentiment while speaking at the TabbForum MarketTech 2012 event two months ago. “We have a lot of brain drain going to Silicon Valley,” says Sadoff. “In Silicon Valley, technology is more of a first-class citizen—on Wall Street, it’s ever more about maintenance with the new regulations.”

Negative Headlines
Part of the reason for this, Sadoff says, was that Wall Street has seen its fair share of negative headlines in recent years—and deservedly so—and this has turned many college students off the notion of donning a suit and heading to work on the Street. Also, according to Andy Brown, group CTO and client-facing technologies CIO at UBS, Wall Street firms have found it increasingly more difficult to attract talent because many social media and internet firms have moved to New York.

Sadoff, speaking at the Tabb event, cited statistics that hold that over 70 percent of the industry’s technology outlay—estimated at $365 billion—is now bound up in maintenance areas. “This means a seat in the back office in front of databases, rather than a small team, ownership-of-product, and quick wealth for young graduates,” he said.

Let’s face it: It’s not an easy sell telling a pie-in-the-sky kid that he or she is more likely to end up helping a bank overhaul its data management systems so that it can better comply with Dodd–Frank than developing cutting-edge trading systems. And working in capital markets IT is basically a thankless job where the cool kids in the room are the traders, and you’re simply there to help those traders to pad their bank accounts. Alternatively, they can go to Silicon Valley and be treated like rock stars, make more money, and have more opportunity for advancement. Tough call.

Financial firms need to do a better job of being proactive and reaching into the classrooms of America’s elite institutions. This industry needs to create something of a counterinsurgency strategy to win these kids’ hearts and minds. And, to be honest, Wall Street could use some new blood to address these paradigm shifts.