Why career ‘boomerangers’ are rare in banking
- Even though it's becoming increasingly common to see high-profile bankers leave the comfort of a bank to lead startups, the opposite -- startup employees going back to banking -- is rare
- Despite the talk around the need for more cross-fertilization between banks and startups, it's hard to come by employees that boomerang back to banks
When a bank product manager moved over to a payments startup, one of the things he was looking forward to was a collaborative workspace where decisions would be made quickly and efficiently.
“I had never worked at a startup, and it was really when startups were becoming a thing, as in, ‘hey, this is another alternative to just working at a large organization,’” he said.
With more than five years’ experience working for mid-sized banks, a change of direction seemed like a good idea, said the banker, who asked to remain unnamed for this story. It was an easy transition for him, since his role at the startup was similar to those he had held at banks. But after more than a year working there, his experience ran counter to the narrative of the startup as an organizationally flat, quick-acting entity. Instead, he said he experienced multiple layers of bureaucracy, an experience more typical of a large bank; and that high pressure to deliver made it a tough sell for him.
“It was about ‘why don’t we have more revenue or customers yet,’” he said. “But the product was an unproven concept.”
Eventually, he decided to go back to banking. Even though it’s becoming increasingly common to see high-profile bankers leave the comfort of a large, established, well-resourced bank to lead startups, the opposite — startup employees going back to banking — is still rare. Despite the talk around the need for more cross-fertilization between banks and startups, it’s hard to come by employees that boomerang back to banks.
There may be little hope that banks and startups will encourage employees to leave and get experience in the other domain, but boomeranging is happening in other industries, like advertising and consulting, so the financial world may follow suit, said Bhushan Sethi, PwC’s financial services people and organization practice leader.
“I haven’t seen it encouraged in banks, but I’ve seen it in other industries like professional services, where they would identify opportunities to get different experiences they can’t provide at scale or in a particular technical area,” he said. “They’re encouraged to leave and they’re managed as an alum or you bring them back — many industries, including banking, are realizing it is challenging to provide all the development experience within your organization.”
One startup analyst, who worked at three startups and recently began working for another startup after a brief stint in banking as a product manager, found that hard to believe, since both banks and startups have enough recruiting challenges as it is.
“For the folks I worked with on the engineering and development side within startups, banks aren’t the kind of sexy places where those people typically want to work,” he said.
In fact, the culture of banking itself may discourage startup workers from coming to banks. Ex-bankers may also be turned off by the bureaucracy. Catherine Flax, who worked in senior roles at BNP Paribas, JPMorgan, and Morgan Stanley, left banking to become CEO of robo-advisory startup Pefin last year. For bankers, adapting to new technology and processes is slow, despite how much they talk up innovation teams, boards, centers and labs.
“Banks are extraordinarily manual in their processes,” she said. “There’s the sense that you have to ‘take that file downtown’ — as in, physical paper. It still happens.”
The startup analyst agreed, and said when banks talk about being more agile, it’s easier said than done — and it becomes a challenge that ex-banker startup employees consider when they have an opportunity to return to a bank.
“Development may say ‘this is how we want to do it,’ but the business and control end of things may act in a classic waterfall manner, resulting in angst, miscommunication and missed deadlines.”
Tim Spence, head of payments at Fifth Third Bank, moved from a career working at ad tech startups and financial services consulting to banking. He said the bank is rolling out products in nine months — a far cry from the years of testing that banks have traditionally done before bringing products to market.
The boomerang banker was attracted to his current employer because it’s now adopting startup-like processes and decision-making structures. For example, instead of “over-architecting” and spending years to develop a perfect product, in recent years, his bank began rolling out products more quickly. Instead of spending years aspiring for perfection, a quicker round of beta products that progressively gets better seemed like a better approach for the bank.
“Instead of designing the perfect widget, banks are saying ‘consumers don’t really know what they want’ so let’s build something minimally viable.”
The ability to employ a more agile approach to product while staying under the umbrella of the bank’s better-resourced structure was an important factor influencing him to come back to banking, he said.
Flax said she enjoyed her career in banking and wouldn’t rule out any future moves, but for now she is pleased to run a financial startup because of the impact it has on people’s lives. Spence said the selling point of working on products at a bank was the ability to affect millions of consumers’ lives in a positive way.
“Startups have the advantage in getting products to market, but we have the advantage of changing people’s lives,” he said, speaking of the bank’s Momentum app, which is a tool that rounds up customers’ debit card purchases and applies it to student loan balances. “I think it comes down to the way you measure the impact that you have… my team’s work is being driven by how broadly we’re able to impact customers’ lives versus how much product we can ship out.”