After a hiatus of a few months, Cash Chronicles is starting the process of posting regularly once again. The past few months have entailed a lot of changes for me personally that I wanted to dedicate my time to. These included quitting my old job in finance and starting a new one in tech, adjusting to a totally new culture, getting back into physical shape, petitioning for custody of my son as well as managing my real estate and financial assets.

I have managed to achieve a sort of routine which eluded me in the first months of the year, which I now realize we’re dominated by multiple battles with COVID as well as my desire to leave my former job. The second bout of COVID that I experienced in late January really seemed to affect my nervous system. This had a lasting effect on my sleep and general mood and produced quite severe anxiety that took me medication to get off. At the time I was becoming overwhelmed with all that I was trying to take on both professionally and personally and needed to take some time to step back.

I think this is something that everyone should do every once in a while. Although I enjoyed writing for this blog, trying to grow it and market it with a day job, a family and a side job became quite taxing. When COVID hit me the second time, I was forced into a corner of having to choose what I can accomplish in a a day and realized my mental health was suffering for it. I took a lot of pride in the fact that I had written 2 posts per week for over 3 years straight and produced over half a million words in output, what I approximate to be the equivalent of about five and a half books.

This stretch of not writing has also given me some time to observe more and think. I have been less caught up in the financial media cycle that working in front office finance almost requires you to partake in, and with my new job, have been able to observe the vast differences in culture between tech and finance. It also has given me a new appreciation for the wealth of opportunities that are available in the US today and reaffirmed my belief that the best opportunities still lie here despite the deeply pessimistic narrative of both the media and much of academia nowadays.

Banking: No Growth and Bad Culture

First it’s worth discussing why I made the move to tech (or more specifically for me, fintech) and why I thought it was time to do so. The overall landscape for banking has changed a lot since when I started in the days before the financial crisis. In those times, compensation and competition were fierce. Global names like Deutsche Bank, UBS and BNP Paribas were competing with the big US names such as Goldman Sachs and Citi. 15 or so years on the landscape has shifted dramatically.

The banking industry in the US is increasingly mirroring that of other countries: the advantages of scale are producing an incentive for fast consolidation and massive investment budgets by the largest names. The big 5 largest banks in the US now control almost half of banking assets in the US. In contrast to the period before the financial crisis, the foreign banks are running for the hills and floundering. Credit Suisse is only the latest example here. You would be hard pressed to find talented students who aspire to work for Nomura, Credit Suisse or Deutsche Bank nowadays. Global retail lenders like BNP Paribas and MUFG have sold off their US presence to US banks or Canadians.

At the same time, the banking market overall is not growing. Innovation becomes more difficult for these large names because it has to make a dent on multi billion dollar quarterly incomes to even raise any eyebrows. It’s easier for a large bank to gobble up another bank and instantly increase its market share than it is to come up with a new, whizzy (and profitable) innovation in the financial sector that will help it stand out from its other large competitors.

Where I have seen more innovation is in the financial technology or fintech sector. Machine learning, AI and new approaches to old problems often start on a smaller scale and build from there. With that comes a different approach and a different mindset than what is commonly found at banks. But in theory, banks should be able to hire this type of talent and grow new tech in house. Many are trying to do this, but now that I am on the other side of it I can see why they are struggling to do so.

While interviewing for a firm that produces wealth management reporting software earlier this year, I spoke with one of the group heads of implementation. His teams were in charge of working through the bugs and any customization needed for wealth management clients, usually large banking firms, that had purchased his company’s software. He explained to me his theory as to why the banks had such a hard time innovating and why it was easier for small companies outside the bank (ie fintech companies) to innovate.

He positioned he thesis by posing a question: how many software engineers do you know that work at banks? Having worked at a bank for 14 years, I couldn’t name any. That’s the issue, he explained, the engineers are the ones that design and build the software to be able to produce these products and they are used to certain amenities that just aren’t in tune with banking culture.

He explained that mainly, they want to be able to dress how they want, have minimal oversight (ie the freedom to innovate), flexible work arrangements and be compensated well. Banks find it difficult to offer all of these together. You can see why in the example of Goldman Sachs: although many are compensated well, they are expected to be in the office constantly and likely find themselves in a high pressure environment with expectations for nearly instant impact. Tech doesn’t necessarily have these stressful contingencies and hence, working at a bank likely isn’t even in the thought process of most software engineers, so the banks miss out.

Culture Wars

That leads me into the main differences between tech and finance that I have experienced in the past few months. It’s worth mentioning that my new company takes a “digital first” approach. This means that they are location agnostic as long as you are in the US. What this means is that most people work full time from home. This leads to a very different approach towards work.

In finance I often felt the pressure to do “performative work” which I think is common in much of the traditional corporate world. What I mean by this is there seems to be a pressure to constantly look busy and almost overwhelmed to convey to everyone that you are working hard (or even harder than they are). For me this often meant if I was working from home then making sure my mouse was moving to keep my Skype status “green” or to be constantly creating calls and meetings to seem busy. Although management had embraced the concept of hybrid work, the implementation fell along more ridgid lines of creating a set schedule of when people have to be in the office, such as 2 or 3 days a week. Under the surface the message I felt always was: we had to suffer so you have to also. I also felt management was conveying the message that we need to be watched and be close to the boss physically to move up.

At a large company, this led to a lot of performative actions or what some may call “internal marketing”. I often saw people speak at meetings with seemingly nothing to say. To me, this came off as them just wanting to be remembered for speaking. I also noticed people came into the office simply to be closer to management and try and get an upper hand in terms of information or endearment. I found all of this to be a waste of time and a distraction from the strategy of my role of landing new business.

In contrast, in my new role in tech I find little pressure to be “on”. There is an expectation to get work done and have a self starting attitude but I feel less pressure for performative work. It creates a sense that your employer trusts you and treats you like an adult rather than as a child to be monitored.

I also find that employees are much more engaged with the strategy of the firm and pose tough questions to management. This is in contrast to the closed board rooms and what I called “palace intrigue” in regards to what happens at the senior level in much of the banking world.

Another notable difference which is probably to be expected is the embrace of new technology. Tech companies now live in their own echo system of apps with names that often alien to much of the corporate world: Atlassian, Okta and Pingboard among others were all new to me. Workers have a suite of apps akin to navigating an iPhone when they start. It’s intuitive yet in stark contrast to the stunningly dated MS Dos and Visual Basic systems built in house decades ago in many banks. Rather than trying to build a whole suite of in house systems, many tech companies have relied on embracing the third party tech universe for outsourcing, much like the corporate world has done with Microsoft products. I was shocked when I was able to submit my receipts for a business trip immediately upon receiving them, taking a picture and uploading them within seconds for approval. This process would have taken me half an hour or more at my old job due to the clumsy and dated software used. Many used to just pawn this off on administrative assistants because it was too cumbersome.

That brings me back to one of the biggest differences which that software executive pointed out: the engineers. When a process was to be changed or fixed at a bank it had to go to multiple committees and be debated on its merit versus costs. The larger it was the more likely that would have to be outsourced to some sort of tech provider or consultant to improve the process. In my experience so far, product flaws are quickly fixed by consultation with the engineering team and in house processes can be designed to eliminate repetitive and manual tasks when they are identified in the value chain. For example, some people in my group noted some manual and unsightly data updates that went out to clients. They raised this concern with the engineering team who was then able to design an automated process which summarized data and model changes in a sleek client friendly summary to be sent out weekly. This would have been a daunting project in my prior role. The engineers were able to tackle it quickly with light effort.

Finally, on the more human side of things I have noticed a general optimism that pervades much of the company compared to the deep seeded pessimism that existed at a large finance company. I can’t tell you how many new initiatives or projects from managers were met with grumbling or deep sighs. Gossip and putting down other areas was rife as well.

In contrast, on my first on-site at a tech company, when someone started to bad mouth another group, a senior manager stopped him and instead asked to refocus the conversation on how they can improve rather than speak poorly of another team. This type of thinking was around in banking but was quite rare in my experience and usually only exhibited by outward facing senior managers.

The Outlook

There may be some that say that my move is poorly timed. Not long after I started, a hiring freeze was announced and our compensation packages were changed. Both big tech and small tech have seen layoffs and hiring freezes. The media would have you believe that this is making Gen Z workers jittery. They could be, but I think this outlook is short sighted.

During my interview process, a number of people asked me why I wanted to change from banking and my answer was this was a long term play. I can see from a high level that banks were struggling to grow or maintain their market share. A poor culture has left much of banking devoid of younger talent. This has produced older and more cautious management. No one wants to rock the boat too much when they are trying to coast for the next 5 years to retirement.

The innovation and new ideas, as well as the fast growth I am seeing are often more on the tech side of things. I do think the banks will still have an important role and a place within the economy but they may start to look more like the situation for banks in China. There, tech companies like Alibaba own the client and push off the loans they originate to the banks for holding. Banks act more of like a lending warehouse than a client facing entity. Tech companies can use all the data they have on the clients to cross sell them products other than banking products, they just don’t want the regulatory burden of being a lender, which the banks specialize in. In fact, a few banks have even embraced this role, as was highlighted this week in a Bloomberg article about Cross River Bank.

In addition, a plateauing or shrinking industry can often lead to a toxic culture where people are often fighting amongst themselves just to survive. Stepping outside of the banking box has allowed me to see the wealth of opportunities that lie outside of the narrow space many people confine themselves to as they get more experienced. I felt truly lucky to have opportunities available to us in the US. I often got the impression that colleagues in Europe and Asia, while having options, were more bound by a ridged cultural factor to stay within their area of study and expertise.

Challenges Ahead

While none of this guarantees I will be successful, and the economy is facing some headwinds, I feel a sense of resiliency at my new firm that was lacking at my old one. Startups often have harrowing survival tales in their early years and I can tell that many of my new colleagues have seen the firm overcome intimidating odds and big challenges. The economic situation and the state of tech is just the latest one.

While some of the differences are definitely due to the size of my new company (I went from a firm of 60,000 to a firm of 2,000) there are palpable cultural differences that make it a much better environment for me both personally and professionally. When I was laid off 5 years ago, I was distraught because I had often viewed my career as a straight line progression to more and more responsibility and pay, but life laughs at our plans.

To what I believe is my benefit, I now view my career as more of a journey, with dips, forks, wrong turns and pleasant surprises along the way. I find this to be actually more exciting in that it embraces the unknown and risk. It also provides me with a sense of agency and perspective which I fee has grown stronger over time. My only regret now is that I spent so long in poor cultures over the years, but it takes being in a bad relationship to recognize all the hallmarks of a good one, work I find, is little different.

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