Redefining Financial Services In 2019
When people used to ask me what I did for work, I would typically answer the question by saying I was in the financial services industry.
While this has been true for most of my career, I've recently begun to rethink what it means to be a financial services company today. Over the past few years, I’ve been working at a company that started out offering cloud-based accounting software and has now evolved to include a variety of connected tools and services. While elements of financial services apply to our organization, I’ve found the term is limiting and doesn’t fully encompass what we do.
In fact, when you compartmentalize or box yourself into a sector or industry because of a definition, it actually limits what you can do and prevents you from reaching your full potential. I believe it’s time to rethink the definition of financial services and broaden it to be more encompassing of the types of companies that fall under this category in 2019. There are a few ways you can help do this, whether you’re a leader in your organization or just getting started in the industry.
Defining Financial Services
When people traditionally talk about financial services, the term has often referred to industries such as banking, credit cards, insurance and accounting. Yet, the financial services industry has gone through many changes in the decade since the financial crisis, and industry professionals have still viewed it in nearly the same way.
There’s been an emergence of new categories that fall under the broader financial technology (fintech) umbrella, such as
crypto, digital payment apps, online lending platforms, mobile wallets and more. According to Accenture, global investment in fintech more than doubled in 2018 to reach $55 billion, and there are no signs of it slowing down yet as investments continue and new fintech unicorns make headlines daily for their plans for disruption.
Those in the industry need to be more mindful of how the fintech sector fits into their understanding of financial services. Not only is there a considerable amount of overlap, but operating in fintech allows people to be at a financial services company that doesn’t fit the traditional definition. It can lead people to finding alternative career paths, much like the position I found myself in when I took the jump from asset management. And, embracing these types of companies into financial services even helps open doors for others — whether they want to work with numbers or are passionate about the economy — but are turned away from the industry based on the assumptions they have of companies operating in the space.
Working In Financial Services In 2019
Since the recession, there’s been a notable departure of graduates pursuing careers in
finance and an increase in graduates seeking more tech-focused careers. The Financial Times analyzed the career paths of graduates from the top 10 MBA programs and found they were 40% less likely to pursue a career in investment banking after the financial crisis. Additional research from Future Workplace and Randstad supports this through a global study of over 4,000 millennials and Gen Z workers, which found the majority (45%) want to work in the tech sector. That figure compares to the roughly 11% of graduates who are interested in working in banking, according to the Financial Times findings.
It’s no surprise since tech giants like Google and Apple have long been known for their focus on innovation, workplace flexibility and flat structures. Many fintech companies have followed suit, providing employees with similar types of growth opportunities, benefits, workplace flexibility, and diversity and social impact initiatives that many workers are looking to embrace. But aside from workplace environments, even established financial organizations like Goldman Sachs are looking to new sectors like tech to transform their business.
When Goldman Sachs and Apple launched a co-branded credit card, this marked a significant milestone in the company’s journey to become a leader in consumer banking. The announcement builds on the company’s debut of an online banking offering, transforming Goldman Sachs from its Wall Street banking and
trading reputation to one that’s built on technology-fueled innovations and partnerships. By taking steps to position your organization more broadly and in a different way, companies in financial services can cater to new audiences, meet their growing demands and define themselves in new markets without baggage.
While these are examples of larger industry changes that are happening, there are other ways to redefine financial services from within. For instance, at my company we regularly employ people with accounting degrees to serve on our customer teams since they have the knowledge and expertise to help our customers. By choosing this alternative career path to working at an accounting firm, they get exposed to different types of opportunities, the chance to work with a growing market and the benefits that come with a startup-like environment. If the industry embraces a new understanding of financial services, there are more ways for people to contribute to the sector than ever before by building on workers’ talents, expertise and areas of interest.
The understanding of financial services will continue to change as the industry goes through new transformations. Continuing to evolve the definition can help prevent anyone from feeling boxed into an industry that isn’t reflective of the type of work they’re doing. Doing so will open up opportunities for people to carve out their own path in financial services and ensure the industry challenges itself to keep innovation at the heart of everything it does.