MBA students have been moving into financial technology or fintech in large numbers. This is surprising at first given that these positions often pay less than traditional MBA jobs, and that’s a big risk given the tuition costs and the fact that the industry is still fairly new. It is a clear departure from conventional careers like management and consulting. But the fintech industry might also offer something to MBAs that traditional positions don’t. Let’s look at the reasons why a growing number of MBA students are seeking positions in fintech after looking at the hard data on this trend.
The Hard Data on These Trends
MBA graduates have only recently started flooding into fintech. For example, one EU school had zero graduates join fintech in 2016 but nearly 5 percent of graduates joined fintech firms in 2017. And more did so the following year. Fintech recruitment of MBA graduates has become so big that INSEAD found it necessary to add a fintech category to its MBA career report They found that just over ten percent of their Masters of Business Administration grads joined the field that year.
The biggest downside of working in fintech is the pay. According to one industry survey, the average MBA graduate in a startup that hasn’t raised capital is just under a hundred thousand dollars a year. For comparison, those entering the financial industry earned around 150,000 dollars. And many of those received starting bonuses. That’s why we can say with certainty MBA graduates aren’t signing up for the pay. Let’s look at the reasons they are choosing to go into fintech anyway.
It Is On the Bleeding Edge
Financial technology is exciting to many because it is on the edge. Most MBA students today are tech-savvy and have at least some kind of interest in the field. Others have entrepreneurial ambitions on their own, and there are few opportunities as promising as fintech. Many also have an interest in things such as cryptocurrency, which is a major component of the fintech industry. An MBA program can be a great incubator for new fintech businesses, and also a great place to learn fundamental business principles that will serve them in this field, such as managerial accounting, strategic management, and project and change management.
Fintech is a popular place for MBAs to start their own business and learn the ropes, and companies tend to recruit peers from the same school and those with the same background. Word of mouth referrals are likely because there aren’t the same recruitment tracks for fintech the way there are for investment banking and consulting jobs.
Many fintechs seek fellow MBAs to fill holes in their team. For example, startups are seeking out MBAs to bridge the gap between customer expectations and the product at hand. And some choose to join fintech because they think banks will let them do this.
Fintech firms are innovative, and that gives each the potential to take off. Some join in the hope of making a lot of money if the firm does take off in the form of equity. This is even seen in countries less familiar with remuneration via equity, though MBA graduates in these countries are very familiar with the concept.
The Advancement Opportunities It Presents
Others are joining so they can be on the ground floor. They’re a vital member of the team from the beginning. They also know that they’ll move up the org chart quickly as the company expands. The promise of this is so great that big banks are afraid to lose top talent to fintech companies. Conversely, time at a fintech company could lead to a role at another technology company. For example, financial technologies like cryptocurrencies were once niche but are now backed by a number of mainstream institutions.
The Ability to Make a Difference
For some, the lure of Fintech is the strong possibility they made a difference. In 2015, one firm estimated that nearly five trillion dollars in financial services revenue could be displaced by fintech. Others simply want to join a team where they are contributing immediately to the mission. And a growing number want to work on pioneering innovations. They may want to work in online markets and virtual platforms that could displace banks and other financial intermediaries.
For some, the ability to make a real difference matters more than the money they might earn. In fact, the ability to generate impact is their biggest incentive for joining these firms, and they’d do the job whether or not they might get rich in a subsequent IPO.
The Career Flexibility It Provides
An MBA program graduate is qualified to work in almost any role in a startup from marketing to operations to business development. They could work in data science or management of a growing department. With a little experience in fintech, they can move into the innovation arm of established financial services firms.
These MBAs will get a chance to get a kind of expertise that is not always taught in classes. They’ll have their finger on the pulse of the industry and be aware of the most recent changes and needs. This kind of knowledge will become increasingly valuable, and many MBAs are aware of this. Which is why many would prefer to get some experience in a field that could actually benefit them later on.
Others move into the investment side and benefit from their experience in fintech. Funding for fintech startups has been growing at forty percent annually for the past four years and at least forty billion dollars has been invested in it so far. The need for this expertise is so great that large banks are sometimes assigning summer associates to cover fintech and then keeping them in the role when they become full-time employees.
Conclusion
Fintech is attracting students motivated by far more than money. We can expect fintech to continue to attract some of the best and brightest MBA grads, only some of whom will eventually end up in traditional roles at banks and other service companies.