It's Getting Harder to Tell Banks from Tech Companies

https://www.bloomberg.com/view/articles/2018-02-15/lloyd-blankfein-wants-goldman-sachs-to-push-technology

by severine • 8 years ago

322 252 8 years ago

cm2187• 8 years ago

That being said I wouldn't say Goldman is your typical bank. Other banks are much slower at embracing automation and software development is more often than not considered as a non strategic commodity which budgets and headcount fluctuates up and down based on how much is available for discretionary spending. And the statements from its senior management are also too often aspirational and disconnected from the reality of the organisation.

wgerard• 8 years ago

That's interesting to hear! I'm going through "Flash Boys" right now, and it (to me at least) paints GS in a pretty negative light wrt their engineering culture.

Granted the book mostly focuses on HFT firms, so I could easily see that GS is way better than most large banks but a bit lacking behind, say, Citadel.

dsacco• 8 years ago

That's interesting to hear! I'm going through "Flash Boys" right now, and it (to me at least) paints GS in a pretty negative light wrt their engineering culture.

As an aside, if you’re not planning to already, please read Flash Boys: Not So Fast when you’re done.

mipmap04• 8 years ago

As someone who works in the regtech / fintech industry I totally agree. Large portions of even the biggest banks are severely underserved technologically. There is a lot of wide open space here for technology that improves efficiency and accuracy related to compliance and general operating activities.

ionforce2• 8 years ago

Is there a way to express/model technology so that it isn't considered this accessory but something that is core to their values/mission?

Have we not done a good job of proving that investment in technology is a force/profit multiplier?

1232123215• 8 years ago

The truth is tech is not a force multiplier in finance, except for HFT. A few firms do pay a ton for engineers (higher than google level comp), but there are probably less than 5000 of those engineers in NYC.

hownottowrite• 8 years ago

http://archive.is/D7vIv

adventured• 8 years ago

As witnessed by Bank of America's aggressive pursuit of blockchain technology & patents:

"[Bank of America] has applied for or received at least 43 patents for blockchain, the ledger technology used for verifying and recording transactions that’s at the heart of virtual currencies. It is the largest number among major banks and technology companies"

https://www.bloomberg.com/news/articles/2018-01-16/bofa-tops...

adamnemecek• 8 years ago

I feel like some of the reasons for this are political rather than technical.

claytoncorreia• 8 years ago

It seems like banks are realizing that they need to become tech companies faster than tech companies become banks.

lisper• 8 years ago

No, it's that it is much easier for a bank to become a tech company than for a tech company to become a bank. The barriers to entry for becoming a tech company are merely technological. They are not trivial to surmount, but they are surmountable. By way of contrast, the barriers to entry to becoming a bank are regulatory, and nearly impossible to surmount, at least in the U.S. When was the last time you heard of a new bank being founded here?

tvanantwerp2• 8 years ago

I doubt a startup could become a bank. But if Google wanted to start a banking subsidiary? They could probably throw whatever money it takes at the problem and get it done.

The real question is, would they care to do it?

ahussain• 8 years ago

https://monzo.com/ - not in the US, but in the UK some start ups have started overcoming the regulatory hurdles.

aianus• 8 years ago

There are many, many small banks in the US; you can just buy one that already has a license. Certainly not insurmountable.

organsnyder2• 8 years ago

I work for a large healthcare system, and the "we're not a tech company" line is often heard. At many levels, I agree—we're in the business of delivering healthy outcomes to our communities, so we need to make sure that efforts across the enterprise support that—but it is often applied in ways that stifle us from delivering what we feel would be the most impactful and cost-effective solutions.

I like to respond that Netflix isn't a tech company, either—they're in the business of delivering entertainment. Their position and reputation allows them to build a stronger engineering culture, but their technology still is subservient to their non-tech business goals. While "software is eating the world" has been quoted to the point of being a cliché, the organizations that recognize software as a competitive differentiator—rather than merely a cost center—definitely have an edge against their tech-averse competitors.

oblio3• 8 years ago

I like to ask people what's the biggest advertising company in the world.

You'd be surprised how many people don't know :)

wafflesraccoon• 8 years ago

Who is the biggest advertising company? Google?

debt2• 8 years ago

I say the same about largest media company in the world.

It's shocking that people don't know it's Facebook.

And in their case not just in the world, but the largest media company in history by a very wide margin. People don't see any connection between William Randolph Hearst and Mark Zuckerberg; Facebook really has the best PR team.

rdiddly2• 8 years ago

You know who else would be surprised, is 1998 Larry Page & 1998 Sergey Brin. Especially the part about hearing their company called an "advertising company," much less the largest one.

shreyanshd3• 8 years ago

I work in technology for an investment bank and i hear “we are not a technology company” every quarter. Ironically, the tech we develop is a major factor, if not the only factor, for revenue. My motivation is instantly shattered when i hear that.

dopamean2• 8 years ago

How could you say that the tech you develop might be the only factor in revenue calculations? That makes no sense to me in investment banking.

hamstercat• 8 years ago

I used to work in another financial-related company and "IT is a cost not a revenue center" was thrown around as often as possible. Raise, promotion, formation, a computer made in this decade, anything really would get us that answer. Not only from my boss, but from the IT's top director in various meetings and one-on-one. I used to find it highly frustrating and unfair given that the company would cease to exists without our software, and that all new customers were acquired through new development in our software.

Now that I'm older and not working there anymore, I understand that it's a culture problem and that management just didn't know any better, but I've come to accept the fact that it was a great way to cut costs and get away with it. After all, they still have many employees and manage to make more profit year after year. It just made for a very demotivating environment.

bunderbunder2• 8 years ago

Funny, I go the other way, somewhat. Last time I was interviewing for jobs, one line I heard from a whole lot of financial companies was, "We like to think of ourselves as more of a tech company than a bank."

It's an instant turn-off for me when I hear something like that. These are companies that should be thinking of tech as a means to an end, and not an end in an of itself. Even when I worked at a major software vendor, the tech was still just a means to an end.

baldeagle• 8 years ago

I work for a bank... and I hear that, 'we will be a tech company or not a company.' All the time...

arenaninja2• 8 years ago

Also work in tech for an investment bank but I hear that we are a tech company every quarter. And it's pure BS, no one here cares about development experience :)

WalterBright2• 8 years ago

Maybe you can fix the problem where I want to download all my statements and transactions for the last tax year. It should be a one button push from their web site. But nope, it's always 15 minutes to a half hour tediously downloading things statement by statement, form by form, argghh.

kbenson• 8 years ago

Conversely, I work for a very small company where the owner likes to fashion himself running a startup even though he's been in business over a decade. Technology features heavily in what we do, but I cringe every time he says "really, we're a technology company".

Terretta3• 8 years ago

Come work at MUFG, largest bank in free world, $2.7T, which decided we have to be a tech company.

Our head of technology strategy for Americas is on hacker news at quarter to midnight. And hiring, not just for blockchain. (See my “about” text.)

Worth a chat if you’re in NYC or San Diego.

sbov• 8 years ago

Can't you play this definition game with any company though?

I kind of think that if an organization views tech as a competitive advantage and core competency, they are a tech company. E.g. Netflix may be in the business of entertainment, but they are also a tech company. Google may be in the business of selling ads, but they are also a tech company.

thephyber• 8 years ago

The way I read it, there is a management position of shunning new tech by saying "we are not a technology company". That statement can also be interpreted as "we are not an innovation company" which conveys an aversion to change.

I think the point of the GP is to say that Netflix "isn't a technology company", but they don't parade around saying that. Netflix uses technology and innovation to the fullest as the means to accomplish the ends of delivering great entertainment value at a low cost.

I don't think it's as much about the "definition game" as about the message that is conveyed.

madeofpalk• 8 years ago

Yes you can, and that's kind of the point.

Slowly but surely, more and more companies are realising that their digital efforts are just as integral to their business as whatever else it is that they're doing. Every company needs to be a tech company now.

In Australia, Commbank realised this at a very early stage: there's actually very little differentiation between the financial products from bank to bank. Sure, interest rates change here and there but on the whole, everyone is the same. Commbank realised that they can make their internet banking and mobile apps just as much as their core product and their differentiator. People aren't going to stay with their bank because of a debit card, but they will stay the one with the better app with more features. They rolled out a bunch of firsts - peer to peer payments by bumping phones together in 2010, transferring money to others using just their phone number, or 'Cardless Cash' where overnight they updated their network of ATMs to allow withdrawals using their phone app.

Qantas is another example of a company that invests (for better or worse) heavily into their digital products all throughout the customer journey.

Every company needs to be apt at digital because, in one way or another, every company is a tech company. It's the successful ones that realise this and use it to their advantage.

tmaly• 8 years ago

I work at a financial services company.

You simply cannot exist if you are not a tech company due to the complexity of the regulations.

justjico• 8 years ago

100% Agree. It’s like saying Coca-Cola is not a marketing company, they sell beverages. Or Apple is not a “design” company, they sell hardware. sigh

ucaetano2• 8 years ago

It’s like saying Coca-Cola is not a marketing company, they sell beverages.

They don't even sell beverages. Their (mostly) independently-owned bottlers do!

mywittyname2• 8 years ago

Coca-Cola is not a marketing company,

I never agreed with this mentality. Advertisement is Coke's cost center; it's not what they sell. They sell licensing rights to soft drinks: that's what makes them money.

Advertisement is a cost of having a customer facing brand. Should P&G and Unilever be considered advertisement companies?

baybal23• 8 years ago

You can fairly say that Coca cola is a packaging company.

heedlessly2• 8 years ago

Apple is a design company.

Foxconn, Qualcomm, and Samsung make their hardware.

Cognizan and InfoSys develop some of their software too.

johan_larson3• 8 years ago

It looks like Goldman has no tech people among their top executives. I would have expected at least a CTO or CIO. I don't see this working out for them.

http://www.goldmansachs.com/who-we-are/leadership/executive-...

idlecool• 8 years ago

Then who do engineers report to?

andrewchoi• 8 years ago

Marty Chavez was, but got promoted:

Prior to assuming his current role, Mr. Chavez was Chief Information Officer, responsible for the Technology Division

Profile on him from a few years back: https://www.nytimes.com/2016/04/03/business/dealbook/goldman...

samstave3• 8 years ago

"I like to respond that Netflix isn't a tech company, either—they're in the business of delivering entertainment."

knowing multiple people from netflix; this is literally a very-uninformed comment...

Much of what you even KNOW about cloud-computing, spot markets, streaming, CDNs, etc was pioneered by netflix.

They are secretive, but innovative as heck. So, your comment is a big NOPE.

s73v3r_5• 8 years ago

Right, but the purpose behind all of that was delivering entertainment. Hence, entertainment company.

sidlls• 8 years ago

Much of what you even KNOW about cloud-computing, spot markets, streaming, CDNs, etc was pioneered by netflix.

Let's not overstate the case. Much of this was around before (sometimes long before) Netflix's digital rise.

megy• 8 years ago

Wow, I think you missed his point entirely.

opportune2• 8 years ago

That was the entire premise. Netflix isn't a tech company in the same way banks aren't - technically. But obviously both functionally are since their entire businesses depend on their technology

_raoulcousins• 8 years ago

My employer uses the line to justify paying developers below market wages.

heroprotagonist• 8 years ago

You'd think this would pay more, to make up for lack of supportive infrastructure and career opportunity.

baybal23• 8 years ago

but their technology still is subservient to their non-tech business goals. While "software is eating the world" has been quoted to the point of being a cliché,

Better to say "software ate the world, but netflix has eaten the software" by almost singlehandedly wiping all its upstart competitors from "indigenous tech companies."

To some extend, Netflix deserve some credit for tech. A non-dotcom running tier one CDN is not a small deal.

Yet, they are still a small fish "in the bigger picture of things" though.

nopinsight• 8 years ago

A major reason why upstarts like Netflix could successfully disrupt old guards, while banks and healthcare industries are still largely immuned despite huge inefficiencies in the way they operate, is the trust factor.

People don’t mind trying out a new entertainment service by a small startup especially they get a free trial month. If it breaks, so what? The same cannot be said about places they choose to manage their finances or health.

Perhaps it might be more promising for a new partnership by big-names in adjacent industries, such as the Amazon-Berkshire Hathaway-JP Morgan healthcare initiative, to disrupt these trust-based industries.

If there is a good way to accelerate the process of consumer trust building, it might allow more newcomers a chance of disruptions. It should result in lower costs and economic surpluses for the consumers. ‘How?’ is the 64-million-dollar question.

curuinor• 8 years ago

it is extremely easy to tell a bank from a tech company: tell if they hash their damn passwords. i'm not even talking salt here, just hashing

raesene96• 8 years ago

if you're thinking of some bank's propensity to ask for specific characters of passwords (rather than the whole thing) meaning they can't have hashed it, it's worth noting that many protect the passwords with symmetric encryption and then store the keys in an HSM to mitigate the risk of unauthorised access.

Cyph0n• 8 years ago

Unless the HSM is also doing the decryption, the key(s) can still be stolen while in RAM..

1232123215• 8 years ago

This isnt really true. Banks dont pay anywhere near tech salaries. Its all lip service.

The flow of good engineers is always banks -> tech companies and never tech companies -> banks.

ionforce2• 8 years ago

I think it depends on the company. From my personal experience it's something like

crappy software company << bank << startup

So depending where you are in the software world, you can still be making a ton of coin at a bank.

samfisher83• 8 years ago

The salaries are good if you are banker.

vonmoltke3• 8 years ago

They don't pay anywhere near top tier tech salaries. They are competitive below that (the Oracle/Cisco/IBM level).

xaybey• 8 years ago

I make significantly more at GS than I did at google. The difference is that the majority of my compensation comes from the yearly bonus - a quirk in finance.

1232123215• 8 years ago

As a regular engineer? Or is there a math heavy component?

My understanding is that I could get about 200k base at goldman and maybe a 20% bonus, this is for working in a high in demand field. Google/FB/Other job I can get 300k+ while working less hours, paid for lunch, better treatment, more respect.

arenaninja2• 8 years ago

Interesting. I work for a direct GS competitor and compensation is nowhere near FANG level, not even with bonus accounted for

joshuamorton5• 8 years ago

This would imply you're at the Director level or above at GS. I expect you were L5 or less at Google, so this would make sense, but I'd expect Director at a big bank to be equivalent to an L6+ role at a Google or FB, or am I totally off base somewhere. (that is, you aren't really expected to make director)

vincentv• 8 years ago

Sometimes in the early stage of their careers people make mistakes (including myself) to move from tech company to a bank. Never doing this mistake again. I've never seen so much legacy code, poor engineering decision and code standards in my career so far. Of course this could be limited experience to my department, but given the comments here it feels like this is a standard situation across the "tech" in the financial world.

raesene96• 8 years ago

I'm of the opinion that all banks should be technology companies, in that pretty much all of their operations rely on computing, so the better they are at developing and operating computer systems they better they'll be able to do business.

Unfortunately, many banks (at least in the UK market) seem to see IT as some kind of overhead, to be minimized in cost and/or outsourced (e.g. Lloyds outsourcing to IBM https://www.theregister.co.uk/2017/06/06/lloyds_confirms_ibm...)

Of course there are ranges of new banks (the UK has a range of challenger banks most of whom take a more tech-focused approach) to challenge the "traditional" approach, and it'll be interesting to see how that shakes out...

oblio3• 8 years ago

Not only in the UK. France, at least, is also like that.

tvanantwerp2• 8 years ago

100% agree. My wife works in private banking, and her descriptions to me of the IT/software environment they have to deal with are absurd.

Recently, the integration of a new loan management system was badly botched and several clients have been hit by it. Bills not going out, therefore not being paid, therefore money being taken forcibly from their accounts without notice. And these are customers with millions each in the bank. This has been ongoing for a couple of months now. The client managers themselves are irate--they've been cultivating these relationships for years, and it's all been jeopardized.

How can so many banks be so blind to the fact that everything they do depends on getting the technology right?

ohazi• 8 years ago

Why is it always the "notifying" part that breaks with shitty software like this, and not the "money being taken forcefully" part, which always seems to work flawlessly? Doesn't that seem a little suspicious?

If they were uniformly bad at writing software, the critical money handling part should fail at roughly the same rate. If they can get that part to work reliably, failure of other parts of the system seem particularly inexcusable.

raesene96• 8 years ago

My theory has always been that the people in senior positions at these companies tend to be older and have come up through the ranks before IT was quite as integral to their operations.

So they don't understand technology and therefore tend to not take it as seriously as they should.

That said, that argument starts to hold less water these days. I had my first job in a web-focused bank 18 years ago now!

One of the consequences I've seen (and I'm guessing its even more prevalent these days with easy access to cloud computing resources) is that bad IT in banks leads to the rise of Shadow IT where departments take it on themselves to work around the main corporate IT function.

curun1r• 8 years ago

On the other hand, it would be great for consumers and those wanting to offer software in the banking ecosystem if there were more standardization in the banking industry. I'd be surprised if anything a bank does is so unique that it requires all their software to be bespoke. Perhaps we could get better security and usability if there were some large providers that offered key software to almost everyone in the industry.

raesene96• 8 years ago

In the UK at least, we have a ray of hope on that front as mandatory Open banking APIs are on the way (https://www.openbanking.org.uk/) which should make it a lot easier for software providers to write applications on top of existing accounts and providers.

malthaus• 8 years ago

The problem is legacy culture & systems. Theres almost no chance of a transformation unless a paradigm shift in senior management thinking takes place.

Maintaing their mess costs massively and large projects carry risks and a bad track record no one on top can support.

Too bad the fintech revolution lost some of its momentum challenging the profitable areas of banking

raesene96• 8 years ago

I'd agree that a paradigm shift is definitely needed to address the problem. Banks need to see that constant investment not "put it in and let it run for 10-15 years" is what's needed.

And yes the point about risk of new projects... who wants to lead a project to replace a mainframe system that's been running successfully for the last 30-40 years and if it goes wrong you're guaranteed to be on the front page of the papers...

I wonder if a pattern will emerge where big banks let the challengers develop the tech, then they buy them and move across to it, once the kinks are all ironed out.

technofiend• 8 years ago

The problem is legacy culture & systems.

I'd argue regulatory oversight also makes innovation and risk taking less viable because every failure will be noticed and require explanation, which puts a damper on "fail fast." You can fail fast internally during your SDLC but doing so in front of an external customer is an extraordinarily bad idea.

sizzle• 8 years ago

https://gel.westpacgroup.com.au/

jonjojr• 8 years ago

Most of what you say is true. But the reason they see IT as overhead is because their budget accounts for building the technology and find that supporting it may cost just as much. So they try to get rid of the overhead of Engineering the system to make room for Supporting the system they built. Now, they seem to quickly forget that you still need Engineering to build your next project. And that is why a lot of these companies treat IT Engineering as a disposable asset and then heavily out source the building of these projects to disposable IT Engineering consultants.

kokey• 8 years ago

I worked for a bank in the UK that's a US bank that has no retail presence in the UK (that probably narrows it down a lot) but much of the IT operations were being run and managed from the UK. The headcount in the global IT organisation was about the same as the headcount of Apple at the time. I've always known banks has been relying on computers for decades and probably longer than most industries and from my experience this bank was particularly progressive when it comes to technology and happy to innovate and experiment. When working in other parts of the financial industry in the UK it wasn't quite the same as this. I think there's certainly a stronger engineering culture in the US and the benefits of technology delivering productivity at scale is appreciated. The UK also has a legacy of a lot of well paying functions in the financial industry that wasn't relying on technology with people who don't have an aptitude for technology.

grkvlt• 8 years ago

JPMC always seemed quite progressive - for instance they embraced open source and open standards, with AMPQ and the Apache Qpid message broker which was part of their tech stack and I worked on for a while there, commiting the code I wrote at the bank to the ASF repository. this is very different from a decade or so ago, when any hint of open source was seen as a possible risk...!

cs702• 8 years ago

If by "tech companies" the OP means established technology companies like IBM, Cisco, and Oracle, as opposed to Silicon Valley upstarts, then I agree.

Otherwise, I disagree. Most banks are large, slow-moving, bureaucratic organizations saddled with decades-old technology.

s73v3r_5• 8 years ago

Using the latest hyped thing does not make one a tech company.

Pxtl• 8 years ago

I'd like to see a tech company where the time to process a simple transaction like a balance transfer is measured in days.

mbesto• 8 years ago

The idea that companies can be defined as a binary "tech company" or "not a tech company" is a trope created by tech VCs/entrepreneurs as a means to signal that they are "special" from businesses that we created more than 15 years ago.

Most of my clients (mainly PE investors) typically define companies as either "Tech enabled", "tech lead", "nothing". This means usually two things to them: (1) the more tech enabled the higher the margins (EBITDA) I can achieve and (2) the more tech enabled the higher the multiple I can achieve.

And that's just it. Everything else is marketing.

DrBazza• 8 years ago

Really? Sounds like the author has never worked in either, and just reads news sites. Having worked in several of both 'MegaBank LLC' and 'A Small Tech Company', they're utterly different beasts. Just because both mention blockchain doesn't mean they're the same.

Culturally, they're worlds apart. Banks offer a career path up and away from technology so you get unmotivated developers joining who are just looking for the next leg-up the career ladder.

Banks are only driven to make money, and the "worst" of the employees are utterly driven by the end-of-year bonus, and to hell with anyone that gets in their way.

ptc• 8 years ago

From the article:

(Disclosure: I used to work at Goldman designing derivatives, not apps. Also I have a Marcus savings account.)

joejerryronnie• 8 years ago

While I do agree with your sentiment, switch "Banks" with "VCs" and "end-of-year bonus" with "IPO" and many people would consider your last paragraph an accurate description of the tech startup scene.

s73v3r_5• 8 years ago

I wouldn't say those things are what makes a tech company a tech company.

"Banks are only driven to make money"

If you don't think tech companies are the same way, you're sorely mistaken.

ABCLAW• 8 years ago

One of the large trends in financial technology development that I've seen is that banks seem to heavily prefer that their staff leave and form third party software service providing companies than hire and allocate resources to internal teams. This means transaction costs are driven up massively, but the leading industry players typically deploy innovations in tandem with their competitors.

My banker friends have big problems trying to modernize sections of their operations on the basis that too much political capital is needed to liquidate entire floors of staff - but that restriction only lasts until someone has an off-the-shelf solution offering 25M in labour savings per quarter.

These inefficiencies and cultural issues hamper execution leading to poorer client outcomes, lower margins, and weaker strategic positioning.

I'm glad that some banks are pushing forward to gobble up that easy ROI, but I am concerned that the net effect of this type of automation is systemic risk, as the industry begins to bifurcate between low and high margin banks, and the latter are afforded accelerating capability to consolidate the former.

Less players. More capacity. More reliance. Less redundancy. Not necessarily bad for John Q. Everyman, but if he's ultimately carrying that risk while pocketing none of the efficiency gains...

drharby• 8 years ago

I work in a bank and man - shits cool af

mtgx• 8 years ago

For some reason, I thought this article would go into a different direction - like about how tech companies are borrowing money at record rates because of dirt cheap Fed interest, which to me is a sign of a new financial bubble.

jacksmith21006• 8 years ago

Really pretty much every company is a tech company in 2018 at some level.

pixl97• 8 years ago

"Software is eating the world", came out 7 years ago and is still as true as ever.

tryitnow• 8 years ago

This sounds like marketing baloney. I would bet most of that "engineering" headcount is actually just analytical headcount. not a bad thing, but it's not what we used to call engineering.

This is part of an ongoing trend to describe everything as some form of "engineering."

Honestly, if I'm going to Goldman for M&A - I want a human relationship. That relationship may be buttressed by research and analysis using "big data" and "machine learning" - but that's not engineering, that's just good research using the latest useful tools.

I'm only addressing the actual investment banking component of GS. Sure, the consumer banking stuff requires technology and "engineering" but there's absolutely nothing new about this, it's just that consumer banking has lagged horribly behind in consumer-friendly technology.

Not much to see here.

xkjkls• 8 years ago

Goldman makes about half its revenue from market execution, which is basically an entirely engineering driven business. Only about 20% of it's revenue come from the "investment banking" sort of equity and debt underwriting type of activity.

bboreham2• 8 years ago

Investment banking is not just advice. They also finance deals (i.e. come up with a few billion to make it happen) and execute - buy all the outstanding shares, or sell new ones in your IPO.

And since those kinds of deals don’t come along every day, they maintain the capability by executing as broker and dealer all the rest of the time.

(I know, I’m simplifying a lot. Hope it helps get the idea across)

dgellow• 8 years ago

To be honest Software Engineering looks like child play when compared to actual engineering work.

Imagine the left-pad incident in a different engineering domain.

eximius• 8 years ago

My imagination is failing me. What would the analog be?

ro_sharp• 8 years ago

It's a bit disingenuous to draw parallels between 24x7 electronic trading operations and javascript web cowboys.

k__• 8 years ago

I don't have that feeling when I see online banking websites...

raverbashing• 8 years ago

Do they?

Have they dropped "corporate" solutions that barely work, sold in golf courses to people that are not affected in the least by their decisions?

Are they still using XML (or even worse, CORBA) as duct tape tying everything together?

Have they dropped waterfall?

Do they allow developers to have their say on architectures and solutions to use? Can they experiment with, let's say, Scala, Elixir or are they stuck with some old Java version and don't even think of adding a library besides the approved ones?

lmm• 8 years ago

Those are absolutely the right questions to be asking, and in my experience the answers are mostly "yes".

jrs95• 8 years ago

Although from what I've heard, their version of moving from "waterfall" to "agile" could best be described as "iterative waterfall"

s73v3r_5• 8 years ago

I wouldn't say any of that would make them not a tech company.

Just a tech company that most of us wouldn't want to work at.

lr4444lr• 8 years ago

XML gets a bad wrap. For a protocol you can easily use over RESTful APIs and define a strong schema around, plus with all of the well-optimized libraries in major programming languages and IDE support, I don't really mind working with it at all.

BigChiefSmokem2• 8 years ago

The biggest problem with XML is verbosity. Besides the excess complexity it also add bits over the wire to transmit all that extra crap.

JSON is king.

suddensleep• 8 years ago

Disclaimer: I work as a data scientist at a large financial institution based in the US; to be fair it is one that has a reputation for being on the "cutting edge of tech", FWIW.

The data teams I work with don't know SAS and some members aren't even that facile with Excel, opting to use Apache Spark (mostly Python, but also Scala bindings) or pandas instead. Almost no one does serious data work on their local machines, and there is a big push to store all of our data off-prem.

The dev teams I work with actively experiment with different cloud-based architectures, devops automation tools, database solutions, etc.

From a product perspective, lots of teams use agile workflows, but each team is allowed to (and encouraged to) choose their own style of getting work done.

This is not meant to imply that banks have largely moved to this model; I think that we are the exception rather than the rule. This is _also_ not meant to imply that top-down corporate "solutions" don't affect us, and that greed has been completely factored out of the equation. But I've been pleasantly surprised by how much leverage and freedom we have as the "tech department".

joncrane3• 8 years ago

Capital One?

eecc• 8 years ago

Just Banks? No, “tech” - which stands for information technology- is just about everything, every industry and job is affected and will change. Information is like electricity...

jnordwick8• 8 years ago

Tech and finance are two very broad brushes that both paint a large swath of the business landscape.

When speaking of finance there is everything from regional banks or loan originators to investment banks and trading firms. They are often very far apart in terms of culture, abilities, and pay.

On the higher end in tech you get front desk trading, and they are most definitely a tech subsidy inside a larger institution. Some of the best tech teams I've ever been exposured to. I would take the best team GS over the best team from Google any day of the week. Even a mediocre front desk team are far far above average for the industry because they focus on getting the best talent.

Even companies like Bloomberg that you wouldn't really think of beyond their news service is a massive tech company on the back end. They also have trading and low latency data infrastructures. One of the best teams i ever met was the core bond team at Bloomberg. I was blown away at how good they were.

All these places know they are tech companies and pay appropriately. On the other side you have regional banks or even old school trading firms where they aren't really tech companies, but are mostly admin work with average pay.

I've worked at tech companies and finance (hfts, algo trading, dark pool, banks), one thing i really like about finance is how difficult and interdisciplinary it can be. The tech problems I've encountered at finance firms have been so much more difficult than any other place. Google scales by throwing more machines at it, as most other web tech firms. Many times you don't have that luxury in finance. You have to be smart about it.

Remember, Google gives it developers Go because it considers them above average cogs. Finance firms gives it developers APL/A+/KDB :) I jest a little, but I think there is definitely something telling in what is expected of you.

You can go into a big bank and be a 9 to 5er in an auxiliary role. Or you can go in and workn your tail off and move up. But be prepared to work a lot for those bonuses.

apaprocki• 8 years ago

Even companies like Bloomberg that you wouldn't really think of beyond their news service is a massive tech company on the back end

The company's entire founding premise was to computerize tasks still accomplished by humans and paper in 1981. The News subsidiary was founded nearly a decade later in 1990. So it's more a case of the tech company considering News the "News-end" rather than tech being considered the "back end" :)

jnordwick8• 8 years ago

I was at an APL(ish) lecture a year ago that veered off into the early years of Bloomberg. I thought it was awesome.

Tloewald• 8 years ago

It's still easy to tell banks from tech companies. Banks probably won't offer you 2FA or allow you to use secure passwords and will cheerfully bring down their website for maintenance for twelve hours at a stretch. They'll also charge you mysterious transaction fees.

thebouv• 8 years ago

Odd, I was just talking to someone yesterday about this because there was a lamentation of not enough "tech companies" in our area to work for.

I pointed out that in the DevOps Handbook one of the lines I highlighted was that in 2013, HSBC (a very large bank) employed more software engineers than Google.

So I went to search other tidbits like that and found that in 2015 Goldman Sachs employed more software engineers than Facebook.

Banks aren't companies that have tech, they're tech companies that do banking.

atomic77• 8 years ago

Banks are better described as tech companies than the media / advertising behemoths. Information security is their bread and butter.

As far as I can tell, the only thing that qualifies a company as "tech" nowadays is a technical tradition of building on open source from the ground up (eg. LAMP and its successors), while banks have traditionally been dependent on a constellation of vendors.

The open source approach has proven a more effective model and it seems that this realization has finally spread outside of silicon valley. It's about time.

Talyen42• 8 years ago

what is a tech company, really?

it's like saying something is a "concrete company" because that's what the corporate buildings are made of, or a "people company" because they only employ humans

(terms that actually make sense: SaaS product (Salesforce, Dropbox), advertising marketplace (Google, Facebook)... and so on. Not "tech")

djtriptych• 8 years ago

I was just at a dev mixer and ran into an engineer at Bank of America. He told me they have 5000 Python developers on staff. I almost fell out of my chair - never would have guessed it. I know there's competition for top talent in NYC, but that's still a surprising number.

jnordwick8• 8 years ago

Bofa has an abnormally large python group because of their back office stack. Afaik, the head of team responsible for that decision left a few years ago when it was having some major problems. I didn't realize it was still their bread and butter.

denimnerd• 8 years ago

There's 100k IT workers at BofA.

The new software engineering stack is JIRA, bitbucket, Ansible, Jenkins, Artifactory, Sonar, etc. Every team is being trained on SAFe. Aka the executives choice for "agile" etc

Also the working areas are being transformed from full height or quarter height cubes to open offices where employees no longer have a laptop and use a thinclient attached to standing desks. This is a dream for information security team but personally I hate it as I spent 2-3 hours working from home every day and the rest in the office. I don't want to develop though a windows GUI in the browser :/

freefood89• 8 years ago

sad

pc86• 8 years ago

Is this an entire article based on a subtitle on the summary page of the CEO's presentation? Not a bad advertisement for GS but come on, this is incredibly light on content, by which I mean there is absolutely zero content.

otakucode2• 8 years ago

Banks are tech companies. When other countries say that they trust the US dollar, what do you think that means? It means they trust that our IT systems which manage the dollar are correct. They trust that when we say Warren Buffet has eleventy billion dollars, it actually means something tangible.

And when they discover that trust is utterly and entirely misplaced, that our IT systems have been run as cost centers and endlessly rushed and slapped together and subjected to every form of intellectual rot that modern business practice could infuse into it.... well then things will get interesting. What if Walmart goes to pay off a supplier and the supplier asks for proof that the numbers Walmart is sending over the wire are actually backed by something and not just computational funny money? Well, we do have a form of money that's actually verifiably real and non-counterfeitable and doesn't just rely on some garbage IT....

mwexler• 8 years ago

I work currently at one of the larger banks, and they actually like to describe themselves as "a tech company who happens to focus on financial things". It's as true as you are willing to believe it, but modern global money movement is really just tech these days, and has been so well before distributed ledger tech came along.

Now, whether any of the banks are any good as tech companies is a different question.

(some grammar fixed)

BigChiefSmokem2• 8 years ago

Goodbye Wells Fargo, Bank of America, Citi, and the rest of the credit cartel! You will never be missed.

Hello Wealthfront, Robinhood, Simple, and the rest of the movers and shakers!

FireBeyond3• 8 years ago

Simple, and the rest of the movers and shakers

Yeah, a bank that announce that 1% of their customers had their account involuntarily closed with 30 days notice is sure to build trust in the new world order.

https://techcrunch.com/2017/04/14/simple-account-closures/

tadfisher2• 8 years ago

Simple engineer here, not representing the company's views necessarily but relaying my own opinions.

That situation was indeed a load of bullshit, but the other side of that coin is that we were doing something that has never had to happen in the history of modern banking, probably because it's insane.

You see, normally when a bank is acquired by another bank, the acquirer gets the acquiree's FED terminals, ACH numbers, deals with Visa, etc. that make the transition more-or-less seamless for customers. So customers keep their cards, their direct deposit still works, their checks still work, and all they need to do is log in to a different website to manage their accounts.

What we were forced to do was to essentially close hundreds of thousands of bank accounts at our former banking partner, open new accounts at our new partner, transfer funds, and issue new cards. And we had a contractual deadline before which the transition had to be 100% complete. We explored literally every other option available, including having BBVA acquire our ACH and Visa prefixes, but that was a no-go for reasons I'm not aware of.

So we got the vast majority of our customers to make this painful switch, which was a miracle in itself, but we could not make it all the way down the list, and that sucked. New bank means new account-holder rules, customers changed email addresses/phones, customers moved, we underestimated the complexity/time requirements, all sorts of reasons applied; but the bottom line is that it was an inevitable situation for this kind of transition, and while we did what we could, we let some customers down (0.7% to be exact).

At least I can say that we won't have to go through this again, and we're finally out of the woods with all of these platform transitions, and we're back to building products again. Feel free to AMA.

internetman55• 8 years ago

Haha, i heard lines like that at so many places i interviewed with. 'we're not a finance company, we're a tech company that does finance' etc

code4tee• 8 years ago

Very true (and actually has been that way for a while now). Big banks are largely tech companies that happen to do banking.

agumonkey• 8 years ago

isn't it everything ? everything is techno engineered these days

uber the tech taxi

amazon the tech store

... it's the engineered era

mywittyname2• 8 years ago

Amazon is the way to put your product on the internet. AWS is their biggest profit center and a lot of Amazon's product sales are from merchants who happen to sell their product on Amazon (and use Amazon's fulfillment centers).

abarringer• 8 years ago

heh yea, but no. All our clients are banks. I spent a good part of the day working on a project to convince them to upgrade their browsers to something that supports TLS1.2.

baxtr• 8 years ago

Isn't every company becoming a tech company?

pdeuchler• 8 years ago

Any sufficiently large company is a tech company, and any sufficiently large tech company is a bank.

I'm pretty sure I originally heard that here on HN, I can't seem to track it down though. Seems to only have gotten more and more true as time goes on.

anonu• 8 years ago

I think the headline should be "It's Getting Harder to Tell Goldman Sachs from Tech Companies"...

Insinuating that all banks are becoming tech companies is being a bit too generous.

EDIT: I am pretty sure Bloomberg does A/B testing on their headlines to see which get more clicks. The URL of the article indicates that the headline may have been different to start out with. I've also often observed the same article on the web and the Bloomberg Terminal with different headlines.

lifeisstillgood• 8 years ago

meh. Software is a new form of literacy. No one goes around arguing if we have literate companies any more. It's like fish noticing water. Give it one more generation.

WalterBright2• 8 years ago

I wish banks would learn what a "transaction" is. I have repeated problems with electronic banking where one party to the transaction shows it as a "success" and the other party shows it as a "failure". These problems tend to be tough for me to resolve as both parties insist on their end.

I'm almost ready to go back to writing checks by hand. Waving a cancelled check around has always worked well to resolve transaction disputes. There's no paper trail with electronic banking.

awl1302• 8 years ago

Sanford Weill, while chairman of Citigroup, once remarked that their main asset was information, not money (I haven't been able to find the quote but i distinctly remember it from my b-school lectures).

awl1302• 8 years ago

Technology has always driven the financial markets--because better access to data is what allows new instruments and/or the active trading of new instruments.

adrianratnapala2• 8 years ago

It would be helpful to use the full term Informatation Technology to understand these trends.

Financial institutions and many other administrative orgs have always been about storing, distributing and processing information. They did this at scale even before the advent of computers. And they were also early adopters of computers. Their core business is providing service by using IT, whether that technology is computers, paper or human brains.

Back in the long ago we didn't call them IT companies, because that designated a supplier of IT equipment (and we used to think of software as equipment). But now in the age of SaaS, we think of IT companies providing services using IT, just as the banks et. al. have always done.

It's the same kind of business, evolved through two different paths, each with strengths and weaknesses. It seems inevitable that the two paths will merge.

colarb2000• 8 years ago

I used to work for a bank for a long time. IMHO, this new fascination with technology is kind of a fad and more of a lip service for marketing purposes. In practice, we still use MS Excel as per what we have been doing for the past twenty years.

patcon• 8 years ago

Anyone else think that the finance folks are just realizing what the tech sector gets away with by being incomprehensible and too fast for regulators? They're just doubling down and digging into tech to get away with more, for longer...

dredmorbius2• 8 years ago

Finance have been doing this for a long time.

See J.K. Galbraith's The Great Crash: 1929.

pmart123• 8 years ago

I think another interesting paradigm is breaking up companies by:

1. embracing technology early 2. chasing technology 3. last movers

Recent examples of last movers that still have been extremely successful have been TJMaxx and Costco, both functioning with very little e-commerce presence. Why does this make some intuitive sense? The first mover has to break ground and if they are successful in applying innovative technologies, they reap the benefits. Meanwhile, several companies chase this innovator, building out similar systems, but these companies are unable to catch the leader, yet still spend a ton in R&D to develop the technology or spend too much acquiring it. Eventually, third-party software is built, commoditizing much of the associated costs. At this point, being the last mover is actually beneficial since the last mover can make the same technological shift without the associated costs that the chasers faced. In 2018, every company pretty much needs cloud instances, notifications, websites, etc. just like companies in the 1970s needed switchboard operators, fax machines, etc. I think its more a question of what companies quickly adapt fundamental new ways to think about an industry than whether the company employs a bunch of developers.

It's Getting Harder to Tell Banks from Tech Companies

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