CEO-led Council releases annual Mass Insight/PwC Sector Impact Report; Launches Financial Technology Boston
From the Brahmin-run banks of the 19th Century through the invention of the mutual fund in 1924 and the venture capital fund in the late 1940s, Boston has long been a center of innovation for the global financial services industry.
In late June, the Boston Financial Services Leadership Council (BFSLC) convened more than 80 partners at the CIC Boston to release the annual Mass Insight/PWC Sector Impact report and launch Financial Technology Boston to ensure the future of this critical sector for the region’s economy.
Financial Technology Boston: An Initiative to make Boston a global FinTech hub
To kick off the meeting, attended by more than 80 local industry veterans, emerging company entrepreneurs, universities and students interested in the field, Bob Reynolds, president and CEO of Putnam Investments, Great-West Financial, and Great-West Lifeco U.S., announced the launch of the Council’s new initiative, Financial Technology Boston.
Financial Technology Boston’s commitment to make Boston a global FinTech leader include:
- Creating a FinTech strategy and promoting Boston as a FinTech hub
- Sponsoring networking opportunities connecting large and emerging businesses and entrepreneurs
- Offering talent recruiting events with leading universities
- Providing leadership on state and federal financial technology policy agendas
Strong, growing, transforming: financial services is already 6% of the workforce, 10% of GSP, and 20% of business taxes
The BFSLC released the 2016 Mass Insight/PWC Sector Impact Report. The overriding theme is optimism for the area’s prominence in the financial services sector, which continues to play an outsized role in the region’s economy.
“The future of financial services in Boston is very, very bright,” Reynolds told the crowd. “And the future will continue to be driven by both traditional and innovative fintech services.”
According to the report, employment in Boston’s finance sector has grown by 9,000 jobs in the last year to 174,000.
That’s nearly 6 percent of the state’s workforce. The report also finds that finance accounts for 10 percent of the state’s gross state product and 20 percent of its business taxes.
Notably, the sector’s workforce is significantly larger than most of the tech sectors and now represents an opportunity to drive technology growth with the marriage of finance and IT.
And the jobs in financial services are good ones, according to the report. The average income in the state’s finance sector is $142,000 — more than double the state’s average income as a whole. That’s a 45 percent increase since 2005. Middle income jobs represent a major contributor. The median financial analyst earns $88,000 annually, while the median for financial managers is over $115,000.
The FinTech talent challenge: Competition for data and risk analysts, cyber security skills
Moving forward, making sure there’s enough trained employees to fill the fast-growing demand in FinTech-related functions is one of the region’s biggest challenges, according to Reynolds.
Keeping up a supply of well-educated workers “can and should give Boston the opportunity to take national leadership” in key emerging areas like big data and risk analytics and cybersecurity that are central to fintech transformation. But he warned that financial services firms need to collaborate more with each other and with academic institutions to make sure that happens.
Talent message to large firms – autonomy attracts entrepreneurs
More than high salaries are needed to lure software engineers and other qualified graduates from local universities into fintech areas in the larger firms, according to representatives of the “next generation” of finance who spoke at a panel.
Arturo Moreno Diaz, president of the Fintech Club at MIT, said one factor that’s important to prospective employees is having autonomy over projects the same way big tech firms like Facebook and Google allow. He also advocated spreading awareness of fintech as an exciting and important area through hackathons and other events.
FinTech innovation 2.0: Back office transformation will drive front end services
Moreno Diaz said that while most innovation has been in front-end, mobile-first apps, innovation coming in the next five years will be increasingly in the back-end processes.
“Mobile is going to be the thing, but it’s going to be worthless unless you produce something behind it,” Moreno-Diaz said.
Mass Mutual VP sees 3 data science fits– PhDs, engineers, hard workers with a strong interest in data science
Another panelist, Sears Merritt, vice president of data science at MassMutual, said he sees three types of students who make a good fit for fintech: 1) Those with PhD’s in some type of science background, 2) engineers, and 3) “hardworking students with a strong interest in data science.”
Many of those, Merritt said, he’s has been able to hire away from other sectors as the reputation of the financial services industry for innovation has become more attractive to students.
Mark Casady, chairman and CEO of LPL Financial, who also provided opening remarks at the Council event, said the whole financial services field has changed from just 15 years ago, when roomfuls of servers were the norm at any firm.
“Today, with the cloud, I can change the world,” Casady said. Recent advances in security at both public and private cloud servers have made them prime tools for the industry in analyzing big data, he said.
One of the overriding messages from the event was provided by Bill Guenther, CEO and founder of Mass Insight Global Partnerships, which supports the Council. He said that “one of the takeaways is that fintech is not a separate segment of the financial services sector,” rather it’s the fast-approaching future of the entire industry.
“Everybody is fintech today. If you’re not fintech, if you’re not using financial technology, you’re not going to be a leader in the industry, neither here, nationally nor globally,” Guenther emphasized.