IT reporter(wp/es):
“The geeks shall inherit the earth” became a popular phrase 10 years ago when Amazon, Facebook and Google were fast becoming the mainstream.
This is now true in London where technology is snapping at banking’s heels to be the capital’s top industry.
Recent data shows that a high-achieving graduate can earn the same or more at a tech firm as he or she can at an investment bank.
The average starting salary at a bank is £46,000, whereas graduate coders can earn £51,000, according to research from jobs site Glassdoor.
Michael Drew, head of technology at headhunter Odgers Berndtson, says: “Both are level for compensation and are fighting for the top two per cent of talent. Tech has really shaken up the employment market in London and there are no longer just two or three paths to success.”
More than one in 10 new jobs created in London last year were technology roles, according to another recruitment firm Indeed, and banking has been shrinking ever since the financial crisis and, more recently, Brexit.
At London Business School, the percentage of those gaining an MBA who went into financial services fell to 26 per cent last year from 46 per cent in 2007 and the percentage going into technology firms more than tripled, from six per cent to 20 per cent over the same period.
Banks have responded by putting a heavier emphasis on quality of life than chunky remuneration.
The banking exodus is reflected in the London office market where Goldman, HSBC, Royal Bank of Scotland and Deutsche Bank have been shedding office space for more than a decade — at present holding 3.6 million square feet.
In contrast, Facebook, Google, Apple and Amazon are on the rampage, holding 3.1 million square feet, with analysts expecting this to rise to 5 million square feet within the next five years.
Tech firms are even encroaching on the Square Mile, an area traditionally associated with big banks.
In 2016, takeaway delivery app Deliveroo moved into Cannon Bridge House — on what used to be the trading floor of the London International Financial Futures and Options Exchange — and last year 5000 Amazon staff moved into Principal Place in Liverpool Street.
But some in the recruitment market are still sceptical and say that the tech industry has a long way to go before it can call itself a genuine competitor to banking.
Drew adds: “Technology is growing year by year but it is still not like the financial services hub. London needs to push forward before it can become a truly world-class hub, respected on the global stage. London is currently just a launch-pad market for US tech firms to go into the rest of Europe.”
Recruiters also say that salary data can be misleading, pointing to the fact that most people in banking receive huge bonuses which dwarf their salaries.
Despite heavy regulation, recruitment firms say top bankers can expect to earn four times their salary.
Richard Buckingham, partner at Leathwaite, says: “At a bank or a hedge fund, you’re working for your end of year bonus. Everything is bonus oriented. At tech firms, the salary and equity options are good — which when it starts vesting can result in a lot of money.”
But while the two industries slug it out for London’s top talent and office space, both face the same potential nightmare — Brexit. Banking and tech are alike in relying heavily on foreign talent and easy access to Europe’s markets, something that could be taken away by this time next year.
However, if the two industries can survive unscathed then the fierce competition between them means London could end up with two world-class industries in the near future.
