The financial sector is at a crossroads, where two very different players are shaping careers and the future of money: the stalwarts of traditional finance and the nimble disruptors of the fintech world.
On one side, we have the legacy banks and insurance companies – institutions built on a foundation of stability, reliability, and structured hierarchies.
On the other side, we have the new kids on the block: fintech firms that are perfect for professionals looking to be at the forefront of change and willing to embrace the risks of working in a high-reward, rapidly evolving environment.
But here’s the key: choosing between these two worlds isn’t just about which is “better” or “worse.” It’s about what aligns with your career goals, values, and preferred working style.
Do you thrive in a structured environment with clear progression, or do you prefer wearing multiple hats in a fast-changing, innovation-driven culture?
Both sectors have their own unique advantages and trade-offs, making it crucial to consider where you’d fit best and, importantly, what drives you professionally.
Legacy financial brands: the pros
When it comes to stability and security, legacy financial institutions have a proven track record that’s hard to beat. These organisations are built on time-tested business models, offering employees a higher degree of job security, especially in economically turbulent times. For instance, Morgan Stanley’s technology and infrastructure team has an impressive average tenure of 16 years, while members of its Operating and Management Committees average more than 20 years at the bank. In a world that’s increasingly uncertain, this kind of longevity is incredibly appealing to those looking for a dependable career path.
If you value structure and a clear path for advancement, legacy financial firms have you covered. Their well-defined hierarchies mean you know exactly what steps to take and how long it might take to reach the next level. Take PwC, for example: employees typically spend 2-3 years at each level, from Associate to Senior Associate, then to Manager, Director, and ultimately Partner. This structured approach not only sets clear expectations but also provides a roadmap for professional growth.
Legacy institutions also invest heavily in employee development through structured programs, providing excellent learning opportunities. The Bank of England’s two-year Graduate Development Programme is a prime example. Participants engage in real-world business meetings and learn the skills needed to become expert analysts, with opportunities to study for Master’s-level apprenticeships or other recognised qualifications. And the compensation? According to data collected by OFS, Chief Product Officers at these institutions can earn up to £348,000, reflecting the rewards that come with climbing the corporate ladder.
Another compelling advantage of legacy financial institutions is their vast international reach. Companies like HSBC operate in 62 countries and territories across Africa, Asia, Oceania, Europe, North America, and South America. This global scope provides employees with unparalleled opportunities for international roles, offering the chance to build a worldwide network and gain exposure to different markets and cultures.
Legacy financial brands: the cons
The rigid and structured nature of traditional financial institutions can often lead to cumbersome bureaucracy. Decision-making processes are typically slow and must pass through multiple layers of management, making it difficult to implement changes quickly. A report released by the Financial Times highlighted how outdated technology and bureaucratic inertia continue to hinder innovation within these organisations. For employees, this environment can feel stagnant and stifling, especially when compared to the agile, fast-paced culture of fintech startups.
Legacy institutions are not known for being on the cutting edge of technology. Despite increasing pressure to modernise, the banking sector can be highly resistant to change. Technologies like generative AI, blockchain, and other innovations are often adopted slowly, if at all. According to a 2021 report by Talend, 56% of respondents highlighted the numerous drawbacks of legacy systems, from inefficiencies to high maintenance costs. For tech-savvy professionals eager to work with the latest advancements, this resistance to innovation can be frustrating and demotivating.
While structured career paths provide clarity, they can also be an obstacle, showing how hierarchies can be a double-edged sword. The very hierarchies that offer clear progression can become barriers, slowing down career advancement and limiting lateral opportunities. In such environments, employees may feel boxed in, with little room to explore or innovate beyond their designated roles. This rigid progression can be especially demoralising for ambitious individuals who crave faster growth or want to pivot to new areas within the organisation.
Modern fintechs: the pros
Fintech startups and smaller companies thrive on agility, providing employees with the opportunity to wear multiple hats and contribute to different areas of the business. This setup often leads to faster career advancement and significant personal growth. For example, at Stripe, the company’s rapid growth means plenty of opportunities to take on new projects and engage in cross-functional collaboration. In fintech, it’s not uncommon for high performers to rise quickly to senior roles, with Chief Product Officers earning up to £287,000 (OFS).
If you’re someone who wants to be at the forefront of technological advancements, Fintech is the place to be. These companies leverage cutting-edge tech like AI, blockchain, and cloud-native platforms to stay ahead. Take Thought Machine, for example. It develops Vault Core, a product that uses smart contracts and real-time data access to create financial solutions, and Vault Payments, which processes global transactions seamlessly. With clients like JPMorgan and Lloyds Banking Group, working at a company like Thought Machine means being at the epicentre of innovation, influencing both fintechs and traditional financial giants.
Fintechs are known for their more dynamic and inclusive work cultures. They emphasise collaboration, inclusivity, and diversity in ways that legacy institutions often struggle to match. Companies like PayPal, Monzo, and Starling have higher proportions of women in mid and senior-level roles, showing a commitment to creating more diverse and representative work environments. Additionally, fintechs frequently embrace hybrid and remote working models. For example, Revolut allows employees to work from abroad for up to 60 days per year, giving them significant flexibility.
Unlike the often rigid structures of traditional finance, many fintechs are actively exploring better work-life balance options for their teams. Atom Bank, a British fintech, has even implemented a four-day workweek without cutting salaries. This policy aims to boost performance while prioritising the mental and physical well-being of employees. For those who value flexibility and work-life balance, these modern policies make fintech an attractive sector.
Modern fintechs: the cons
While working at a fintech company can indeed be high reward, it is not without high risk. The potential for high financial rewards is offset by the inherent volatility of the sector, with fintechs often more vulnerable to economic downturns and systemic risks. According to the World Economic Forum (WEF), fintech companies are particularly susceptible to these risks, as they heavily rely on macroeconomic factors for growth. In a WEF report from January 2024, 56% of respondents pointed to economic instability as a major hindrance. Unlike traditional financial institutions with diversified portfolios and established market positions, fintechs may struggle during financial downturns, making job security a real concern.
While fintechs often pride themselves on flat organisational structures, hierarchy is often necessary. The lack of a traditional hierarchy may sound appealing, but it can create challenges when clear lines of authority and structured decision-making are needed. According to a 2024 article from Harvard Business Review, the process of becoming less hierarchical can backfire, as some level of structure is crucial for efficient operations and employee clarity. In these flat organisations, the lack of defined leadership can lead to confusion, inefficiencies, and difficulty in implementing strategic initiatives.
Similarly, another symptom of these flat structures is that career paths are often undefined and less structured compared to those in legacy financial institutions. While this setup offers opportunities for rapid advancement, it also requires employees to be highly self-motivated and proactive about their professional growth. This lack of structure can make career progression feel opaque and unpredictable, leading to burnout and dissatisfaction. According to The Chartered Management Institute, flat structures can destroy employee retention because of unclear advancement opportunities and the immense pressure to perform.
Decisions, decisions
Navigating the choice between legacy financial institutions and modern fintechs can be tricky, as the pros of one sector might be the cons for someone else. What one person sees as the stability and structure of a traditional bank, another might view as stifling and slow-moving. Meanwhile, the rapid pace and innovative environment of a fintech could be thrilling to some, but overwhelming and risky to others. It ultimately comes down to what you value, your career goals, and what kind of environment energises or challenges you in the right way.
At OFS, we understand both industries deeply and know how to match talent to the right opportunity. Our expertise lies in not only understanding the ins and outs of finance and fintech but also in getting to know you. Contact us today, and we will work with you to carve out a role that aligns with your aspirations, strengths, and preferred work style.
