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One-Third Of Job Applicants In Crypto Come From Banking — Bitget Report

Bitget
One-Third Of Job Applicants In Crypto Come From Banking — Bitget Report

This study by Bitget reveals the profound transformation taking place at the intersection of traditional finance and the crypto industry. It provides a comprehensive analysis of talent migration from traditional banking to the cryptocurrency space, offering key insights into this unprecedented shift. Explore this report for a deeper understanding of how the finance sector is adapting to the era of Web3 and decentralized technologies, challenging the long-standing dominance of traditional banking.

Key takeaways:

- 33% of the exchange job applicants previously worked in banking;

- Investments in blockchain retail banking will reach $40.4 billion by 2031;

- 50% reduction of revenues of banks resulted in over 70,000 job cuts between 2020-2023;

- 36% of blockchain-related posted roles were remote-based, double the global average of 16%

- Salaries in crypto startups are almost double those of banking comparable positions;

- 23% of candidates apply for KYC Manager, Compliance Associate, Senior Compliance Associate, and AML Analyst.

Traditional banking has long held a position of power and credibility, serving as the cornerstone of economic structures worldwide. However, in recent years, multiple significant events and developments have altered the landscape, giving rise to an industry-wide shift and another competitor in the face of crypto firms.

In 2023, the impact of digital finance and blockchain on the banking industry has reached its peak. As of now, 90% of the world's banks worldwide are currently working with or exploring blockchain technology. Among them are JPMorgan Chase, Barclays, HSBC, Citi Group and Banco Santander just to name a few.

Analysts predict that by 2031 the global blockchain in retail banking b50cad9c-eb11-4667-99a3-bc6eaa2aef70 will reach $40.4 billion, growing at a CAGR of 40.4% from 2022 to 2031. The expected spending by banking and financial sectors on the blockchain can reach up to $22,5 billion by 2025-2026.

Banking Job Trends Impacted by Digitalization and Remote Work

If 3-4 years ago the crypto market was significantly dependent on bank capital, in 2022 the situation began to change in the opposite direction. Nowadays, decentralized finance stands as one of the banking sector's top priority domains. Financial institutions are accessing cryptocurrency liquidity via custodial services or investments to safeguard cash flows in an increasingly competitive environment

This macro-market shift is evident in recruitment trends. With the rise of digital currencies and the widespread adoption of remote work due to the pandemic, professionals from the banking sector are increasingly finding opportunities in the dynamic and innovative world of cryptocurrencies. The evolving financial landscape, coupled with the uncertainties brought about by the global crisis, has created a big shift, attracting talented individuals towards such technologically advanced sectors as cryptocurrency and blockchain. As a result, traditional banks are experiencing a notable drain of skilled employees and the need for big layoffs, necessitating a reevaluation of their strategies and adaptability to remain competitive.

Already in 2020, around one-third of all jobs advertised by UK banks were for technology-related roles, representing a 46% increase from 3 years ago. This hiring trend is typical across many regions and is illustrated by the breakdown in the types of roles held by employees at banks. For instance, over one-third of Goldman Sachs’ employees are software engineers.

The push towards digitalization has resulted in some job losses and changes to conventional jobs in the banking industry. When it comes to the former, digitalization has affected standard banking employment more broadly than earlier disruptive technologies like ATMs. Low profits in the banking industry have also hurt job numbers. The industry's return on equity has remained below the 12% threshold linked to the cost of capital before COVID-19, even with advances since the Great Recession.

When it comes to the layoffs, since most merger and acquisitions (MAs) activity worldwide has completely stopped due to rising interest rates and weakening economic circumstances, investment banks' revenues have decreased by more than 50% year over year — which in return puts pressure on companies to reduce their payrolls.

It's remarkable how an industry may see layoffs just a year after enjoying an exceptionally successful record year. Throughout 2021, investment banks hired a tonne to meet demand. In 2022–2023, only a year later, banks had an excessive number of staff members and insufficient deal flow.

Another factor in this decline is demographics. Younger workers, who now make up the bulk of the workforce, tend to be more interested in technologically innovative areas than traditional ones. The banking sector, previously considered prestigious among millennials and baby boomers, is now losing its appeal to the next generations. Moreover, Gen Z has already opted into cryptocurrency. In late 2017 and early 2018, a flurry of initial coin offerings (ICOs) involving young Millennials and older members of Generation Z transformed the global landscape, spawning a "decentralization" movement and bringing Bitcoin closer to the mainstream.

Over 50,000 Banking Employees Left Jobless Due to Cuts and Layoffs

When trading, asset management, MAs, investment banking, dealmaking, and initial public offerings are strong, Wall Street thrives. The market's downturn has severely impacted these industries, which has resulted in the elimination of Wall Street employment since COVID-19.

As a result of reorganizations and mergers, nearly 50,000 people lost their jobs at Morgan Stanley, Citigroup, Capital One, Goldman Sachs, BlackRock, Bank of New York Melon, UBS, Wells Fargo, and JPMorgan since 2020. Front desk agents and support personnel in risk management and compliance were most impacted.

In 2023 alone, five big banks cut a combined 20,000 jobs. Meanwhile, many of those who lost their jobs went to crypto companies. Coinbase alone has hired 197 employees from Amazon, 97 from Alphabet, 73 from Microsoft, 72 from Meta Platforms, 37 from Goldman Sachs, and 29 from Morgan Stanley. Another 21 Goldman staff joined corporate credit card start-up Brex, while 18 went to SoFi Technologies, the fintech firm led by former Twitter executive Anthony Noto from January 2020 through April 2022. The cryptocurrency trading platform Amber Group hired 250 new employees in the previous year, including a former executive from Goldman Sachs and bankers from Morgan Stanley and the Royal Bank of Scotland. 38 ex-HSBC workers moved to Revolut and 21 — to Monzo Bank. The latter has also hired 27 people from Barclays and 32 former employees of Lloyds Banking Group. Between 2020-2023, a 50% reduction in revenues of banks resulted in over 70,000 job cuts.

As a result of the tight labor market, an increasing number of highly skilled workers are seeking employment in new industries, opting for more flexible schedules and greater wages. Although in 2022–2023, the cryptocurrency market lost almost 2,000 jobs following the FTX crisis, the sector is still expanding and hiring.

Salary Discrepancies Draw Talent into the Crypto Market

In many cases, due to increasing digitalization, salaries in banking have been reduced due to the increase in the proportion of remote workers. Meanwhile, the cryptocurrency market, with its initially predominant share of decentralization of the work process, offered competitively higher salaries for remote employees.

In fact, according to job market data released by Indeed in 2022, 36% of blockchain-related posted roles were remote-based, which is double the estimated worldwide average of 16% across employment sectors.

When looking at the average salary and number of vacancies — it’s clear that if previously middle-top positions in banks received more than in similar professions in crypto, now we observe a steady decline in salaries and bonuses in the banking sector.

Market data shows that on average crypto companies pay better than traditional financial organizations. Financial News reports that junior engineers at crypto startups in London can expect to get beginning wages of £100,000 ($125,000) and corresponding incentives. This is higher than offered by investment banks, who now provide their junior employees in London with wages of about £70,000 ($87,810).

A two-fold difference is observable between the average salaries in banks, averaging around $54,000, and those in crypto firms, which average a higher figure of approximately $115,667. This analysis draws from data collected across leading job platforms such as Zippia, Glassdoor, Indeed, Crypto Job List, eFinancial Careers, and Web3 Career.

33% Of All Applicants Are Ex-Banking Employees

To analyze the influx of banking staff entering the cryptocurrency market, Bitget examined all the incoming CVs submitted over the past three years. Within just 2 years, the yearly count of resumes associated with banking surged from 880 to 1,440, marking a 113% increase in 2022 and a further 143% surge in 2023.

Concurrently, the influx of job seekers from the banking sector has increased. While in 2021, there was one bank employee for every 10 applicants, by 2023, 30% of all resumes originated from the banking industry. Moreover, within that same period, interest among individuals outside the cryptocurrency market surged 180%, climbing to a 330% increase over 2 years.

One-Third Of Job Applicants In Crypto Come From Banking — Bitget Report image 0

The most frequently sought vacancies included middle and senior positions in areas such as investment relations, business development and sales, KYC and compliance, data analytics, product design, project management, and backend engineering.

One-Third Of Job Applicants In Crypto Come From Banking — Bitget Report image 1

Among the popular positions for ex-bank employees, the most requested was related to KYC and compliance, with 23% of candidates applying with resumes for roles such as KYC Manager, Compliance Associate, Senior Compliance Associate, and AML Analyst.

Meanwhile, the majority of applicants from the banking sphere are involved in middle and senior positions, as well as performing analytical, managerial, and sales-related tasks. Amidst the active development of the cryptocurrency and blockchain industry, the focus shifts to areas associated with interaction in the traditional sector. Professionals engaged in investment attraction, market analysis, financial activities, and communication with regulatory bodies become in higher demand and eligible for increased salaries.

At the same time, the number of applicants for technical specialities constitutes a smaller share, which can be attributed to the active demand for the development of blockchain and Web3 products from banks, thus attracting the necessary developers and engineers. Salaries in these specializations remain above the level of the cryptocurrency industry, unlike positions related to research, management, or representative activities.

The growing influx of banking employees can be attributed to both general factors, such as the development and adoption of the cryptocurrency market, and micro-factors, including the increasing interest of employees in new technologies and the financial gain reflected in higher salaries, accompanied by prestige and future potential. To understand the motivation perspective of the employees themselves and assess their viewpoint, Bitget conducted a survey where applicants were offered to answer what prompted them to change their field of work.

Factors Motivating Ex-Banking Applicants In Career Transition

Among the most popular reasons behind the choice of ex-banking applicants were high salaries, industry prestige, growth opportunities, and flexibility. Survey participants highlighted higher salaries and bonus opportunities, the sector's innovativeness, prospects, and flexibility in terms of personal and professional growth, along with a friendly working environment.

One-Third Of Job Applicants In Crypto Come From Banking — Bitget Report image 2

Further Prospects: Challenges and Opportunities Ahead

To remain competitive, banks are likely to accelerate their investment in digitalization to improve the client experience and productivity levels. By investing in digitalization, banks may generate greater returns from their existing staff by allocating mundane, repetitive tasks to machines, thereby freeing up workers to focus more on high-value activities.

At the same time, much will depend on how banks adapt to a remote work format while maintaining competitive working conditions for current employees. The remote work trend continues to grow and even senior positions are looking for jobs that meet this criteria. 74% of CFOs surveyed by Deloitte say they plan to shift previously on-premise workers to remote positions. The types of employees expected to permanently adopt remote working arrangements will be varied, including IT support staff as well as managers.

Additionally, to compete with the crypto market, banks will have to rely on the younger generation. This will apply to both products and recruiting. By 2025, Gen Z will account for 27% of the labor force. This places the Gen Z generation at the forefront of the adoption of blockchain technology and the creation of more decentralized networks, platforms, and opportunities for public blockchain implementation.

Still, it is reasonable to anticipate that some employment will be eliminated as a normal byproduct of technological advancement when it comes to the change of jobs in response to growing technological needs.

According to Alan Johnson, managing director of pay consultancy firm Johnson Associates, banks are still trying to reduce headcount to match lower revenue levels since they did not respond quickly enough to their "declining fortunes" in 2022. The sector is "pretty cautious" when it comes to MA and underwriting due to the shaky state of the economy and the unpredictability of the market as of 2023.

Moreover, finance industry executives, headhunters, and consultants interviewed by Reuters predict subdued deal flows, decreased bonuses, and heavy job cuts in 2024.

At the same time, with successful transitions of banking and financial institutions into Web3, there's a possibility of some attrition of professionals from leading crypto companies. We also foresee the likelihood of increased mergers and acquisitions in both markets, which could impact job reductions.

Reference:

Zippia

Glassdoor

eFinancial Careers

Glassdoor

Indeed

Glassdoor

Crypto Job List

Glassdoor

Web3 career

larkLogo2024-01-25
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