Many students and entry level professionals wonder if there will be a career to be had in finance in the coming years. There is no question that there will be; there are many fantastic opportunities in the finance field, as this article will illustrate. But there is no doubt that the finance industry is changing as technology is being introduced that will transform how financial transactions are conducted across the world. This is an exciting time to be in finance.
Blockchain – The Future of Finance
When people are talking about the finance sector being exciting and transformed by technology, they are talking about the secure digital ledger called blockchain. It is a digital ledger where cryptocurrency transactions are recorded publicly and chronologically.
Cryptocurrencies are only growing in popularity, and that is why the banking and finance industry is investing so heavily in financial technology of fintech.
Blockchain provides users with a way to constantly maintain and verify digital records in blocks that may be shared securely by large numbers of users. Blockchain and cryptocurrencies such as bitcoin and ethereum bring with them the possibility of handling many types of financial transactions that humans do currently. Blockchain, could, for example, make it much faster to purchase a home; much of the delays in a home purchase come down to dealing with mountains of paperwork being processed by human beings. Blockchain can make that easier and more secure.
As blockchain and cryptocurrencies are growing in popularity, they are changing the financial industry, and bringing with it many opportunities for finance professionals.
According to Deloitte, here are several financial services examples where blockchain can be used to improve service and efficiency:
- Speeding up and simplifying payments across borders
- Will speed up share trading and make it more accurate with faster settlements
- Smart contracts will execute commercial transactions and agreements automatically without an expensive middleman
- Identity management will be easier and more secure
- Transparency and traceability of transactions will help banks and insurers to grow loyalty and rewards programs
Blockchain and Financial Services Evolving
The global financial system moves trillions of dollars daily and services billions of people. But our financial system is filled with problems that add costs via fees and delays, and there is too much opportunity for fraud and crime.
For example, 45% of financial middlemen, such as payment networks, stock exchanges and money transfer services, have economic crimes every year.
The financial system is inefficient because of many industrial technologies and paper based processes are simply ‘papered over’ with a slick electronic facade. Also, the financial system is centralized which makes it highly resistant to change and more vulnerable to failures and cyberattacks. It also is exclusionary and denies many people with access to financial tools.
But blockchain and cryptocurrencies are going to transform how the business of finance is done, and finance professionals who want to have a great career would be advised to prepare themselves.
Cryptocurrencies are forever evolving and changing, as can be seen with the volatile pricing of Bitcoin, Ethereum and other cryptocurrencies. But whichever cryptocurrencies eventually become the most dominant, there is no doubt that blockchain technology is changing the finance world. Professionals who want to land hot, lucrative jobs in finance will find focusing on blockchain-related gigs could be the key to a great future.
Blockchain projects are critically important to the future of finance because they can reduce and even eliminate settlement times in major financial transactions, possibly saving the financial industry up to $80 billion per year. Other valuable uses of bank-backed blockchain projects include:
- Secured global currency exchange rate speeds
- Faster transaction security
- Eventual replacement of back-office clearing houses that exist between buyers and sellers
There is more of a focus than ever on bank-supported blockchain projects. These projects will need finance professionals with a good understanding of blockchain and fintech in the coming years.
One of the exciting blockchain projects that will lead to plenty of finance and tech jobs is the IBM-supported Hyperledger Fabric project. This is a trade finance platform that is designed to facilitate international payments with blockchain.
Seven of the largest supporters are Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit. The blockchain platform operated by IBM will run via the IBM Cloud, which will allow for interconnectivity between every party in a transaction with full security.
The project is intended to be scalable and allow several entrants to integrate easily into the financial supply chain process via the secure blockchain. This will allow for a high level of transaction transparency.
Another major player in the bank and finance space that savvy financial professionals may take part in is R3, a new blockchain consortium. This entity raised $107 million last year with four of the major backers being SBI Group, Temasek, Bank of America Merrill Lynch and Intel.
One of the major projects of R3 is developing the Corda platform with plans in the future to build an infrastructure network geared towards financial organizations to build their own dedicated, ledger-based services and applications. R3 is also highly focused on blockchain being accepted by government entities.
3 New Crypto Careers in Finance
All of this talk about the possibilities for finance professionals in blockchain and cryptocurrencies is great, but what are some of the actual job titles that are coming available today?
Here are three that are popping up regularly online:
Cryptocurrency Order Manager
Some finance students and professionals will find opportunities to work in a digital currency exchange. One of the most prominent exchanges for buying and selling digital currencies today is Coinbase based in San Francisco. Coinbase lists the major altcoins such as bitcoin, litecoin and ethereum which are denominated in dollars, British pounds and the euro.
Coinbase often does not have enough order managers and clerks to meet the strong demand for trading services. Coinbase has been aggressively hiring order managers, accounting managers and controllers.
Even beginning order clerks and managers can make $21 per hour and get their foot in the door in this growing finance industry.
Because of the big returns on some digital currencies in the past three years, there is more interest from buy side finance organizations to get in the game. Hedge funds are starting to get into the crypto game and this could lead to plenty of job opportunities for finance analysts in the crypto space. Funds need analysts to find the profitable opportunities in major cryptocurrency markets.
Crypto Fund Wholesaler
Fund wholesalers are needed to promote and sell the services of crypto funds to brokers/dealers, RIAs and financial advisors. In term, these financial professionals get a cut of the money that has been invested with them. Wholesalers will often get a 10-12 basis point cut of the money that is invested plus residuals, depending upon which fund family it is. This is in addition to a salary of up to $100,000.
Amplify and Reality Shares are two major asset managers that are already running blockchain ETFs. These funds invest in companies that are in a good position to profit from new crypto technology, such as IBM, Intel and Overstock.
As finance and technology such as blockchain changes and evolves, it will change how we do business, and how professionals in the finance industry work. It is true that some jobs in finance will disappear, but basic financial skills and technology chops will be needed in a big way. Smart finance students and professionals should be learning as much as they can about the blockchain and finance space so that they will able to get jobs in this new and transformative finance field.
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- Blockchain Jobs Now Offered by Wall Street Banks. (2018). Retrieved from https://news.efinancialcareers.com/us-en/305107/blockchain-jobs-now-offer-wall-street-banks/
- New Finance. (2018). Retrieved from https://themarketmogul.com/new-finance/
- How Blockchain Is Changing Finance. (2017). Retrieved from https://hbr.org/2017/03/how-blockchain-is-changing-finance
- 5 Blockchain Use Cases in Financial Services. (2018). Retrieved from https://www2.deloitte.com/nl/nl/pages/financial-services/articles/5-blockchain-use-cases-in-financial-services.html