When Eric Wu joined Morgan Stanley fresh from his bachelor degree, working as an analyst on collateralized mortgage loan structuring, little did he know, nine months into his Wall Street career, he would be trying to network his way into the tech startup world. After having “30 coffee chats in 30 days”, each conversation leading to others, Wu got his first break into the entrepreneurial ecosystem.

Wu went on to work for Techstars, a premier startup accelerator, and later Hinge, a popular online dating app. He is now in the early stages of launching his own e-commerce fashion startup, Wu & Y. Wu attributes his current success in speaking about the value proposition of startups to clients, partners, and investors to his prior banking job. Working at Morgan Stanley required him to be able to explain complex concepts to non-finance savvy customers. His communication skills were perfected during the bank’s rigorous multi-week onboarding and, later, ongoing training programs - a luxury few startups can afford. “Many startups are too new, too small and moving too fast to have as robust a training or onboarding program. The expectation is that you learn on your own,” Wu explained.

Traditional finance firms have unintentionally become a talent boot camp – investing heavily in training to create well-rounded employees with high-stamina and perfected soft skills. This combination, found in "finance alumni" is in high-demand as it reflects a broader set of skills compared to those who choose the startup route directly.

Learning to perform in high-pressure circumstances is one of those banking skills transferrable to entrepreneurial ventures. Reflecting on his nearly three years at Goldman Sachs as a software developer for high performance, ultra-low latency trading systems, current Microsoft employee and serial hackathon attendee Sankalp Shere says “the high-pressure situations in banking I frequently found myself in [at Goldman] is not unlike the pressure situations an entrepreneur may face.” Shere has dabbled in the development of various projects, which he hopes to one day turn into a full-fledged company, hoping his experience will help him succeed despite the odds stacked against an entrepreneur's favors.

The grass is “tech-ier” on the other side

But why would bank graduates decide to join the tech ranks? Millennials have grown up during a digital revolution. From smart homes and connected devices to to tech-glamorizing movies like “The Social Network”, technology has been fully integrated into their daily lives. It is not unreasonable to expect them to want to harness technology in their professional lives, too. However, traditional banks are not able to provide such opportunities. Despite the thorough training programs banking firms provide, young employees are still confronted with outdated, slow information and communication systems - signaling a lack of innovation in the tech side of banking.

While technological innovation has infiltrated virtually every industry, the financial industry’s adoption of digital solutions has been markedly slow. The Economist Intelligence Unit conducted a survey of 100 senior banking executives, asking them to provide a self-assessment on the primary competitive disadvantages of banks competing against fintech. The results skewed most heavily due to culture and people: 49% of respondents felt the [lack of] clear strategic vision for digital to be a driving disadvantage, 38% felt that culture at banks was not suited to rapid change, and 35% felt constrained by legacy technologies.

Unable to find innovative opportunities at traditional firms, many millennials have turned outward: those with a genuine interest in finance turning to fintech, like Alexa von Tobel, who went from Morgan Stanley trader to founding LearnVest; those with other passions choosing to remove themselves from the finance industry entirely, like Derrick Fung, who went from being a foreign currency trader at CIBC World Markets to founding successful music startup Tunezy. Both von Tobel and Fung were later named as Forbes “30 Under 30” - thus, showing that former millennial bankers have the potential for succeeding in entrepreneurship both within finance and outside.

Those millennial bankers interested in fintech are particularly well positioned for success. For fintech venture capitalists like Amy Nauiokas, co-founder and president of Anthemis Group and Archer Gray, banking alumni make for excellent entrepreneurial investments. In an interview at The Buttonwood Gathering 2015, she commented on how even long-time finance veterans have started entering the entrepreneurial arena, but, she wondered, “If you’ve have had your whole career in financial services and weren’t able to innovate [...] why wait until now to come out?”

One reason could be that there is growing financial interest in fintech. Global funding of fintech startups grew from $1.8 billion in 2010 to $12 billion in 2014, according to CB Insights. As a result of this growing fintech focus, the sector is drawing entrepreneurs from all levels of experience, but to Nauiokas the founders at the extremes - those with either no banking experience or those who never tried to innovate during long tenures in traditional banking - rarely have the “chutzpah” [the courage or ardor an individual has, as she put it] to succeed in fintech. "I think somewhere in the middle is best: someone who’s [...] been exposed and seen the structure and then come out. Or, have had success in another field and is able to export that success to financial services," she said.

Harnessing innovation through partnership

Should traditional finance firms want to retain the millennial talents who have genuine interests in finance, they will need to dedicate more internal investments to innovation and give employees greater opportunities and outlets to get involved.

Some banks have already taken note. Companies like Citigroup, Wells Fargo and Visa have started in-house innovation arms. “Given the pace and scale of the change we are seeing, there is an increased recognition that partnerships are needed to move quickly and effectively respond to shifting customer expectations. We continue to see how nimble startups, for example, can quickly change a product or approach to meet an emergent customer need, and they have valuable insights that established players can learn from a champion,” Deborah Hopkins, Chief Innovation Officer at Citi and Chief Executive of Citi Ventures, told Pro Journo following Buttonwood.  

While keeping up with Silicon Valley’s incessant quest for innovation and industry disruption may be difficult, the start of innovation groups is just one small step that banks have made in the right direction. Management consulting firms, who in recent times have also found themselves in similar talent retention predicaments, can be of inspiration, too. Deloitte, for example, not only started Deloitte Consulting Innovation (DCI), a new in-house innovation service line, but also began hosting company-wide hackathons and rapid prototyping events. Such events give all Deloitte employees, not just those in the DCI group, the chance to experience digital entrepreneurship without quitting their day job.

If nothing changes, finance jobs will continue being a boot camp for ideal tech employees like Eric Wu and Sankalp Shere - quickly to leave to other jobs once they come off the finance conveyer belt, rather than channeling their talent to revolutionize the industry and the company from within.

This article was published in collaboration with Pro Journo, a business journalism incubator.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.