Business focus: Banks face off against start-ups in the battle for interns

The pay for interns is good — pro-rata it works out similar to a typical analyst starting salary of £47,000 — but the odds of getting a place are low, with only about 2% of applicants accepted. You would think this would guarantee prestige and attractiveness — but more and more millennials are shunning the suit and tie as a mark of success.

“If you go back to 2005 and said you worked for a large, tier-one investment bank at a dinner party you’d get the cachet, you were the cool kid,” said Logan Naidu, chief executive of graduate and intern recruiter Dartmouth Partners.

“Nowadays it’s the person showing up in jeans and flip-flops working at a tech start-up around Old Street that gets the caché. The very, very best people have more options than ever and are more willing to take a risk.”

Entry-level pay in the tech sector can be higher than banking — some say top-notch graduate analysts at the likes of Google and Facebook can earn £70,000 — but underpinning the change may be a broader shift in millennials’ attitudes to work.

While 10 years ago most graduates were happy to commit to the slog of investment banking hours — perhaps smoothed by the glamour of the pre-recession good times — today many want more flexible working and hands-on experience.

Entrepreneur Alex Morris interned at a top-tier investment bank but left to found mobile advertising start-up Vidsy when he was 21 after feeling “constrained” by banking. “I really wanted to build value in the world, not in the abstract,” he said.

Ambrose Cooke, 23, interned at Goldman Sachs but shunned banking life to co-found Snapchat ad start-up Fanbytes.

“I think banking has a lot of glamour projected on it towards young students, with its starting salaries and work perks, but beyond that the prestige falls short of creating actual satisfying, valuable or impactful work,” he said.

However many entrepreneurial millennials see the hothouse banking atmosphere as the best route to success.

Citi intern Philip Kurukgy, 21, dabbled with start-ups by co-founding an investment company called Queen’s Tower Capital earlier this year with fellow Imperial students and Citi interns David Fong and Peter Style.

He said his millennial peers liked the flexibility of working in a start-up environment but added that investment bank internships were more rewarding for young graduates. “The things you learn in the corporate world are incredibly different to what you can pick up on your own,” he said.

For their part, investment banks have responded in kind to shifting millennial tastes.

A graduate recruiter for a major bulge bracket bank said that the entry of cooler tech start-ups had helped shake-up the stuffy world of banking.

“Someone like Google, which is a relatively new proposition, does seem more relaxed, warm and welcoming than traditional banking,” he said.

“We don’t want to be Hansel and Gretel about it and say it’s bouncing around on space hoppers and playing table football but, at the same time, there are things we can change to make it more appealing.”

The crisp suits and smart ties are still a must for parts of banks where clients could walk into the office — think wealth management or investment banking — but things are more relaxed elsewhere, with many allowed T-shirts and jeans.

Some firms also have guarantees for graduates — at least one protected weekend a month, keeping track of analyst hours, faster promotions, forcing them to go home early on Fridays.

However, banks will need to stay on top of a widening chasm between millennials’ demands and their own offering. “This generation is less willing to make the lifestyle sacrifices so the attrition rate in banking is very high,” said Naidu.

“There are fewer star bankers in the pipeline so it’s a question of where they are going to come from.”