Providing financial services is an increasingly complex task, whether because of the mountain of regulation, new methods of delivery or alternative business models enabled by new technology. This has been good news for those providing financial training degree courses.
Ever since the 2008 crisis, and the realisation that many of those implicated in the meltdown were ignorant of the risks they were taking, training has been high on the agenda for those seeking a career in financial services.
However, growth in demand for masters in finance degree programmes is also being driven by students who have no intention of working in financial services, but who feel such specialist masters qualifications, which can be completed in 12 months, are better value than a two-year MBA.
MIT Sloan received a record 2,083 applications for its masters in finance course this year, 22 per cent more than in 2015 — that is 17 applicants for every available place.
A masters in finance is seen as more attractive to graduates because they can get a “deeper dive” into the subject and at a lower cost than with an MBA, according to Heidi Pickett, director of the master of finance programme at MIT Sloan.
Fewer than a fifth of students graduating from the school’s master of finance degree programme last year took jobs in investment banking compared with more than a quarter who went to work in jobs outside financial services.
“Certainly financial services [companies] want to hire credible people with the relevant knowledge to work in the industry, but the skill set can also be applied to jobs in other sectors,” Ms Pickett says.
A major attraction of masters in finance courses is that they can be completed straight after an undergraduate degree. This is in contrast to an MBA, which requires several years of prior work experience and, in the US at least, usually necessitates a two-year career break.
“Students feel they get a step ahead of their peers with a specialised masters programme,” says Ms Pickett.
The University of Minnesota’s Carlson School of Management is one of several US business schools that have added masters in finance courses to their roster of degree programmes in recent years. This is reflected in the increased number of institutions in this year’s FT ranking, from 50 to 55.
Carlson was in part responding to what it saw as latent demand in the market. It received 150 applications for the 27 places available before it had even advertised the course.
However, the introduction of a master of finance degree has also benefited existing programmes run by the school because it has justified the creation of additional specialist teaching modules available to other students, including those on the MBA course, according to Sri Zaheer, Carlson’s dean.
“Now we have a masters in finance and business analytics it means there are new subjects open for all our students if they have the right background,” she says.
Masters in finance courses are often the most international offered by business schools in terms of the percentage of students coming to study from other countries.
This is particularly marked in the UK, where Lancaster University Business School, for instance, records no British students on its masters in finance course this year. Such a heavy reliance on foreign students makes the tightening of immigration controls in many countries a particular concern for business schools.
In the US, visa headaches are one of the main reasons many business schools have sought to ensure that their masters in finance courses are classified as science, technology, engineering and maths (Stem) qualifications.
Courses with this status can offer their non-US students an additional 24 months on their visas to remain in the country.
Course content has also had to adapt to changing demand. This includes the introduction of modules covering entrepreneurship or subjects such as crowdfunding, which may help people seeking jobs at fintech start-ups.
Up until the banking crisis of 2008, a lot of teaching focused on the skills needed for mergers and acquisitions, says Diane Morgan, associate dean of programmes at Imperial College Business School.
“Interest was so high that we had investment banks working with us to create specialist programmes in this area,” she says. “Since the crisis, demand has shifted such that asset management is more popular.”
Imperial’s central London campus is a short cab ride from both Europe’s banking capital and Silicon Roundabout, one of the world’s densest clusters of technology start-ups, many of which are propagating new models for delivering financial services.
Students who wish to follow an entrepreneurial route can gain substantial amounts of support at the business school, not least through Imperial Innovations, a publicly traded investment and commercialisation business created within the college. Many, however, still prefer to work for established banks, according to Ms Morgan. “Our graduates are focused on brand,” she says. “As much as they are interested in start-ups, they say, ‘I really need to start here.’”
Barclays is one of the biggest employers of Imperial masters in finance students, taking about 30 to 40 each year from the graduating classes, according to Ms Morgan.
Strong demand for financial training creates its own problems in terms of maintaining the quality of teaching while increasing capacity.
At Warwick Business School, applications are up 12 per cent this year for all finance-related masters programmes. Although this is still not a record high for the school, it is a “steady state” where the school can provide a quality of education the employers expect, according to Alex Stremme, assistant dean for Warwick’s masters in finance programmes. “Pushing numbers too hard would compromise the quality of the product,” he says.
Economic and political uncertainties, increased competition and social pressure have fed greater demand among employers for “well-rounded” candidates who can combine breadth and depth of knowledge, according to Mr Stremme. This might mean explaining the workings of a collateralised debt obligation to a lay person or leading a debate about the pros and cons of quantitative easing.
“It is precisely the new challenges that lie ahead, many of which we have not even begun to understand, that require highly trained individuals with the intellectual maturity and independence that only postgraduate courses can develop,” Mr Stremme says.
In an uncertain world, there may never have been a better time for institutions offering financial training.