Science graduates are spurning academic life for the financial rewards of investment banks, where their skills are in demand for analysing risks and markets. Sally O'Reilly reports

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JP Morgan's Kalafatis: it is vital to have business skills

There are two main career routes for scientists entering the City. Those at graduate level can compete with applicants from other disciplines, and there are also a few openings for physicists, chemists and mathematicians with PhDs.

Scientists in investment banks such as JP Morgan typically work in risk management. Besides developing mathematical models, they also analyse markets, client responses and competitors.

"We employ a large number of scientists, but are highly selective about who we take on," says Dimitri Kalafatis, a senior quantitative analyst. "Not all our recruits are PhDs - we also recruit science graduates with a good MSc from the London Business School or from prestigious institutions overseas, such as the Ecole Polytechnique in France."

Scientists who are able to apply their knowledge with flexibility and breadth are the best candidates, says Kalafatis, so those with a background in chemistry or physics are more likely to be taken on than biologists. "Theoretical physics is particularly useful, because it involves building mathematical tools to solve problems. That's highly appropriate for working in an organisation like this."

But scientific knowledge must also be matched with some understanding of finance and the markets. "It's not enough for someone to have a good academic background if their business skills are zero," he says. "It could be worthwhile for someone with a PhD to get business experience as well - perhaps with a small software house."

Vivienne Dykestra, global head of graduate recruitment at Deutsche Morgan Grenfell, agrees. "We have room for a few boffins, but not that many," she says.

"Right at the beginning, we will be looking for signs that they can survive in this environment. Someone who is not socially adept would probably struggle. After all, most people in the City range from confident to arrogant."

Deutsche Morgan Grenfell takes on hundreds of graduates globally every year; this year it will recruit more than 400. Of these, between 20% and 25% will come from a scientific background. On top of this, a handful of PhDs are recruited each year to work in global markets and equities, where mathematical modelling is a key part of their job.

"The flow of scientists into the City is increasing, partly because funds for research have diminished in the past five to ten years," says Dykestra.

High salaries are another reason. Graduates with science degrees who go into academic life are lucky to start on £15,000. At investment banks they start on a salary of between £23,000 and £26,000. After that, those who do well can earn £40,000 or more within three years. Chartered engineers in the City have an average salary of £49,000, compared with £40,000 elsewhere.

Even so, Neil Harris, head of careers services at University College, London, says that working in the City is not necessarily a smart career move for committed scientists. "If you are doing financial modelling, you could be using your scientific skill. And forecasting is also quite mathematical, so you can apply scientific skill there," he concedes. "But in other areas, scientific knowledge is helpful, rather than directly useful. If you are committed to a scientific career, you shouldn't go into the City. You won't be at the leading edge of science."

Perhaps the mythical status afforded some scientists in banking can compensate for this. PhD physicists, statisticians and mathematicians working on modelling are referred to as "rocket scientists". But Harris says that in fact even scientists working at this level in finance houses are not particularly high powered in scientific terms.

"Basically, they are applying statistics and differential equations to financial products," says Harris. "Most statisticians and mathematicians are very much at home with this. But it is seen as weird and wonderful in the City."

This is an attitude that Duncan Matthews, head of NatWest's innovation and growth unit, would like to see changed. His view is that investment banks could benefit financially from a better understanding of science - and of some of the business opportunities that it presents.

"We are the only unit set up to look specifically at the market possibilities for scientifically based ideas from smaller companies - from start-ups to those with a turnover of £5m-£6m," he says.

Both the Bank of England and the CBI have applauded NatWest's approach - so perhaps there are new career opportunities for scientists in the City which have yet to be opened up.

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