"We can’t change the nature of the finance industry overnight"

As part of the #QuantWomen series, we speak to influential women working in quantitative finance now to hear how they got their start, where they think the industry is going and what advice they have for the next generation of quants. Today, we talk to Jessica James, Managing Director, Senior Quantitative Researcher at Commerzbank AG. 

How did you start your career in finance?

I was writing up my thesis in theoretical atomic physics at Oxford and wondering what I ought to do after that.  My supervisor had a letter land on his desk from the First National Bank of Chicago.  They wanted someone to help with their nascent derivatives business who could do maths and programming.  It was addressed to ‘The Head of the Physics Department, Oxford University’ and as there wasn’t really such a person, it was only luck that it landed on his desk.  He gave it to me saying that he knew I was looking for something.  I wrote back and was invited for interview.  I had a day of about 15 interviews with traders and salespeople where I had to explain that my thesis was all about whether the Universe is left or right handed.  It must have gone ok as I was flown business class to Chicago for a second round.  I don’t remember that very well due to the free champagne on the flight home but I got the job.

What was your lightbulb moment?

When I realised that no-one was using historical data properly.  Forecasts and strategies were designed on the basis of intuition and views, not proper statistical analysis of past events.  By doing this kind of analysis properly I have been able to design structured products which work for clients, create funds and indices containing billions of dollars’ worth of investment which were based on statistics, and generate forecasts which have a better than 50% chance of coming true.  I have also kept a foothold in academia as I am a visiting professor at UCL and Cass universities in London, and I have published several books on finance and financial mathematics.

Why do we see so few women in quantitative finance? (or finance in general)

I believe it is mainly a ‘compound interest’ problem, closely connected with the high turnover in the finance industry.  Let’s say that there is a 5% disadvantage for women, for whatever reason – unconscious bias, family choices, whatever.  Then, at every ‘turnover point’ (like a round of redundancies, or a choice of promotion candidate, etc) there will be 5% fewer women left.  After 10 such cycles, there will be hardly any women left, and this will be particularly obvious in senior positions.  In finance these ‘turnover points’ happen about every 18-24 months.  In the British Civil Service, or for example in some branches of medicine like dentistry, these points happen every 5-7 years or more.  Such employers retain a much higher proportion of women.  I would like to have some data to do this analysis properly.

What can we do about it?  We can’t change the nature of the finance industry overnight, so we need to work on the bias.  Things like name-blinded CV filtering for first round interviews, flexible working (in the case of families for both parents; equality only comes once fathers have the chance to take a part) and a positive work environment would all help.  For example, in a redundancy situation, one point to check would be that the proportion of men and women being let go are similar.  And I firmly believe in publishing relative rates of remuneration between men and women.  While actual numbers may be confidential, all organisations should make sure that equal jobs get equal pay.

What advice do you have for women starting out their career in quant finance?

Take a deep breath, jump in!  It’s great fun.  Always stand up for yourself and TAKE NO **** FROM ANYONE.

What will the future of quant finance/risk management look like?

More regulation, which is right and proper.  Many quant teams now take folk from all over the world; you may be sitting with folk from China, Hungary and Lebanon all in one team.  I *hope* that we’ll see management develop a respect for statistics!  Whatever you are doing, retain your integrity.  It’s more important than a job.