The news: The Trump administration overhauled the H-1B visa program by imposing a $100,000 fee on successful applications, a massive cost increase that is expected to create significant hiring hurdles for the finance industry. 

The top 10 US financial institutions (FIs) have a total of 12,000 H-1B visas. The biggest US bank, JPMorgan, has 2,440, per Business Times.

Why it matters: The visa holders fill engineering and technology roles that are essential for core financial activities like developing quantitative models, algorithmic trading, risk management, and software. The new $100,000 charge will be prohibitively expensive for hiring entry-level junior analysts or tech workers.

FIs are expected to increase their reliance on foreign business support centers as a result of these new costs, per ATM Marketplace.

Zoom out: FIs are already getting hit by higher labor costs to account for booming M&A, IPO, and equity-capital-market transactions, even as the broader US job market slows, per the Wall Street Journal. 

Layoffs that would normally happen in the fall are being delayed as a result, and banks are paying more to attract senior bankers in this profitable window.

Our take: The banking talent pipeline is heading toward a painful reckoning. The firms that rely on a continuous stream of junior talent to feed their development teams will suffer most—which will push FIs to change how they staff.

The inevitable outcome isn't necessarily hiring more high-skilled US workers, but a forced acceleration of the trend toward offshoring critical technology. 

We may see some larger firms and industry groups lobby against this change if offshoring still doesn’t spare FIs’ bottom lines.