Britain’s traditional strengths in finance and technology have, almost inevitably, spawned one of the world’s biggest financial services technology markets. But as FinTech expands in the UK and globally, competition for A-players – already fierce – will increase further, with the potential to throttle ongoing growth.
UK FinTechs are already feeling the pressure. Indeed, they have been for some years. Without the necessary talent – particularly within the niches of data and analytics – financial services technology companies simply cannot leverage their growth potential. No wonder then that, in the UK FinTech Census 2017, three in five respondents said attracting suitable talent was their biggest challenge – more than any other issue, including “raising equity capital” (34%) and “driving consumer adoption” (49%).
But why are UK FinTechs struggling to hire the talent they need?
Clearly, competition is a major factor. There are already more than 1,600 businesses in the UK’s financial services technology sector; this number is expected to more than double over the next decade. Yet it is not the only factor. Here are four reasons why UK FinTechs are finding it hard to source the talent they need to grow and thrive, plus solutions for how to overcome them:
1. Workforce Gender Diversity
UK FinTech is currently less diverse than would be expected of an innovative, forward-thinking sector. Four-fifths of all executives within the space are men; according to Innovate Finance’s 2018 report on venture capital investment, just 3% of the $1.7 billion that flowed into UK FinTechs that year went to firms with a female founder. Looking beyond the C and D-suites, less than a third of total FinTech staff are women.
Over the long term, there is clearly a need for FinTechs to recruit and retain a more diverse base of talent. New systems are needed to teach and inspire younger generations – particularly girls – to consider a future in data and analytics, and greater collaboration between employers and educators is required to forge new pathways into relevant training programmes and careers.
All of the above sounds ambitious, and will not be achieved quickly. But for the shorter term, there is still much that FinTechs can do to market themselves better to women with the requisite skills. After all, employers within the sector already offer an array of benefits such as:
- Remote working
- The chance to move seamlessly within companies and adopt different roles
Positioned correctly, FinTech has the potential to become the “poster child” for diversity and equality within the traditionally male-dominated financial services space.
2. The Brexit Question
The current skills shortage within data and analytics often forces UK FinTechs to look overseas in order to fill vital roles. Indeed, of the 76,500 people employed in FinTech roles, 42% are from overseas; 28% come from within the European Economic Area, with the remaining 14% coming from further afield.
It is not simply the case that a handful of major employers are skewing the figures by hiring heavily from overseas. Of all financial and related professional services companies in the UK, 84% use non-UK labour to overcome skills shortages, while 76% rely on overseas talent to provide specialist knowledge and skills not readily available here.
Given the vagaries of a post-Brexit immigration landscape, FinTechs may suddenly find themselves unable to access the international talent on which they rely heavily, further worsening the current skills shortage facing the sector.
Simply put, FinTechs cannot afford to bury their heads in the sand. At this stage, no one knows what immigration will look like once Brexit has been delivered, so FinTechs should prepare for the worst. Short-term, the solution is to partner with a recruiter that understands the talent market and how to find the right candidate for a role.
3. Demand for Emerging Roles
Roles that did not exist a decade ago now account for an increasing proportion of all finance jobs. Indeed, so-called emerging roles – such as data analysts, AI and machine learning specialists, designers, and people who work in innovation roles – currently account for around one in seven financial services jobs globally, but this proportion is expected to increase to almost one in three by 2022. Unsurprisingly, there is real concern over how the industry will fill these much-needed positions.
Until such time as a high proportion of these emerging roles can be filled by graduates, meeting the needs of the sector will undoubtedly require reskilling existing staff and ensuring the industry remains attractive to the best talent.
Additionally, FinTechs must get better at hiring from less traditional backgrounds – not only from outside the FinTech space, but from beyond the financial services industry altogether.
4. The Crowded London Marketplace
As revealed by the Mana Search Data Analytics Salary Report, three-fifths of data and analytics roles are for London-based jobs. The UK capital has the world’s highest concentration of financial and professional services firms, while 85% of all accelerators attended by UK FinTechs take place in the city. In other words, competition for the best talent within London is already fierce – and it is only going to get fiercer.
To overcome the challenge of a London-centric market, FinTechs must be prepared to look beyond the M25 when it comes to sourcing talent. One way to do this is through offering remote roles long-term which in response to the impact of Covid-19 feels more relevant than ever – a tactic that has already been adopted by some of FinTech’s biggest employers. For instance, the payment processing platform Stripe planned to hire 100 remote engineers in 2019, creating what it described as a “remote hub” to sit alongside its physical locations. Stripe has since said the success of the scheme has inspired it to hire even more remote talent.
Companies need to rethink the ‘traditional’ approach to recruitment. The sector is relatively new and growing rapidly, while salaries and benefits are extremely competitive. This means employers within the sector cannot afford to rely solely on poaching talent from their rivals; they must be prepared to cast the net wider. Likewise, they can no longer rely on traditional recruitment partners.
Clearly, there are significant barriers standing between FinTech companies and the talent they need to grow. Yet many of these barriers can be overcome by teaming up with the right recruitment partner, offering remote roles to candidates long-term, and ensuring a greater collaboration between employers and educators to encourage more diversity in the workplace.