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The rise of fintech: can supply of skills keep up with demand?

27 / 09 / 2019

LinkedIn recently published its annual list of top start-ups to work for in the UK. Last year, we reported on how fintech firms had dominated the 2018 rankings, and not much appears to have changed over the last 12 months.

In fact, fintechs have only tightened their grip on the list, which ranks start-ups on four key metrics: employee growth; jobseeker interest; member engagement with the company and employees; and the company's ability to attract talent from LinkedIn's Top Companies list.

Monzo Bank, Revolut and ClearBank were all in the top five last year, placing first, third and fourth, respectively. In 2019, Monzo retained the top spot, while Revolut moved up into second place. ClearBank slumped to 11th, but another fintech - Starling Bank - rose from 18th to fourth.

Overall, 12 of the top 25 start-ups were listed as either financial services firms or banks. The results suggest a bright future for fintech, an industry that is now worth £7 billion to the country's economy and employs 600,000 people, advocacy group TheCityUK found.

However, the group's research and other recent studies suggest it's not all blue skies ahead for fintech. The sector must overcome significant challenges regarding skills shortages in the coming years if it is to retain its current high growth levels.

Key workforce challenges for fintech businesses

Job creation within London's fintech space has climbed 61% over the past year alone, according to one report. LinkedIn notes that Monzo has added approximately 800 jobs globally over the past year, as it spreads into the US market, while Starling Bank wants to nearly double its workforce after raising £75 million in recent funding.

Fintechs are clearly looking to expand, but TheCityUK highlighted various workforce problems the UK market will need to address if it wants to maintain its global reputation as a financial technology hub:

1. Poor data regarding skills demand

Many financial services firms are failing to maintain quality data on the skills they require to fulfil their digital strategies over the next five years. Those that have generated data have done so in a piecemeal fashion with a large amount of guesswork about which direction emerging technologies will take them.

Where data is sufficient, businesses have found the skills they need to grow are changing day by day. Coders, software developers, product designers, data scientists and cyber security experts are among the most sought-after candidates at the moment. Specific skillsets in artificial intelligence, blockchain and coding are particularly hard to find, especially for fintech roles located outside of London, such as in Manchester, Leeds and Edinburgh.

2. A lack of a graduate talent pipeline

Skills shortages are likely to continue within fintech firms unless the industry is able to work more closely with academia and government to ensure a suitable graduate talent pipeline is established.

According to TheCityUK, current arrangements generally involve individual organisations dealing with academic institutions on an ad-hoc basis. Instead, more formal links are required for a solid skills base to develop among graduates entering the workforce.

3. Greater leadership needed for upskilling

The evolution of technology and the resulting effect on consumer expectations means staff who already work within the financial services industry need upskilling to meet the new demands that are likely to be placed upon them.

Organisations are already struggling with best-practice methods on how to approach reskilling their employees. Again, better cooperation is thought to be needed between the government and industry to retrain existing financial services workers in an ever-changing fintech landscape.

4. Diversity issues 

Both financial services and technology are sectors with historic diversity imbalances. It's therefore not surprising that fintech inherits similar problems, despite ample evidence that improving diversity is linked to better profitability and value creation.

Specifically, overcoming the lack of gender diversity in UK tech positions could prove essential for narrowing skills gaps within the industry. The 2019 Tech Talent Charter revealed men hold nearly 72% of tech-based roles in the country, while women comprise just 26%. Programmers and software engineers are especially poorly represented, with women holding just 15% of these positions.

5. The Brexit conundrum

Making accurate predictions about the course of the UK's exit from the EU has proven somewhat of a fool's errand. However, one undeniable outcome is that EU nationals now seem to consider the UK a far less attractive place to work than prior to the referendum in 2016.

A recent LinkedIn report revealed a 30% drop in professional migration from the EU to the UK between Q1 of 2016 and Q1 of 2019. Unfortunately, LinkedIn has also noted that up to 20% of graduates with the tech skills needed to push fintech forward come from the EU, with French and German graduates particularly sought-after.

Securing the UK's fintech future

What impact are these workforce challenges having on UK fintechs? For a start, optimism among company owners appears to be faltering.

Currently, almost two-thirds of fintech founders believe this country is the world leader in the industry, but only 33% are 'confident' or 'very confident' the same will be true over a five-year trajectory. Brexit is especially concerning, with 69% saying they are 'worried' or 'extremely worried' about the negative impact on their organisation.

These results are from the inaugural Digital Finance Forum Summer Survey of fintech founders. Like TheCityUK's report, recruitment has been identified as a key challenge for the industry. Two-thirds of respondents said their biggest hurdle was hiring enough good people to fill positions across all roles and disciplines, making this the most frequently cited concern.

One theme is clear across all the research: fintechs must have access to the right skills if the UK is to continue being a global leader in the industry. To innovate effectively, companies need to be able to attract and retain the best candidates in a sector where the war for talent is only intensifying.

At Barclay Simpson, we have extensive experience of conducting sophisticated hiring strategies for fintech firms. Our consultants have helped place corporate governance professionals into some of the world's most well-known fintechs, including businesses on LinkedIn's Top 25 Start-ups list.

To learn more about how we can assist you with your fintech recruitment needs, please contact me on 020 7936 2601 or via email at NE@barclaysimpson.com.

Our 2019 Market Reports combine our review of the prevailing conditions in the corporate governance recruitment market with the results of our latest employer and candidate surveys.

Image credit: Héctor J. Rivas
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