Talent shortage in fintech ‘a global plague’

After a year of unprecedented growth in 2021, last year turned out to be one of consolidation for the fintech industry amid a global downturn in investment, largely due to the knock-on, economic effects of the Russian invasion of Ukraine.

Business strategy Digital marketing handshake Economic growth global network Ai, Data analysis financial Technology connection,

New and out now! The Winter 22/23 issue of Think Global People magazine

But the one thing that did not change in fintech was the chronic skills shortage – something expected only to get worse in 2023.In a January report from global advisory, broking and solutions company Willis Towers Watson (WTW), which has 45,000 staff serving more than 140 countries and markets, described the problems of employee attraction and retention as a "plague" for fintech organisations across the globe.

Related reading from Relocate Global and Think Global People

Global war for fintech talent gather pace

The reasons are not hard to fathom. According to research by the Korn Ferry Institute in Los Angeles, the skills shortage in the global tech industry as a whole will reach 4.3 million workers by 2030. Nowhere is that shortage more keenly felt right now than in fintech.For years, tech organisations have looked abroad for talent. India, in particular, has been a happy hunting ground, especially for US companies. But even that source is beginning to dry up amid mounting domestic and regional demands. A survey late last year found that more than 60 per cent of fintech companies in India were reporting a shortage of skilled employees, mainly in IT, engineering and sales services.In the UK, Charlotte Crosswell, who took over the chair this month of the government-backed Centre for Finance, Innovation and Technology (CFIT), has warned that the nation's fintech industry cannot continue to assume that a stream of talent will continue to flow into the country from overseas.Warning that the UK could risk losing its status as a global fintech hub if it did not address the challenges around the talent shortage, she said fintech firms had been grappling with a tightening of the talent pool since Brexit and that access to talent was currently the “biggest challenge” facing the industry.In a podcast interview, Ms Crosswell said that the sector “can’t always assume the talent’s going to be there” and that it had to be proactive in attracting overseas skills to the UK. “It’s not a UK race for talent – it’s a global race for talent,” she said. “We’re up against people who want to hire our talent from the US or from Asia or from Europe.”Ms Crosswell added that it was essential that UK firms could bring this overseas talent into the country rather than relying on remote workers. “At the moment we are seeing UK fintech often leverage overseas talent. With the drive for hybrid working, it’s not so needed now to be coming here,” she said.“Is that something we want to see and want to leverage so that it helps us scale UK fintech? Or [would] we prefer to see those companies employ people in the UK, pay tax in the UK and really make this a success story?”

A different take on total rewards for 2023?

The WTW report, 2023 Pay Trends in the Fintech Industry, says that while last year saw the highest salary budget increases in nearly 20 years, companies are still struggling to fill key roles at every level, with the situation exacerbated by a voluntary attrition rate hitting 14 per cent in the UK and 13 per cent in the US."Most fintech organisations are enhancing their rewards by reinvigorating the employee value proposition, increasing workplace flexibility and offering more competitive compensation, such as spot bonuses and equity awards," says WTW.But the report adds that economic volatility and uncertainty could lead to lower investment levels and economic growth this year, which could force organisations to review their workforces and be more cautious about increasing salaries "among many other things".WTW concludes: "Organisations will look beyond pay and take a holistic view of total rewards to create employee experiences that attract and retain the talent needed to drive business objectives. To effectively compete against industry peers, compensation and HR professionals will seek a more sophisticated understanding and application of data in their strategic total rewards practices and policies."In its review of the past year, the FinTech Magazine website highlighted the Great Resignation of 2022 as one of the factors that had worsened the skills gap across the fintech sector.The talent shortage is being felt particularly keenly in the UK, not least because it was revealed towards the end of last year that London had edged ahead of San Francisco and New York to become the world’s biggest centre for fintech investment during 2022.The importance of the UK tech sector was emphasised by Prime Minister Rishi Sunak in his first speech of the New Year. "The more we innovate, the more we grow. And the world is seeing an incredible wave of scientific and technological change,” he said."So right now, the most powerful way to achieve higher growth is to make sure the UK is the most innovative economy in the world. That’s why we are increasing public funding in R&D to £20 billion to enhance our world-leading strengths in AI, life sciences, quantum, fintech and green technology."The Department for Digital, Culture, Media and Sport (DCMS) in London says that this "will ensure that UK technology businesses have access to the skills and funding they need to innovate, develop and grow", adding: "We will work with schools, universities, further education providers, and businesses to deliver the digital skills that the real economy actually needs – including apprenticeships and skills training throughout people’s careers – in a framework that is understandable and recognisable."The DCMS points to the fact the government is already funding 1,000 PhDs in artificial intelligence and 1,000 scholarships for masters degree conversion courses in AI and data science. It also points to the Digital Skills Partnerships being rolled out around England. But, it concedes "more needs to be done".

Attracting global tech talent to the UK

Chris Philp, the-then Minister for Tech and the Digital Economy and now a Home Office minister, said in the autumn: "It is also vital that the best and brightest from around the world can quickly and easily come to the UK. In addition to the comprehensive suite of visa routes already available to digital businesses, we are introducing the new High Potential Individual and Scale-up visas, so that UK digital businesses can easily recruit from anywhere in the world."Securing the brightest and best global expertise might be easier said than done at a time when the hunt for tech talent is heating up across the world and as the fintech environment itself faces new challenges in the coming year.Victoria Treyger, managing director at Californian venture capital company Felicis Ventures, suggests on the TechCrunch website that while 2022 was largely about the reset of the funding environment, 2023 "is going to be a year of recalibration for fintech companies".She adds: "The great news is that large enterprise and mid-market companies care more than ever about bottom-line impact. As revenue growth slows down, cost savings and efficiency have become critical. Larger companies are more likely to cut back on internal innovation efforts and technology investments that are not core to the business."This opens the door for fintechs that can deliver real improvements to the bottom line by eliminating manual processes and saving their customers money."Meanwhile, Oliver Prill, CEO of digital banking service Tide, has told UK Tech News (UKTN) that he believes 2023 will herald a new era of mergers and acquisitions in the sector.“Increasingly investors are going to be looking at companies with business models that solve the real problems that consumers and businesses are facing and that also have a clear path to profitability,” he said, suggesting that investors would be making safer bets in companies with predictable revenue streams – a stark contrast, said UKTN, to earlier investment trends in burgeoning industries where growth took precedence over profits.Mr Prill added: “There was an emphasis on big money investments and rapid growth for tech start-ups in the years just prior to 2022. The macro-economic conditions have unsurprisingly cooled off big spending from many investors, and the increased interest rate might have driven that even further.”But while the investment landscape surrounding fintech remains uncertain for now, few doubt the long-term importance and viability of the sector. The bigger challenge will be finding and keeping the talent the industry is so desperately short of.

Subscribe now to Think Global People magazine and read more from David Sapsted in the brand-new winter issue

Subscribe to Relocate Extra, our monthly newsletter, to get all the latest international assignments and global mobility news.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.

Related Articles