Innovate Finance launched its FinTech for Schools campaign over March 2019, designed to encourage young people to understand the increasing importance of digital skills in the workplace, with an emphasis on ensuring the sector’s appeal to girls. Zoya Malik spoke to Innovate Finance member firms CEO and Co-Founder Benedetta Arese Lucini of Oval Money and Jonathan Naismith, Business Development Manager at Exate Technology on their views on how the campaign will function to nurture future Fintech recruits.
Zoya: Why is there a dearth of tech developer talent in the UK as opposed to other parts of the world? Why is investment lacking?
Benedetta: The gap in tech talent is not just a UK issue but a European one. European countries have not been investing in tech start-ups and innovation technology for a long time and there are still very few exits by successful entrepreneurs that create the culture that encourages the younger generation to see tech as a career. If we then look at women in this space, the percentages are tiny, still affected by bias in schools that considers coding a male role.
Jonathan: On a more general basis, I believe there is the assumption that IT/Tech is only a back office function, where opportunities are limited and you’re forced to work in a broom cupboard. Of course, the reality can be somewhat different with technological innovations enhancing the way we do business today. As such, IT specialists are the enablers of business tomorrow.
More specific to the UK, because it is arguably the biggest financial hub in the world (New York would argue that – as a result of this reputation, the UK attracts the best talent in the world. Unfortunately, the majority focus on becoming the British equivalent of the next Wolf of Wall Street and not a technologist. Additionally, we are seeing this trend of efficiency and cost savings within the financial Industry. As such, offshore IT talent is more attractive to firms operating within the UK as it is far more cost effective for most organisations. That said, I do believe change is on the horizon. The continued innovation from Facebook, Amazon, Netflix and Google (among others), as well as the growing attention on FinTech, has certainly placed a spotlight on technology and the opportunities it can provide. Coupled with IT/coding being introduced as a subject in schools at an early stage, this may lead to an increase in young talented technologists within the UK.
Zoya: How will a new generation of students be incentivised to join the fintech industry?
Benedetta: Fintech is one of the most interesting emerging sectors in tech. This is because it affects everyone’s lives and as such a new wave of dis-intermediated solutions are emerging in the last couple of years, following the already mature disruption in other industries like travel and mobility. Disrupting the financial markets though requires a set of core competencies that includes coding, regulatory and legal and more creative skills that can become the incentive for a new multi-disciplinary generation to find a role in this space.
Jonathan: Having been a part of a FinTech for almost 2 years now, I can say, beyond any doubt, it has provided me with more opportunities, exposure and responsibilities than I would’ve had in a corporate. It hasn’t come easy or without its challenges but that has allowed me to develop new skills and grow as an individual. I have had the wonderful privilege of meeting and engaging with some incredible individuals, from all different backgrounds, who are changing the world and making a difference in the way we conduct business. As such, I believe that as FinTechs continue to mature and grow, opportunities within a FinTech will only increase, providing new and exciting journeys for new generations of talent. I would add, that if you are unsure of where you want to go or what you want to be, try FinTech. It is a great opportunity to learn and try different experiences.
Zoya: What is the prospect for fintech growth and investment in the UK over the next 5-10 years?
Benedetta: I believe the fintech industry is just at the initial stage of its maturity and will experience a huge growth in the next 5-10 years. This is because consumers are starting to get used to a new range of experiences that are personalised and inclusive. Even though there is an explosion of new solutions in banking, savings, investing, insurance and loans, the current start-ups still reach a small number of early adopters, but they are ultimately ready to reach a mass market challenging the traditional financial institutions to innovate themselves making the sector more dynamic than ever.
Jonathan: Unfortunately, there is no way of looking at this holistically without taking into consideration the global environment, including “he who is that shall not be named” – Brexit. We have seen an increase in uncertainty in markets globally with several significant events transpiring, including the ongoing trade wars between the US and China, as well as political instability/changes across various regions. More pertinent to home, Brexit is still dominating headlines. Speaking to an individual who is highly connected in the VC and FinTech space yesterday, I was informed the EU in fact contributes £700 million every year to be invested in UK FinTechs. Post Brexit, it is uncertain if this investment will remain, decrease or cease to exist. In addition, these global phenomenon are also distractions, taking up resources from financial institutions, as they aim to mitigate their risk exposure. This results in less time and resources being devoted to FinTechs, making traction harder to come by and affecting VC investment decisions.
Within the last 12-18 months, financial institutions have certainly started to embrace FinTech more. I believe this is due to the realisation of the benefits and threats FinTech poses to traditional banks who don’t transform. There has been a general uptake in VC investments from $14.7 billion in 2017 to $36.6 billion in 2018, as according the 2018 FinTech VC Investment Landscape by Innovate Finance 2019. In addition, there are some asking for FinTechs to be regulated, which could pose further obstacles. All things considered, I do expect FinTech and investment to continue growing in the next 5-10 years but potentially not at the current rate witnessed recently.
Zoya: How will the initiative offer a new generation of developers in the UK a chance to compete with FinTech peers overseas?
Benedetta: FinTech for Schools initiative is an important programme to encourage a new generation of leaders and entrepreneurs in the sector. The challenge should not be seen as a UK one but as a European one. Allowing trained young people from the UK to work in tech, anywhere in Europe is a huge opportunity and I think we should take advantage of this to be competitive with other countries across the world.
Jonathan: With the UK being a global financial hub, attracting the best talent from around the world and bringing with them their international experiences, many of the UK FinTechs are pioneering and leading the way for others to follow. This is evident in the huge success of the UK’s FinTech market globally. The FinTech for Schools initiative provides a wonderful platform for FinTechs, comprised of the best talent from around the world, to share their international knowledge and experiences with the younger generations. In doing so, we hope to inspire them in a number of different ways. We aim to inspire younger generations to challenge the way things are, in order to develop new ways of doing things. We aim to inspire them to try new things, by not being afraid to fail as it often provides the most valuable learnings. I believe if we can convey all these messages, in a manner that resonates and inspires, then we will equip the next generation with the knowledge and tools to continue competing globally.
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