Fintechs are facing a welter of employment challenges but industry executives are convinced the industry will ride it out.
The fintech job market is enduring a tumultuous period with job cuts, staff shortages and accusations that the fintech bubble has burst.
These headwinds have undoubtedly forced fintech onto the back foot, but industry executives are convinced these ructions in the employment market are short-term and that the industry will ride them out and soon return to rude health.
Tim Chong, co-founder and CEO of credit card startup Yonder, says: “Fintech is still massively attractive. If you look at fintech over a long-term trajectory, there is still a huge opportunity for it.”
Fintech bosses have been wielding the axe far and wide in 2022, with thousands of staff being let go across stock trading apps, crypto outfits, buy now, pay later (BNPL) firms and other fintechs. US stock trading app Robinhood, crypto outfits Bitpanda, Gemini and Coinbase, BNPL poster boy Klarna and fintech Curve are among those who have publicly disclosed they are axing staff.
In many cases, a slowdown in demand coupled with a dire economic outlook has forced fintechs to cut staff. For example, stock trading apps have seen a curb in demand coming out of Covid, which has been exacerbated by rising interest rates. The crypto outfits, meanwhile, have been burnt by the recent tumult in the cryptocurrency markets.
One theme appearing to run across many of the fintechs making job cuts is startups admitting (or being accused of) being too gung-ho in hiring staff when the going was good – and now it’s coming back to bite them on the bum.
Examples of over-zealous hiring pre-2022 include a former employee paid $70,000 for answering phones at Coinbase, which is axing over 1,000 employees. The executive told Business Insider that Coinbase had “hired too many talent” and “paid way too much” for the talent.
Coinbase CEO Brian Armstrong admitted as much in a blog post announcing the job cuts with comments, such as “adding new employees has made us less efficient, not more” and “employee costs are too high to effectively manage this uncertain market”.
Likewise, Bitpanda, which is axing hundreds of jobs, admitted “our hiring speed was not sustainable. That was a mistake”. Meanwhile, staff at Robinhood simply said “there was not enough work and too many people”.
Going berserk over talent
Dave Cunningham, a fintech entrepreneur who chairs the Irish operations of crypto exchange Coinmama, said pre-2022 fintechs had been caught up in a “frenzied panic” about snapping up talent.
He said: “My feeling is that all of these organisations, the crypto organisations and everyone in fintech, has just been hooked up into a frenzied panic around talent.
“It was just such a hot market for talent, people were getting crazy money and huge stock options and just hiring at all costs and I think it’s a combination of the ambition of the companies coupled with the ambition of the VCs that were fuelling all this.”
As part of the crypto-hype, Cunningham said crypto firms were happy to publicly announce massive hiring sprees, adding credibility and legitimacy to a new burgeoning industry.
Now, amid a reversal of fortune, which has seen the likes of bitcoin and ether plummeting over 50 per cent in price from last year’s peak across an industry facing regulatory pressure, the companies are having to pay the consequences.
But Cunningham doesn’t blame those from traditional finance and other industries for being seduced by the “well-funded, hot space of crypto” before this year’s market crash. He says crypto represented the next iteration of the booming fintech industry.
A further reason for over-zealous hiring in recent times has been cheap capital, an inducement that Chong says has lured fintechs into trying to grow to match the growth ambitions of their VC-backers.
In light of the current job cuts and market challenges, Chong believes one change we will see is a “stabilisation of salaries”, dispensing with the skyrocketing salaries seen in the boom years of crypto and fintech.
Fintechs on hiring spree
Yet it’s not all doom and gloom and some fintechs have made a public display of saying they are on the hunt for top talent, while their rivals are showing staff the door.
Neobank Revolut said its “actively hiring” with over 220 vacancies, according to LinkedIn, while rival challenger Monzo has more than 400 job vacancies.
Wise CEO Kristo Kaarmann said the money transfer company is in a “different place” to tech firms that are axing staff. In a Twitter post, he said: “Years of building Wise as a profitable long-term company is paying off now.”
Meanwhile, Amanda Ward, VP People, ComplyAdvantage, the compliance data fintech, said it has hired over 150 staff this year, boasting an overall headcount now of around 450. However, she admitted that prospective candidates are acutely aware of the doom and gloom around much of the current job market.
As an example, she says candidates are keener to probe ComplyAdvantage about its current financial performance and the long-term outlook for the company before signing on the dotted line.
Ward says: “There is absolutely a consciousness in candidate questioning around the viability of your company, how much cash you have? What your company performance is? What you are aspiring to be? Those questions are appearing earlier in the process than before or perhaps not even in people’s consciousness before.
“It’s very difficult for candidates not to have that in mind when you switch on the TV or go on social media and it’s all about doom and gloom and a global recession.”
A further difference Ward has noticed is that prospective candidates looking at joining ComplyAdvtange are looking at multiple other roles at the same time, which is more than in previous years. On the job cuts impacting fintech, Ward says ComplyAdvantage would be ‘foolish’ not to see if it can acquire talent from those fintechs carrying out redundancies.
But she adds that fintech is a ‘community’ and ComplyAdvantage has also been helping some fintechs which are cutting jobs to see if it might have suitable openings at ComplyAdvantage.
Chong, meanwhile, says Yonder has a ‘”fairly conservative” strategy for hiring and highlights that “competition is still really fierce for the top tier talent we are looking for”.
Staff shortages across finance
The job openings at Monzo and Revolut come amid a wider challenge of staff shortages across the financial services industry.
According to industry figures from recruitment giant Indeed, there were more than 4,500 job listings across finance, in the two weeks to 21 June this year, ranking finance in one of the top 10 industries most in need of workers in the UK.
These staff shortages can be attributed to myriad reasons, from worker interest shifting out of finance to, in a post-Brexit world, problems in recruiting and retaining overseas talent. As there appears to be no short-term remedy to these challenges, some fintechs are instead upskilling their current workforce.
Others say they are casting their nets further and recruiting from a bigger talent pool.
Fintech taken a knock but future looks bright
According to ComplyAdvantage’s Ward, despite the challenges, she is “not seeing anything in the trends coming into us that people don’t want to work for fintech, because that is a risk area”.
Cunningham, meanwhile, says the crypto industry has had its nose bloodied by the job cuts.
He said: “It will take some time for the industry to look more stable before you will get a big rush of traditional finance executives taking the leap into what has shown itself to be a volatile environment.”
But Chong says fintech is still a big pull for top candidates, pointing out that Yonder has hired staff from top tier consultancy firms this year.