According to KPMG, investment in European fintech in the first half of this year alone reached $26 billion, and it’s easy to see why fintech companies are so attractive to investors.
They are consistently more creative and agile than their traditional peers when faced with challenges, innovating on all fronts, all the time. While incumbents struggle to update their legacy systems, fintech companies fully embrace new technologies, such as natural language searches and chatbots. PwC’s worldwide survey of the industry found that 46% of large fintech firms thought emerging technologies were the most important part of their business to invest in in the next 12 months. Only 23% of traditional financial institutions thought the same.
That said, those institutions are slowly catching on to the need for innovation, and this means that smaller fintech firms are in direct competition with the big banks for top talent.
HSBC, for example, has spent $2.3bn on its digital platforms and AI technology, while Barclays and Santander have developed their own fintech investment wings to profit off the industry’s growth.
These huge, established businesses are doing their utmost to attract talented employees to bolster their own digital divisions, at the expense of younger fintech start-ups.
Innovate Finance research suggests there will be 30,000 new fintech jobs by 2030. However, it is going to be difficult for the UK fintech sector to fill these positions. The industry is dependent on global talent – the same report found that 42% of fintech workers are from outside the UK, and that 82% of firms find it difficult to recruit people from outside the European Economic Area. As the country heads towards Brexit, the combination of these factors could result in a shortfall of over 3,000 workers by 2030, costing the sector more than £350 million.
It’s therefore essential for the sector to develop to meet these challenges, and for entrepreneurs to build ambitious, cohesive companies that foster collaborative environments where fintech talent can be nurtured and trained.
And it’s just as important for growing companies not to lose their early culture of disruption and innovation. Too often as a company develops, it loses its spirit, and talented employees leave the company as bureaucracy and internal politics cause the organisation to stagnate. Tech companies have the highest employee turnover rate of all major industries – 13.2% in 2017, according to LinkedIn data.
There is no universal formula for fintech success, and each company will have to develop its own strategy to drive innovation, hold on to its culture, and, most importantly, build and retain their talent. We have grown employee numbers at IPF Digital by close to 500% over the last four years – here are just five of the many lessons we’ve learnt along the way:
1. Build an aspirational culture with a clear direction of travel
The success of a business relies entirely on the people responsible for delivering its strategy and building the technology, not on the technology or the strategy alone. This is especially true of young companies with high growth ambitions.
Money is not necessarily what motivates talented people to work for disruptive tech companies. There is a generation – especially those who grew up during the global financial crisis – who want to be part of a business which is driving meaningful change in the financial services industry. To differentiate your company from the competition and the incumbents, you need to develop a unique culture and brand that gets the right people to come and work for you. Fostering a strong culture will keep the company cohesive and underpin its future growth.
2. Hire people for their attitude, not their CV
The financial and tech sectors, more than any other, frequently see rapid changes which bring with them fleeting opportunities. Your team must have the mindset and creativity to recognise these opportunities and adapt to grasp them. There are distinct advantages to having employees with strong technical backgrounds, but if they don’t have the right attitude, they won’t be able to innovate fast enough for your business to succeed.
Skills can be learnt, but the right attitude is harder to teach. Hire people who will work collaboratively and effectively with your current employees and understand the common goal the company is working towards. Find individuals who bring a diverse range of experiences and viewpoints to your team. Employees with a collaborative, curious, and creative attitude will drive your business forward and find the best ways to increase customer satisfaction.
3. Failure is a friend, not a foe
Your team will fail to come up with and implement new ideas if there is a culture in your company where mistakes are avoided at all costs. Mistakes are part and parcel of innovation, and if your team aren’t making mistakes, then they’re not challenging themselves enough.
Mistakes are always learning opportunities. They help your company develop and will show you what doesn’t work – so you can see what does. They lead to new solutions for old problems – they’re a blessing to your business, not a curse. Foster a culture where failure is accepted, and experimentation rewarded.
4. Manage your risk, don’t avoid it
No company with an inspirational story achieved success by the complete avoidance of risk. Many entrepreneurs, though happy to take the huge risk of starting their own company, see their company move into a ‘zero risk tolerance zone’ once it starts to grow. Risks and mistakes go hand-in-hand, and both are essential to business success. Taking risks is the only way a company can expand and grow. When a business is restrained by rules, regulations, and red tape, it will lose the creativity it started with and the entrepreneurial spirit which drove it in its early days.
Build up your team’s understanding of risks so they can manage them most effectively – this will mean they operate at their very best. Encourage your employees to apply their creativity to the challenges they face and support them when they begin new initiatives and projects.
5. Fail to plan, plan to fail
It is your responsibility to provide a clear vision for employees so that the business can be consistently focused on its long-term plan. Explain to them why and how their work is overcoming obstacles and directly contributing to the company’s future. To reiterate, talented people work because they want their work to add value to something greater than themselves. Complex rules and procedures don’t achieve anything for your team. Instead, inspire people by giving them the opportunity to learn with a ‘hands on’ approach.
These are straightforward ways to attract the top talent and to encourage your workforce to perform at its best. Talented people with the capacity for innovation and the desire for the business to succeed are what allows your organisation to move forwards and remain competitive in the industry. Hire for attitude, train for skills, and help grow and strengthen the fintech talent pool so that the industry can advance. The future of the fintech sector in the UK currently faces a number of challenges, but with the right mindset and culture, it will be possible to tackle them effectively.
Viktoria Ruubel is the Chief Product Officer at IPF Digital. Viktoria leads the strategy and the development of IPF Digital products across all markets and is a member of IPFD’s senior leadership team. IPF Digital, the digital lending business of International Personal Finance, is a leading fintech business. It operates across 8 international markets including Mexico, Spain, Poland and Australia and serves around 250,000 customers.
