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Continued Growth In FinTech Funding Puts Pressure On Growing Demand For Skilled FinTech Staff

Global FinTech investment has almost doubled in four short years, from around $20 billion in 2014 to almost $40 billion by the end of 2017.

In a sector that continues to see unprecedented growth, it would seem that there is very little that can stop its meteoric rise. However, over the last couple of years, one potential pain point has been identified that is closely related to the increasing demand for skilled FinTech staff.

FinTech is facing a potential future skills shortage

FinTech talent is the lifeblood and the backbone of the industry. A shortage in the availability of highly-skilled FinTech employees would significantly stifle innovation and hamper the remarkable growth we’ve seen so far.

This is an obstacle that most of the biggest FinTech hubs around the world will have to overcome.

London, considered to be the largest FinTech hub in the world, employs more than 75,000 individuals in the FinTech sector, broken up into 40% technical talent, 30% financial services experts and 30% business development, corporate staff and executive leadership.

Recent research indicates that that the UK will need to fill 766,000 new technology jobs by 2020.

Regarding FinTech specifically, according to Innovate Finance, UK FinTech firms will employ over 100,000 workers by 2030 and the number of companies will more than double to 3,300.

However, they also expect a skills gap of around 3%, or 3,200 highly-skilled employees that could see the industry lose £360 million as a direct result.

It is worth mentioning that the UK faces a unique problem in the form of Brexit. Overseas migrants make up around 42% of the UK FinTech workforce and the skills shortage as a result of the country’s decision to leave the European Union is not an inherent issue of the FinTech industry as a whole, but, because of London’s dominance as a global FinTech hub, it definitely adds to it.

New York, another leading FinTech hub, has reported a 21% increase in FinTech employment since 2006, almost double than the average of 12% across all industries. The FinTech sector in the city employs close to 60,000 individuals.

But according toStart Up  City:  Growing New  York  City’s Entrepreneurial  Ecosystem for  All,  business leaders from the local technology sector have stated that talent shortage is their top concern and that FinTech companies, in particular, are already struggling to fill jobs in computer programming and tech engineering positions.

Another report, Building New York City’s Innovation Economy, states that part of the issue is that local universities have not formed sufficient partnerships with businesses in the FinTech sector and that New York is, in fact, well behind other FinTech hubs in this regard.

In Singapore, the FinTech workforce is about 7,000 strong but the Monetary Authority of Singapore (MAS) has also stated that there’s a big need for attracting top talent and filling demand while acknowledging the difficulties of recruiting and retaining specialised FinTech talent.

San Francisco, a leading American city for FinTech innovation, employs around 74,000 people in the FinTech sector. In recognising potential skill shortages, the state of California established a STEM (science, technology, engineering and mathematics) task force responsible for improving education and access to STEM-related courses, including student testing, curriculum and instructional practices, professional learning, community and business partnerships and resources.

Finally, in Toronto, the Digital Finance Institute started The FinTech Association of Canada to act as the global voice for stakeholders within the industry. The association’s aim is to create partnerships and promote the Toronto FinTech ecosystem on an international scale to attract talent and investment that will support and grow the city’s 60,000-strong FinTech workforce.

In true FinTech style, the industry is not facing the challenge lying down

The FinTech industry is known for overcoming all sorts of challenges, including regulatory speedbumps, dismissal from giant financial corporations such as international banks, high-profile scepticism of adoption levels, to name but a few.

But rather than back down, the industry seems to thrive in the face of a challenge, so much so that many of these groups have stopped fighting against the sector but instead are now doing all they can to collaborate and work with FinTech startups.

And in true FinTech form, the industry is also not backing down from the challenge of a seemingly insatiable demand for highly-skilled and specialised workers.

Most of the FinTech hubs are home to a whole host of FinTech incubators, accelerators and co-working spaces. These are not just designed to help FinTech startups succeed but also to connect businesses with skilled talent pools and to provide talent development programs for the future.

In London, for example, Tech City UK (in collaboration with University College London and Cambridge University) launched the Digital Business Academy, an online program that teaches students the necessary skills to start, grow, or join a tech-related organisation.

The London Stock Exchange established the ELITE Programme (in collaboration with the Imperial College Business School) providing FinTech employees with education and mentorship, and the Open University partnered with Innovate Finance to create FinTech 101, teaching participants the impact of disruptive technologies on the existing financial services industry. Other notable programs within the city include Level39 and the London Innovation Lab.

In New York, the Applied Sciences NYC initiative was launched in 2010 by then mayor, Michael Bloomberg. The program was specifically designed to tackle the skills shortage in tech-related positions.

The FinTech Innovation Lab was created to help FinTech entrepreneurs engage with industry influencers and leaders, while Cornell University launched a FinTech incubator for PhD students who want to start their own FinTech company in the city.

Empire Startups is a community of FinTech entrepreneurs that host meetups, workshops and panel discussions to help emerging talent connect and learn from established players.

In Singapore, the MAS pledged over $200 million for the development of a Smart Financial Centre to help create vital connections between financial institutions and local universities while prominent talent supporting programs in San Francisco include StartX and FinTech Connection.

Finally, Toronto has various public, private and university-based incubator programs. These include the Ontario Network of Entrepreneurs that provides funding to institutions to cultivate a culture of entrepreneurship among students, the Digital Media Zone that connects students with startups and industry thought leaders, and the Creative Destruction Lab that launched a 9-month program focused towards the scaling of tech-startups by providing mentorship from industry leaders and big players.

Here at FintechFans, we are equally passionate about the development and promotion of highly skilled FinTech talent, and, apart from our dedicated FinTech job board, we are also hosting the 2018 FinTalent Competition in two separate locations later this year.

The FinTech industry is not showing any sign of slowing down

These programs seem to be highly effective in curbing the skills shortage concerns and satisfying the talent demand within the sector, as the industry is not showing any signs of slowing down.

A recent report by Medici Research showed that VC investment in FinTech startups totalled $3.764 billion for the month of June 2018 alone, 116% higher than May’s VC investment total of $1.746 billion.

It highlighted that skills in Lending, AI/ML/NLP and InsurTech-based startups are in high-demand, followed by the talent demand in crypto, payments, RegTech, Big Data, WealthTech and cybersecurity.

Overall, 2018 is shaping up to be another record-breaking year, as overall FinTech funding for the first half of the year has already surpassed 2017’s total funding amount of $39.4 billion.


* Further sources: Investigating the Global FinTech Talent Shortage– Ryerson University