From Banks to FinTech: How to prepare for Talent Migration

Major brands in financial services and technology as separate entities are losing employees to the fintech industry, a fast-moving combination of the two fields. Fintech companies are attracting and retaining the best talent all over the world, while banks are struggling to cater to a new generation of innovation-focused financial talent. The tradition of banks as the "face" of finance is disappearing, and banks may eventually become the regulated back-end infrastructure for the new face of fintech.

Risk Mitigation and Capital that Drive Change

This is not a change related to COVID-19. Long before this event took place, a rise in financial services was already underway, with a notable migration to fintech by some of the brightest and most successful.

The success of companies such as Plaid and Klarna has helped improve the perception of the fintech sector as a stable one, and this is driving the change we see today.

Coupled with significant capital flowing on the field, the opportunities for growth and upside became clear. Importantly, these strong capital flows allow many fintechs to offer employee packages rivaling those of highly compensated career bankers, an important factor for aspiring talent that’s on the move.

The Vanguard

The thrill of being at the very cutting edge of technology innovation is yet another key factor in the excitement surrounding this new industry. The speed at which technology is advancing in the fintech space is truly exciting, as many fintechs carve out a space for themselves in the history books one of the many benefits prospective employees now enjoy is a perceived level of comfort working for a fintech company, while they benefit from the excitement and progressive perks of a startup.

One of the factors contributing to some of the success is that fintechs have been well-positioned to embrace the hybrid workplace, with many already having supported remote working policies and other flexible paid time off policies, such as unlimited annual leave, COVID-19.

The pandemic also saw many workers move away from major cities to pursue roles with firms that have remote or more flexible working policies. While the pandemic may have accelerated remote working for more traditional organizations, the flexible and decentralized nature of the fintech industry meant that remote working was already a way of life for many fintech companies.

In the wake of pandemic influenza's passing and some banks already pushing for pre-pandemic operational models, the fintech industry is seeing the benefit of employees who enjoyed their taste of greater work-life balance and are unwilling to revert back.

Key implications

Studying the industry as a whole, this shift could result in further innovation in the fintech space, as top talent migrates toward it. In particular, we could see more emphasis on offerings that expand access to financial services. While the start of 2022 has been met with the return of market volatility, we’re likely to continue to see more partnerships between banks and fintechs, as well as more immediate M&A activity, as fintechs continue to develop increasingly exciting offerings for banks. A great example of this is how FinLync is aggregating bank APIs.?

Another positive implication of talent migration within the industry is the incoming diversity of hires, which equates to diversity of experience. Fintechs need this greater diversity, including the experiential wisdom of veteran bankers, which is hard to substitute for.

Additionally, the offer of greater work-life balance for the industry is particularly important for women and parents, who often carry a heavy load of caretaking responsibilities outside of the office and struggle to remain in traditional financial services settings.?

This is a huge win-win for both parties, as fintechs can build and retain strong, senior teams while promoting diversity and inclusion. Meanwhile, talented senior employees have the opportunity to pursue work that is meaningful to them without sacrificing a big paycheck or their ability to support personal responsibilities.

Building on traditional banking careers?

The purpose of fintech is not to denigrate a traditional financial services career. Fintech companies find great value in traditional banking and the record of industry leaders being open to innovation, such as the many firms embracing open banking and creating many exciting API offerings.

Additionally, a background in traditional financial services is very useful, if not critical, to a successful career in fintech. Corporate banking, for example, is a space ripe for innovation, but due to its complexity, it can take a decade working on the ground to deeply understand it. Hands-on experience in industries like this can help make fintech solutions more impactful.?

With this acceptance model, we can expect to see a significant shift in talent in the coming years. PwC has already announced a plan to boost headcount by 100,000 over five years, and digital transformation has further increased the need for talent.?

The greater implications of the talent shift are encouraging. We will see a more flourishing financial technology ecosystem as conventional financial services and exciting innovations still continue to meet in new ways.