The future of jobs in fintech (hint: it's not as bad as it looks)

Meta’s 11,000 job cuts and Twitter’s firing of 50% of its workforce in recent weeks have naturally been the dominant tech layoff stories of late. But they aren’t the only ones.?

Earlier this month, fintech unicorn Pleo announced that it was cutting 150 positions, accounting for 15% of its staff, and is putting the brakes on its international expansion.?

At the same time Irish-American payment service company Stripe is cutting 1,100 positions, corresponding to 14% of the company's employees.?

It seems that after a number of years with increasingly good access to capital, the current macroeconomic climate heralds a new reality for financial technology – a reality in which access to jobs is falling, with no end in sight. This comes as no surprise considering the rapidly changing sentiment in the environment following several years in a global pandemic, soaring inflation and no quick end to the Russian invasion of Ukraine.?

This has resulted in it becoming significantly more difficult for fintech’s to raise capital for new growth - and therefore new employees. In some cases, it has also meant management having to make tough decisions about their businesses - and that has meant downsizing in some markets and saying goodbye to good colleagues.?

- In the scale-up and 'unicorn' segment, jobs are tightening. It has become more difficult to raise the necessary capital for growth and valuations are falling. So that's why you look at costs, and the biggest cost is typically staff, which is why this is where cuts are made, says Thomas Krogh Jensen, CEO of Copenhagen Fintech.??

- I believe that we see some taking the opportunity to adapt the organisation to a new reality. Some of it is due to the current climate for raising money and some of it is due to the fact that you may have built up a slightly too large organisation in the 'good times' to keep up with high growth.?

- What we have learnt through multiple crises (9/11 attack, the financial crisis of 2007/2008 and the Covid-19 pandemic), is that now is also the time when great companies are born and existing ones grab the opportunity to reinvent themselves and see the opportunity for growth 'on the other side', in order to prepare for the turning point that will eventually come.

At Copenhagen Fintech we are still seeing great startups and teams getting investments - especially in the early stages. Short term 'adjustments' are being made to prolong runways and buy time, however, we have also seen companies ready to onboard new talent, and all of our founders are getting the privilege to now learn how to navigate in more uncertain and volatile times.

It is also important to note that 2021 was a record-breaking year for investments in fintech. Last year saw DKK 14 billion injected into Danish companies, compared to DKK 4 billion in the two years prior, which caused a big rise in employment to keep up with this growth. This year the numbers are still expected to be high, with a forecast predicting DKK 6-8 billion by the end of the year, numbers which are still almost double those from 2019 and 2020.? Trying to live up to any statistics from last year is just setting yourself up for disappointment, especially in this climate.

All in all. Things aren't as bad as they look. Fintech is still transforming financial services, Copenhagen Fintech is still supporting founders, corporates and investors, capital is still circulating and startups are still growing - maybe just a bit slower than last year.