Slow the turnover: Three ways FinTechs can retain Gen Z talent

In recent months, we’ve spent a lot of time talking about the role of Gen Z in fueling a resilient pipeline of talent to the banking sector. But what about to the FinTechs?

When I spoke to Matt Hatch, EY Americas FinTech Leader and fellow Workforce Advisory Partner Cathy Goonetilleke about this, we concluded that the talent challenges are a bit different between FinTechs and banks.

But what do they have in common? Talent, as always, is complicated. Read on for our combined thoughts.

When attraction is not the issue …

FinTechs have no trouble attracting talent from the Gen Z. Younger workers are drawn to the sector’s reputation of having a fast-paced and entrepreneurial culture and a digital-first, agile, working environment.

But even FinTechs are feeling the talent shortages caused by the great resignation, and job-hopping is particularly common among members of Gen Z. Getting these young recruits through the door is easy for FinTech firms — the harder part is encouraging them to stay.

Some attrition of talent can be a good thing, but lose too many and it disrupts operations, costs money and threatens business continuity. Here are three ways for FinTechs to retain Gen Z workers.

1.????? Maintain a startup culture

The transition from high-growth startup to established business has its pitfalls.

Evolution into a larger corporation can come with higher expectations, including regulatory pressures, more disciplined governance and complex bureaucracy. These all have cultural consequences that need to be managed carefully.

Some FinTechs have lost talent on their path to maturity, where talent has become tired of the cultural changes that have come along with growth. And it’s easy to see why — much of this talent accepted offers in these firms in early funding rounds, where fast-pace bootstrapping was part of the appeal. As these companies grow and become more accountable to the markets, so too do responsibilities around risk, controls and governance. The company Gen Z fell in love with feels different in a period of rapid growth. ?

But it’s not impossible for a scaling company to hold on to its startup culture. Here are two ways:

• Enable fast decision-making. Despite being a bigger kind of firm, having clarity on who can make what kind of decisions, and divulging decisions to the lowest levels of accountability, can lead to faster decision-making across the company. ?
• Encourage experimentation. Entrepreneurial cultures are experimenting all the time and testing and learning is a state of being. To encourage this practice in a larger firm, and as discussed in our article Three ways to unleash the power of people in banking transformation, giving employees protected time to create and present their creations, and rewarding experimentational activities, can serve as good signals of a culture that values creativity and innovation.

As is always the case, authentic communication is key. Leaders in high-growth firms should acknowledge that in order to grow, some aspects of the culture might need to change. But, this could be complemented with a message that the “secret sauce” of the company’s culture will not go away with an explanation of what cultural features will be retained, and how. To take this idea further, crowd-sourcing with the workforce what elements of the culture should stay, and how these attributes could thrive in a period of organizational growth could be a helpful way to gather not just employee feedback, but tangible ideas for preserving cultural traits. ?

2.????? A balanced remote work model

The world of work changed radically in the wake of COVID-19 pandemic, and many younger people emerged from the pandemic with an expectation of remote or hybrid work.

FinTech firms were quick to realize this and were some of the first to give the people what they wanted for the long term. Many FinTechs remain a “remote-first” model, which is not only valued by employees, but relatively easy to maintain in a digitized sector where most functions can be performed virtually.

But is it perfect? No.

Some leaders in FinTech firms have found this model a challenge for employee loyalty since there are limited opportunities to build meaningful, personal bonds between teams and managers in the absence of in-person connection.

Others have found that it is hard to onboard talent and accelerate their ramp-up time to normal production levels without having in-person access to senior colleagues or the benefits of the apprentice model and learn by observation techniques. ?????????

With this context considered, some might consider the “fully remote” model a bit extreme. And, if you prescribe to the “all is good for you in moderation” philosophy, you might agree.

In response, some FinTechs are mandating a small amount of intentional on-site work to counter-balance a largely remote model, and are equipping employees with travel and networking budgets to facilitate this kind of connectivity in the office environment. ??

3.????? Double down on the mission ?

As discussed in our recent blog, Six tips for banks to inspire the Gen Z through vision and purpose, having an inspiring vision, purpose and set of values is a requirement for Gen Z where almost two-thirds (63%) feel it is important to work for an organization that shares common values. As noted in that piece, some neo-banks and FinTechs are well down this road — armed with modern vision and purpose statements linked to democratized finance, green investing and other noble pursuits.

In some respects, it is this authentic commitment to vision and purpose that has bolstered the appeal of FinTech to younger workers in the first place. The idea of working somewhere that makes a positive difference in the daily lives of others is a powerful thought.

Clearly, in periods of growth, staying faithful to the mission is critical. So much so, that we have heard of some companies removing distractions from the mission by declaring apolitical status or amnesty from social and political issues in the workplace. This is interesting, as in large banks we have seen the opposite — a leaning in to the social discourse to connect with diverse populations around matters of race, gender, sexual identity and more. ??

So, how can a scaling FinTech keep its people focused on the mission in a period of high growth? As discussed in our last blog, strategies could include:

• Articulating how specific programs the FinTech is delivering has a tangible impact on the mission
• Establishing a measurement framework that tracks the company’s progress toward the mission and monitors this over time
• Seeking perspectives from stakeholders, such as employees and customers, to understand perceptions on how “true” the company is to their mission
• Formalizing decision-making with the mission at the center — for example, challenging every decision with the question: How does this help the mission? Where the answer is negative, go the other way
• Making it clear, every day, how people’s contributions affect a larger purpose – and bringing it to life through storytelling, social amplification and more

FinTechs must not throw away their advantage

Gen Z is the largest living generation, and its views and values will increasingly dictate how businesses behave — both internally and outwardly.

FinTech companies need Gen Z in their ranks if they want to stay relevant in this new world. The sector has a head start in the race to attract Gen Z, but it can’t get too comfortable. To keep its lead, it has to focus on developing and retaining this valuable talent.

This is the third in a series of five blogs that explore how the financial services sector can attract and retain Gen Z. These follow our first report, How banking on Gen Z talent will make or break the future of banking.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.