European FinTechs are bucking the layoff trend
Around the world, the once-unstoppable growth of tech companies has been called into question by successive waves of layoffs, with sectors whose strength is tied to consumer confidence the hardest hit.
In Europe, q-commerce has been among the hardest hit. Between the biggest players on the European market such as Gorillas, Getir and Zapp, thousands of jobs have been cut this year.
Related: Pink Ties Assemble as ultra-fast merchants face global challenges
Also related: German delivery service gorillas cut 300 jobs
Without the armies of delivery workers that q-commerce companies employ, the worst FinTech layoffs usually number in the hundreds rather than the thousands. But it’s difficult to compare the two, and Europe’s loss of FinTech jobs still represents a significant blow to the continent’s tech ecosystem.
See also: Ultrafast traders’ losses increase in the face of an uncertain future
Some of the worst cases include Klarna, which announced it was cutting its global workforce by 10% in May, a move that will be felt most at the company’s Stockholm headquarters.
Learn more: Klarna faces growing pains as losses increase
Meanwhile, Vienna-based crypto firm BitPanda revealed in June that its workforce will be reduced to 730 people, representing around two-thirds of its previous workforce.
Other European FinTechs slimming their employee base include digital bank Nuri, trading platform FreeTrade and digital wallet aggregator Curve.
There is a silver lining
Despite the bleak outlook, some FinTechs seem to be bucking the global trend, seizing the opportunity to invest in new talent.
In a recent first-half earnings call, Ingo Uytdehaage, CFO of Amsterdam-based payments company Adyen, told investors that the company had expanded its workforce by 400 in the first half of this year, half of which were placed in technical roles.
Read on: Growth in Europe is slowing, but EMEA is still a key region for Adyen
Across the Channel in England, one of Britain’s leading challenger banks, Starling, is in the midst of a hiring frenzy despite an announcement in July that the company is scaling back its European expansion plans. At the time of publication, there were over 180 vacancies at neobank listed on the popular job board, Indeed UK.
More about this: UK FinTech Starling Scuttles EU Banking License
In Southampton, where its engineering and operations team is based, Starling even wrapped six double-decker buses in advertising as part of a drive to recruit 100 new staff to its offices in the city. That’s no surprise, as the FinTech firm has pointed to “the city’s growing and skilled job market [and] its reputation as a budding technology centre’ as key factors behind the decision to set up shop there in 2019.
Investment in the future
Finally, what Adyen and Starling have in common is that they are both profitable businesses with established user bases and relatively predictable revenue streams.
Unlike early-stage FinTech startups that rely on venture capital investment to sustain their business and drive growth, Adyen is publicly traded and had a net profit of €282.1 million ($287.1 million) in the first half of 2022. It is a margin that gives the Dutch payment company the opportunity to invest in the talent needed to continue to innovate and develop new products.
Starling, on the other hand, has yet to go public, but is certainly headed for an initial public offering (IPO). Last November, the company’s chief executive Anne Boden told reporters that an IPO was “a year or two away”, adding that in terms of IPO location, London would “be the default option unless we are convinced otherwise”.
Also, after posting its first full year of profitability in July, Starling doesn’t need to pursue additional rounds of funding just to keep the business going. The bank said the latest £130.5m ($151.7m) fundraising from existing investors in April was earmarked to build “a war chest for acquisitions”.
And with Starling looking to expand its banking-as-a-service platform, Engine, the new money can’t hurt its research and development programs either.
More about this: 5 things to know about Starling’s Banking-as-a-Service product, engine
Finally, with other companies laying off employees and implementing hiring freezes, recruiting campaigns face less competition and there is a greater opportunity to pick up recently redundant but qualified talent eager to find a new professional home in this tough economic environment.
And for firms going against the grain, despite the current macroeconomic headwinds and a potential European recession, the decision to hire now could well pay off in the long run.
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