Can banks take advantage of the wave of fintech redundancies?

Amid a nationwide labor shortage, exacerbated by the pandemic and the “big wave of resignations”, banks have struggled to attract technology talent in recent years, said Poorani Jeyasekar, director of the advisory and investment firm Klaros Group.

But with the latest wave of fintech layoffs, traditional financial institutions have an excellent opportunity to acquire new job seekers with technology and financial talent, Jeyasekar said.

High interest rates, rising inflation and a fall in stock market valuations have resulted in a decline in venture capital flowing into the fintech sector, which has contributed to a round of layoffs in recent months.

Digital Mortgage Lender Better.com has cut 5,000 jobs since December, according to Fast Company. The company received widespread criticism after the first round of layoffs, conducted over Zoom, went viral in December.

Amount, a Chicago-based banking technology provider that helps banks facilitate buy-now-pay-later financing, has cut 18% of the workforce, a spokesman for the company said last month.

Amount CEO Adam Hughes said the decision to pair the workforce was made in response to the current macroeconomic environment.

“[W]”I have decided to make some proactive adjustments to ensure that Amount’s ability to thrive in the years to come,” Hughes said in a statement on the layoff.

Other fintechs and payment companies that have downsized the workforce the last few weeks include PayPal, Klarna, Bolt and Coinbase.

In the midst of layoffs, banks should consider hiring technologists who are specifically focused on artificial intelligence, machine learning and computer science, Jeyasekar said.

“[Financial institutions] sitting on a lot of data that exists within screened business units today, “she said, adding that bank directors may have” a good vision “, but not necessarily the right talent to carry out that vision.

“Fintechs has used AI and machine learning to develop credit guarantee data models, run efficient operations and predict customer behavior to name a few. CIOs can use this as an opportunity to hire AI / ML talent to carry out their vision,” she said. to.

As more fintech talent becomes available, banks should also consider the customer experience expertise employees with fintech experience can provide to a bank, Jeyasekar said.

“Traditional FIs have been behind in customizing financial services and products,” she said. “Fintechs has done a fantastic job of understanding customers ‘pain points and personalization. The reason behind fintech’s success is to have strong product managers who take into account customers’ pain points, behaviors and work with the technology team to deliver personalized solutions.”

Traditional banks can use this opportunity to hire product managers who understand the Millennial and Gen Z customer, and who know how to customize products for that demographic, she said.

When looking at fintech talent, banks should also consider bringing these workers into their innovation teams to help the institution identify better ways of working, Jeyasekar said.

“Most traditional financial institutions have set up separate innovation teams to come up with new products and services that compete in the fintech market,” she said. “The purpose of separating the innovation team is to separate the old ways of working from the new ways and give the teams the freedom to experiment and learn, and to create an innovative culture. Fintech talents are used to working in an innovative culture and collaborative team where new ways of working are rewarded. “

But not all job seekers with fintech backgrounds will suit a bank well, said Oliver Rolfe, founder and CEO of Spartan International, an executive search and consulting firm based in London.

“If a person who has been released has never worked in the banking industry and is experienced, the chances of them crossing are more limited,” said Rolfe, whose firm focuses on global equities and investment banking management, as well as fintech. “While an experienced person who has previously worked in banking, and has not been out for too long, would have a greater chance of making the transition. On the junior front, there are several opportunities for change and transition from one to another. “