Fintech layoffs hiring opportunity for banks, credit unions

Paul Davis, Director of Market Intelligence, Strategic resource management.

A surge in layoffs at prominent fintechs in recent months could help traditional financial services firms address staffing issues.

Upstart Holdings of San Mateo, Calif., recently laid off 140 people who processed loans. Chime, a digital bank in San Francisco, said it would cut 12% of its workforce, and Stripe, also in the San Francisco area, will eliminate 14% of employees, or about 1,000 positions. Blend, Brex and Varo have also let people go in recent months.

In most of these cases, the fintech companies cited a downward swing in market conditions. Many grew too fast, employed too many people and have to contend with intense investor expectations.

Upstart cited a “challenging economy” and reduced volume on its lending platform. Chime pointed to “current market dynamics,” while Stripe discussed “leaner times” looming.

As someone who keeps her finger on the pulse of the industry, I have several takeaways from this wave of announcements. We will undoubtedly see more cuts among fintechs of various sizes and stages of their life cycle. The cuts are likely to include processors, marketing professionals and other back office positions.

At the same time, more traditional lenders, many of which have already scaled back their mortgage operations, are likely to reckon with the reality of cutting jobs across other consumer loan businesses.

While the layoffs create more challenging operating conditions for traditional and non-traditional lenders, they can also create some fantastic opportunities for growth-oriented banks and credit unions willing to make countercyclical moves. I recently had an exchange with an executive at a mid-sized bank about fintech layoffs. Her enthusiastic response was: “Tell them to come my way. We’re hiring!”

I totally agree with her thinking. I think some banks and credit unions can scale up when others pull back. Many of them have already hit the brakes on acquisitions in favor of strategic hiring to enter new markets or expand into new industries. Those who do may be well positioned when market conditions improve.

“Wee Willie” Keeler, a member of Major League Baseball’s Hall of Fame who hit over .300 for 13 consecutive seasons, famously said the secret to his consistency was “keeping your eye on it and hitting them where they’re not.” In other words, you have the most success when you aim for the holes.

With that in mind, remember that the downsizing and withdrawal of some market participants will create service and product gaps that need to be filled. Demand may be decreasing in some areas, but it will not disappear completely.

There is a very good chance that many of these displaced fintech employees either work in the San Francisco area or work remotely. So you should be willing to have an open mind (and a plan of action) to offer work from home positions to these potential clients.

Are you looking for a technically knowledgeable loan officer? A marketer with social media experience? Call center employees? There are hundreds of people who have suddenly found themselves in the market. Now it’s time to give them a look.

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