Is fintech losing its luster for career changers?
For years, technology companies have sought to woo senior employees from traditional industries, offering them both the opportunity for a leading role in future technology and highly competitive pay.
“The reason people wanted it [join such companies] is that they promised high salaries and huge amounts of shares, says Sam Burks, managing director of recruitment agency Nicoll Curtin. “Even if they didn’t end up going public, they could still end up being worth a lot more money in five or 10 years.”
And the job offers came as the valuations of these companies outperformed rivals in other sectors by multiples. San Francisco-based payment provider Stripe had a price tag of $95 billion in June 2021, while its UK counterpart Checkout.com was valued at $40 billion in January. In contrast, the British high street lender NatWest, one of the largest banks in the country, has a market value of around $27 billion.
But the changing economic tide has made investors increasingly bearish on the technology sector. That, in turn, has forced major players to make severe cuts as they try to prove to potential financiers that they have a path to short-term profitability.
For executives on their way to executive MBAs – which some see as a stepping stone to a career change – the technology sector continues to offer opportunities for exciting roles at the forefront of innovation. But in this climate, executives considering such moves need to be more careful about which companies they choose, some recruiters warn.
Reversal of fortunes: Silicon Roundabout, London’s fintech hub, has lost its appeal for some © Jason Alden/Bloomberg
Geopolitical tensions and a likely recession have hit consumer spending, with rising food and fuel prices causing households to tighten their purse strings. Big names in sectors that flourished in the low interest, high e-commerce period of the pandemic — such as crypto and “buy now, pay later” financial services — have had to make swing cuts.
In London alone, at least 4,300 start-up workers have been laid off since the start of the pandemic, according to Layoffs.fyi, a dashboard that tracks layoffs in the sector. About a fifth of these were from fintechs such as investment app Freetrade, income-based finance provider Uncapped and SumUp, which provides payment services for small merchants.
“Some of our more established and long-term clients have had hiring freezes and their revenue and profits have been impacted by the slowdown and downturn in markets globally,” said Alison Power, co-founder and director of resourcing at Finiti Search, which recruits for global fintech sales teams.
The effect of that has been a reversal of a years-long trend, Burks says, with the world of traditional financial services looking more appealing. As interest rates rise, banks’ profits have continued to grow.
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“Many people [in fintechs] is moving back into the banking world, says Burks. “They’re happy to take a little less in total compensation to be in a safer environment, especially with everything that’s going on at the moment.”
This is echoed by a senior employee at a major bank, who says staff hired for technical roles had often ended up leaving to join fintechs – but the decline has slowed in recent months, reflecting the changing tide.
Burks says he has recently placed crypto and buy-now-pay-later individuals in traditional financial institutions with lower base salaries because they sought stability — though some still took the plunge in the opposite direction.
Those hoping to make a career switch to fintech after an executive MBA are not without options. Investors continue to pour money into early-stage fintechs with low-cost business plans – which are less capital-intensive than mature, later-stage counterparts – and offer them a path to growth.
Simon Benson, founder and director of fintech recruitment specialists Wilson Grey, says he still saw staff being headhunted to these smaller companies from the big fintechs where they made their names.
“What’s attractive to a company with a Series A funding round is people who have made that journey before, proven talent who have been on that path,” he says, adding that attracting such people can appeal to potential investors.
For employees who joined a start-up after it was already established, there are also potential benefits to joining a newer company. “They get to help build something and get equity and options, and can use their experience to get a bigger piece of the pie,” notes Benson.
Power at Finiti echoes that point, adding that larger and more established fintechs are replicating the mistakes of incumbents when it comes to jobs.
“We often find that the hiring process is more rigid and they have less flexibility when it comes to offering something different to candidates without going through a lot of red tape,” she says.
