The Fintech Slump gives banks a good chance to close the talent gap
The job planets have aligned, giving banks and credit unions a window to ease their long-running struggle to attract the kind of tech-savvy talent they need to meet rapidly rising customer expectations.
The opportunity comes at a crucial time as the industry accelerates its transition to modern technology in everything from artificial intelligence software to core cloud computing.
Recent layoffs in the fintech sector combined with a looser, more tech-friendly culture and rising pay rates in banking are luring some workers to take a harder look at banks and credit unions.
A window opens:
Banks and credit unions have a rare opportunity to redirect the flow of tech talent, due to layoffs among fintechs.
Based on the applications they see flowing through their systems, tech job seekers are applying for banking positions “at an aggressive rate,” says Art Zeile, CEO of DHI Group. The financial brand. He recommends that banks and credit unions double their recruitment efforts and keep a close eye on layoffs in technology companies. “I would use that as my hunting list,” he says, referring to layoff announcements.
Big opportunity for banks in Fintech layoffs
Several prominent fintech companies announced notable layoffs in recent months. In June, Coinbase announced that it was laying off 18% of its workforce, roughly 1,100 employees. Robinhood announced a 9% reduction in April, followed by a massive 23% reduction in August. Even fintech giant PayPal set up its security R&D team to focus on new technologies.
While these layoffs are more company-specific than an industry-wide cutback in fintech, they add to the potential talent pool for banks, Zeile observes.
Read more: Grow or Die: The Ultimatum Facing US Banks
Across the banking industry, companies are hiring an increasing number of technologists with skills in automation and software engineering, according to a report by Dice, a subsidiary of DHI. Among the growing technical job postings in finance, some of the most sought-after occupations include full-stack engineers, back-end engineers, and DevOps engineers. Listings for software engineers, the most in-demand technology job in financial services, grew 28% between January and May.
Most sought-after tech jobs in finance
Source: Dice
Top technical skills in finance
Source: Dice
The top finance-related technology skills, according to Dice’s data, reflect the increasing migration of banks to the cloud.
Overall, the flow of tech talent has flowed increasingly from banks and even big tech to fintechs, a trend that accelerated during the pandemic, according to data compiled by workplace intelligence company Revelio Labs. Monthly job changes peaked in March 2022, the highest figure since records began in 2011.
As in many other industries, workers reassessed their lives and goals during the pandemic – and career opportunities are no longer just about money. Work-life balance and better career prospects are also key drivers, Lisa Simon, economist at Revelio, said in an interview with Bloomberg. “People have stopped and reassessed what is important to them,” Simon said.
While the recent spate of fintech layoffs won’t reverse the broad trend, it does provide a timely opportunity to at least pick up some key talent.
Read more: How to survive banking’s biggest threat: staffing
Looking for talent to build the banking user experience
The intensifying war for talent will continue to be one of the top trends in banking, says Accenture. As banks search for technology workers, they seek skills with a focus on innovation and user experience.
Zeile, who sits on the board of a public bank, notes that many banks and credit unions are more focused on “client-facing” software development that requires more talent focused on the front-end experience. “The banking industry is trying to fix a user experience problem. They’re trying to get engineers to focus on the interface and the web experience.
At the same time, they are also trying to do more quantitatively with internal data analysis because they realize that it will lead to a better experience and allow them to create strategies around their growth, says Zeile. That’s a tall order in terms of skill sets.
Large banks have significantly increased the hiring of technical talent over the past year. In early January 2022, TD Bank announced it would add more than 2,000 technical positions to focus on automation, machine learning, cloud and DevOps.
In addition, Citi announced in June 2022 that it is seeking more than 4,000 technical workers to capitalize on a “digital explosion.” “We’re trying to digitize as much of our customer experience as possible, front and back, and modernize our technology,” Jonathan Lofthouse, Head of Markets and Enterprise Risk Technology, said in an interview with The Business Times.
Read more: Banks are all Fintechs now (or soon will be), but do they have the right talent?
Could “Stability” be the new hook for banks and credit unions?
Banks and credit unions have often struggled to attract tech talent because their traditional cultures didn’t align with those of tech workers. Fintech’s cool culture and excitement gave them an upper hand in recruitment, but banks and credit unions can be more attractive in uncertain economic times.
While younger techies may be willing to take a risk with startups, more mature workers with families may find more security in traditional banks as fintech companies come under financial pressure. “Anybody thinking about their career right now needs to think twice about fintechs and their financial means at this point,” observes Zeile.
Not everything has changed:
The security of a traditional financial institution is suddenly a big plus. But today’s technology workers still expect a hybrid working arrangement.
This can put banks and credit unions in a better position, especially if they have the right culture. JPMorgan Chase CEO Jamie Dimon said in 2021 that telecommuting is “not working,” and he still feels that way. Still, he said in a letter to shareholders that “working from home will become more permanent in American business.”
Read more: 3 Ways Any Financial Institution Can Move at Fintech Speed
The banks need at least a hybrid working environment, states Zeile. He notes the clichéd notion of a technologist who wants to wake up at 10 a.m. and code from home in shorts until 8 p.m. Expecting these workers to keep bank hours and show up at the office in suits will only limit the bank’s ability to recruit and retain them.
Banks and credit unions that want to attract these workers must offer a hybrid work environment, flexibility and a loose dress code. “Those are three attributes that are important to technologists, and I think a lot of things have moved in that direction,” he notes. “They really want to show up in shorts and T-shirts and flip-flops.”
While many banks already offer a decent compensation package, they may increase it as soon as rising interest rates increase margins. Some banks and credit unions may also find it a wise move to break up technology departments to meet cultural needs.
Zeile notes that the bank whose board he sits on is headquartered in Denver and opened a separate operations center in Kansas City for its technology workers. “They let them have their own little satellite office in Kansas City where they can do whatever they want,” says Zeile. “That flexibility has really worked well for them.”
