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Fintech future of finance

Technological innovations will be the heart and blood of the banking industry for many years to come, and if banks do not make the most of it, the new players of FinTech and large technology companies will. - David Brear, Think Different group, ex-Head of UK banking for Gartner.

The future of financial services lies in FinTech. As the above quote alludes to, the inherent competitive and innovative nature of tech-first enterprises are driving the UK’s storied financial sector into the digital age, mostly by choice, but sometimes by necessity.

The digitising of financial services, driven in large part by an incredibly active and well supported financial start-up culture and digitally engaged populace, has created unheard of monetary accessibility and efficiencies through FinTech and FinTech influenced services.

The UK has been a stand-out leader in creating an environment of financial innovation, funding, and regulatory exploration - typified in the creation and subsequent global adoption of the world’s first financial Regulatory Sandbox - which has been furthered through rapid access to capital and seed funding; an established foundation of existing financial services; and a vibrant and talented financial and technical workforce, underpinned by elite domestic education and training.

However, as the Kalifa Review on UK FinTech reports, there are dark clouds on the financial horizon, including rising international competition and the ongoing effects of the pandemic on everything from pressured supply chains, to enterprise-wild digital transformation.

As many other specialist sectors across the UK, the biggest point of future contention lies with access to skilled labour. In this instance, specifically the growing lack of financial talent required to maintain FinTech - and by extension financial services as a whole - as a vital growth arm of the UK economy.

The pathways for talent to enter FinTech are essential to the future of finance and continued growth of the financial services sector, as the Kalifa report highlights:

➔ The (financial) sector’s direct GVA contribution to the economy is estimated to be £13.7bn by 2030, with job creation contributing to 70% of this.

The Kalifa report is a benchmark guidance document in support of our burgeoning FinTech market. They pin future FinTech success on three opportunities, all three of which hinge around the management of, training of, and development of people - a national embodiment of FinTech jobs and skills training; global trade and market reach; and sustainable, accessible recovery. These are then followed by a list of infrastructural and business-led recommendations to reach these goals including national connectivity, internationalism and regulatory improvements.

Why is there a tech talent shortage in the UK?

It’s less that there aren’t mature channels of development - the UK boasts an enviable and forward-thinking higher and further education community - it’s more that the compounding effects of COVID-19 created rapid demand for digital transformation, and as emerging novel technologies such as blockchain, AI and automation became mainstream, they created unprecedented demand for talented people.

And, like a snowball effect, the lack of digital tech talent is causing follow-on delays to the sustainable transfer of legacy enterprises online, the development of new technologies and, ironically, the training or reskilling of more people.

➔ “66% of digital leaders in Britain say that lack of talent is responsible for slower digital transformation in their organisations”,

➔ “Nearly two thirds of technology professionals believe employers need to be more open to the value of transferable skills from both inside and outside of the industry”,

➔ “The Learning & Work Institute says the number of young people taking IT subjects at GCSE has dropped 40% since 2015”.

It’s worth highlighting more of the Learning & Work Institutes findings, as they offer some clues as to how we develop more digitally engaged younger people.

“Learning & Work Institute's research reveals that 70% of young people expect employers to invest in teaching them digital skills on the job…(and) there are four main reasons why the digital skills shortage is steadily climbing across the country:

➔ A lack of clearly-defined job roles in certain fields,

➔ A lack of understanding and guidance about potential career paths,

➔ A lack of relatable role models,

➔ A difficulty in making many technical professions seem appealing to young people, especially young women”.

In short, developing skills and talented workers takes a holistic approach to building a community of mentors and inclusive working practises that can better define roles, and guide people on career pathways.

The Kalifa Report, FinTech Skills and Your People

Consider the following - “71% of the UK public are now using the services of at least one fintech company”. But when “67% of the UK’s fastest growing FinTechs consider talent to be a high priority”, the onus of almost every tech enterprise needs to be on their people, first. The UK public demands it.

Amongst other factors, the Kalifa report highlights FinTech skills development to be a mix of:

➔ Domestic educatory support via well positioned work experience, internships and learning and development through further education within Fintech environments first hand,

➔ Continued support of streamlined visa applications for foreign talent,

➔ Retrain and upskill our existing workforce.

Further research highlights where FinTech talent needs to excel: software development, blockchain, data analysis, cybersecurity, DevOps and Automation. All of which neatly parallel the pressures and requirements on either specialist tech industries, such as Logistics Tech, Health Tech, and Education Tech.

So when professionals in each tech sector share the same broad skill sets, how can employers attract and deploy these skills in specific sectors, such as FinTech?

We believe it's worth facing up to the changing nature of recruitment and career building in 2022 - balance what people want, what they need, what they value, and what gives them happiness in their work. This means taking a look at what drives people - our future - holistically, and in context.

What do people want from work?

The pandemic ushered in a wave of professional soul-searching. No matter what you called it - the great resignation, the great reset - there was, and continues to be as of writing, a global realignment of values in the wake of the pandemic. This has most acutely been felt in work, and many millions of people have taken a step back from their careers over the last 2 years and assessed what they need from their job, and what makes them happy.

The primary causes of employee dissatisfaction in the wake of COVID-19 - and some of the most important things to consider when creating employer value propositions and advertising any live roles - are:

Remote/hybrid Work - overwhelming popular in virtually every industry,

Hub and Spoke/Small office culture - smaller, more local offices replacing bigger, commute-heavy cultures,

The 4 day week - the end of post-victorian 5 day weeks as people become more productive in less time,

Ethics and sustainability rule - young people especially want to align with an employer’s values, and want to see themselves reflected in their company,

Hyper personalised performance management - when it comes to feedback, companies have to make it hyper targeted, personal and relevant. The yearly appraisal is dead.

Summary

The future of financial services looks bright.

The UK is tending towards digital ownership, orientation and connection with financial services almost exclusively online. This rapid shift to the digital has put enormous pressure on tech firms to continue offering great products, and to maintain a globally renowned UK-centric culture of FinTech success.

But a company is only as good as its people, and as enterprises look to shore up their digital transformation, or emulate the success of other FinTech organisations and use the UK’s now established sandbox, they have to focus on how, and where, their limited access to talent can make the most impact.


References:

https://www.bankofengland.co.uk/prudential-regulation/new-bank-start-up-unit

https://www2.deloitte.com/uk/en/pages/financial-services/articles/journey-through-financial-conduct-authority-regulatory-sandbox.html

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/971371/KalifaFintechReview_ExecSumm.pdf

https://techmonitor.ai/leadership/uk-tech-skills-shortage-digital-transformation

https://www.totaljobs.com/recruiter-advice/skills-shortages-in-the-uk-technology-industry

https://www.bbc.co.uk/news/business-56479304

https://www.huxley.com/en-gb/blog/2020/09/the-most-in-demand-skills-for-fintech/#:~:text=Skills%20needed%20include%20incident%20investigation,encryption%20methods%20and%20analytical%20skills.

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever

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