Fintech businesses plan a hiring spree

Fintech enterprises suffer with shortfalls in talented labour and difficulty in retaining those they have

With new opportunities emerging constantly, businesses need strategies to secure their workforce.

The size of the problem

The Chartered Institute of Personnel and Development (CIPD) recently estimated that the real cost of replacing a typical employee in the industry to be around £6,125. A similar estimate from the Center for American Progress puts it at 20% of the person’s annual salary. Neither figure includes the impact of an unfilled vacancy, which according to the Society for Human Resource Management is typically around 42 days. As financial institutions face up to challenges from Brexit, security threats, new technologies and over-regulation, many will fail to adapt quickly enough without adequate talent in place.

The average time that an employee stays in their job is where the problem really lies. Turnover in the banking and finance sector is estimated at 17.4% by Insperity, and 18.6% by a Compdata survey. The figure has been deteriorating steadily for a long time. In 1995, the average time an analyst stayed in their post was 30 months.

It had declined to 26 months by 2005 and to 17 months by 2015. PayScale’s employee turnover report confirms that Fortune 500 IT enterprises have worse employee retention than any other sector, while a Price Waterhouse survey found that no less than 48% of employees are actively looking for opportunities elsewhere.

It has little to do with salaries: the highest median salaries are paid by companies like Google and Amazon, who also have the worst retention rates. Perhaps this is why Google is known for its generous provision of ping-pong and pool tables, video games, swimming pools, gyms and free hair-cuts – but it doesn’t seem to work.

The UK has a leading position in fintech enterprise, and consequently, its exposure is greater. Some of our dynamic new enterprises include Iwoca, Atom, Monzo, Suade, Onfido, MarketInvoice, ClearBank, Cleo, Datasine, Post Quantum, and 10x Future Technologies.

Finding solutions

Lending start-up Iwoca has revealed plans to procure more staff than it needs this year, in order to avert the risks and overheads of shortfalls later. The headcount will rise from 230 to 350 by the end of the year, with as many as 200 brought in specifically to avoid future HR shortfalls and the disruption caused by getting replacements up to speed in a complex enterprise.

The strategy is justified by consistently growing funding and opportunities for technology driven innovation in the financial industries. The proportion of insurance issues, underwriting, banking, payroll solutions and payment transactions conducted through purely digital operations can only continue to rise.

Employers should scrutinise the issues that are causing them to lose workforce loyalty. It will not be the same in every case. For some, it will be wage levels, but in others, it may be opportunities for training and promotion, poor conditions of employment, stressful KPI targets and so on.

Although the sector’s jobs are generally well paid, personnel and contractors are often stretched by high mortgage costs and car instalments, so introducing a prompt and flexible payroll system often diminishes the stress that leads employees to start trawling those jobs ads.

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