Financial services and technology marquee brands are losing employees to the fintech industry, a fast-moving combination of the two fields. While banks struggle to cater to a new generation of finance talent focused on innovation, fintech is attracting and retaining the best talent available. Banks’ traditional role as the “face” of finance is fading, and banks may soon become the regulated back-end infrastructure for the new face of fintech.

Risk mitigation and capital driving the shift

To be clear, this isn’t a COVID-19-related change. Long before buzzwords like “The Great Resignation” began to dominate news about talent and the future of work, an uprising of rising stars in financial services was already underway, with some of the brightest moving toward fintech.

The decreasing risk of fintech is one of the most important factors driving this change. Plaid and Klarna’s success stories have helped to improve the sector’s image as stable. The opportunities for growth and upside became clear as significant capital flowed into fintech. Importantly, these strong capital flows enable many fintechs to offer employee packages comparable to those of highly compensated career bankers, which is an important consideration for aspiring talent on the move.

The cutting edge

Another important factor is the sheer thrill of being on the cutting edge of technology. The rate at which technology is advancing in the fintech space is truly exciting, as many fintechs carve out a place for themselves in history. Prospective employees now perceive a level of comfort working for a fintech while benefiting from the excitement and progressive perks of a startup.

Some of the success can be attributed to fintechs’ readiness to embrace the hybrid workplace, with many already supporting remote working policies and other flexible paid time off policies, such as unlimited annual leave, prior to COVID-19. As a result of the pandemic, many workers relocated away from major cities to work for companies that have remote or more flexible working policies. While the pandemic may have hastened remote working for more traditional organisations, fintech was already ahead of the curve. As we move into a post-pandemic world where some banks are already pushing for pre-pandemic operational models, the fintech industry is benefiting from employees who have had a taste of greater work-life balance and are unwilling to return.

Key implications

Looking at the industry as a whole, this shift could lead to even more innovation in the fintech space as top talent migrates there. We may see a greater emphasis on offerings that increase access to financial services. While the beginning of 2022 has seen a return of market volatility, we’re likely to see more partnerships between banks and fintechs, as well as more immediate M&A activity, as fintechs develop increasingly exciting offerings for banks. FinLync’s aggregation of bank APIs is a great example of this.

Another positive implication of talent migration is the incoming diversity of hires, which equates to diversity of experience. Fintechs need this greater diversity, including the experiential wisdom of veteran bankers, which is hard to substitute for.

Furthermore, the industry’s offer of greater work-life balance is especially important for women and parents, who frequently carry a heavy load of caregiving responsibilities outside of the office and struggle to remain in traditional financial services settings. This is a huge win-win situation for both parties because fintechs can build and retain strong senior teams while also promoting diversity and inclusion. Meanwhile, talented senior employees can pursue meaningful work without sacrificing a large salary or their ability to support personal responsibilities.

Building on traditional banking careers

The celebration of fintech is not meant to diminish a career in traditional financial services. Fintech firms place a high value on traditional banking and the track record of industry leaders who are open to innovation, such as the many firms that have embraced open banking and created numerous exciting API offerings.

A background in traditional financial services is also very useful, if not essential, for a successful career in fintech. Corporate banking, for example, is ripe for innovation, but due to its complexity, it can take a decade of hands-on experience to fully comprehend it. Hands-on experience in such industries can help make fintech solutions more effective.

We can expect a significant shift in talent in the coming years with this acceptance model. PwC has already announced a plan to increase headcount by 100,000 over the next five years, and digital transformation has increased the demand for talent even more.

This talent shift’s broader implications are encouraging. As traditional financial services and exciting innovations continue to intersect in novel ways, we will see a more vibrant financial technology ecosystem.