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A Tech Talent Windfall
Turmoil in the fintech space could have banks gaining ground in the war for tech talent.
Several fintechs recently announced that they’ll be cutting anywhere from 5% to 20% of personnel. On June 14, Coinbase Global let go of 18% of its staff — around 1,100 people. The cryptocurrency exchange brought on more talent to keep up with growth at a pace of around 200% year-over-year, wrote Coinbase CEO Brian Armstrong in a note to staff. “[I]t is now clear to me that we over-hired.”
On a smaller scale, the retail banking platform Amount laid off 18% of its workers later in June. That’s around 72 people, according to TechCrunch, despite hitting unicorn status — a valuation of $1 billion or more — last year.
Venture capital firms have pumped a lot of money into fintechs over the past two years. “The instruction that came with those checks was, ‘We want you to grow as quickly as possible,’” says Alex Johnson, creator of the Fintech Takes newsletter and former director of fintech research at Cornerstone Advisors.
Fintechs staffed up to deliver that growth, hiring engineers, product designers, behavioral scientists, academics and the like. But now, fintech valuations “have come crashing back down to earth,” says Johnson. “The instruction now from those same investors is, ‘We don’t want you to grow. We want you to get to profitability as quickly as you can, and extend your burn rates and be prudent.’”
The result? Thousands of tech professionals are now on the market.
Banks have struggled to compete with technology companies in the war for talent. In Bank Director’s 2022 Compensation Survey, 39% report that their bank plans to hire technology personnel in 2022. Almost a third say these positions have been among the most difficult to fill over the past two years.
Most banks have struggled to compete for this talent because they’re less likely to offer stock-based equity compensation and even then, “there’s not an expectation that the stock is going to go crazy in terms of jumping up in value,” says Johnson. Compounding that has been the industry’s risk-averse and conservative reputation.
Now, fintech has lost some of its luster, and the banking industry’s stability and profitability is giving financial institutions “the best chance they’ve had in the last 3 to 5 years” to recruit new technology talent, says Johnson.
And it all starts with that one strategic hire, Johnson adds. He advises banks to identify a key area for technology enhancement and attract a senior individual who’s given the autonomy to attack the problem. “That can be a good way to get the snowball rolling down the hill,” he says. “What I’ve observed at other fintech companies is you make one of those hires and then all of the sudden, a year later, you’ve got 15 of the best people that you never could have recruited all by yourself.”
• Emily McCormick, vice president of research at Bank Director
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