The future of finance sits at a precarious juncture.
Over the past few years, banks, trading houses and financial services providers – small and large – have become completely reliant on financial technology. The result has been more competitive, safer, and most transparent markets. It seems difficult to see how such progress could be sustainable.
There’s a massive hole in the market.
By 2030, the UK fintech sector will face a 3% workforce gap, or a shortage of around 3,200 highly-skilled tech workers, according to research by Innovative Finance, a not-for-profit industry association. According to EY, in 2016 there were 57,000 open fintech positions in New York alone. Perhaps one of the most innovative financial regulators – the Monetary Authority of Singapore – has stated previously that it recognises the need to help meet a growing demand for fintech recruits.
In San Francisco in 2015, the fintech workforce reached 74,000, but in the same year, $3.7 billion in fintech investment flowed into the sector, according to KPMG. The need for programmers and developers to make use of that investment has led to job boards lighting up across the city.
Think about the huge range of benefits fintech has brought to financial services: loud technology, process and service externalization, robotic process automation (RPA), advanced analytics, digital transformation, blockchain, smart contracts, artificial intelligence and the internet of things (IoT). That’s not including quantum computing – widely tipped to be the next stage of development in financial services.
All of these things have changed the nature and structure of financial services, for the better. The regulatory onslaught that spawned from the global recession, which brought with it weighty and expensive compliance burdens, would have been a struggle for most market participants had they not utilised leading edge financial technology. And as markets have tightened over the past few years, the search for arbitrage would have been a wasteful hunt had it not been for risk management systems capable of intelligent and algorithmic models based on machine learning.
Should these advances dry up and the pace of technological development begin to lag, markets may find themselves in trouble. So entwined have financial services become with the technology that serves them, the risk of a divergence between the two would have a seismic impact on markets.
The technology is – currently – there.
Many of the market leading developments in the fintech arena have been adopted widely. But the problem of a lack of personnel is felt on both sides: without the necessary workforce to help develop systems and advance offerings, fintech vendors may find themselves struggling to keep up. It seems in some instances that is already the case. Within financial services, employing skilled workers to adequately make use of these systems on a daily basis will become an issue. On both sides of the market – and given the sophistication many of these processes require – a lag is already in shape, given the vast initial learning curve new recruits face before they can meaningfully contribute to the company.
And so maintaining a sustainable fintech talent pipeline has become a matter of no little importance, but work is being done to help. Across the globe, governments have created policy to attract talent from abroad, and fintech incubators have been established to foster talent.
At bobsguide, over the next few months we’ll be asking some of our thought leaders and the editorial board to produce educational articles and host live seminars to help inform the workforce of tomorrow. At this critical juncture for fintech - and the wider financial markets – building that workforce could be crucial.
The bobsguide Fintech Academy will be active from July this year. To find out more, get in touch.