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In 2018, there was a 61% increase in fintech job creation within London from the previous year, per a new report by Robert Walters, making it the fastest growing sector for vacancies in the city.
Business Insider Intelligence
The significant number of fintechs within UK’s capital support this trend: London ranked second in fintech company concentration behind San Francisco. And when looking at the UK as a whole, fintechs’ hiring growth rate between 2017 and 2018 stood at 82%.
Here’s what it means: Fintech unicorns’ focus on expansion and VC attraction are partly driving growth in new fintech roles in the UK.
- The UK houses 25% of all fintech unicorns and their growth plans call for more talent. There are 29 fintech unicorns worldwide, seven of which are based in the UK, making the UK second only to San Francisco, which is home to nine. According to the report, UK’s fintech unicorns enjoy revenue growth and are increasingly focusing on expanding internationally, with examples including TransferWise, Revolut, and OakNorth. To support their expansion efforts, these firms require additional headcount.
- There’s significant demand for IT professionals, in particular. Over 30% of jobs in the UK’s fintech industry are for IT-related roles, compared with 24% in 2017. And fintech unicorns’ hiring for IT professionals increased 74% year-over-year (YoY). The surge in roles for IT talent comes as no surprise given fintechs’ focus on digital capabilities and innovation.
- VC funding continues to flow into London. Thirty-nine percent of Europe’s VC investment is flowing into the UK’s capital. And part of this funding is used to add staff, helping fintechs further grow their operations.
The bigger picture: Healthy growth in hiring can help the UK’s fintech scene broaden its reach across products and geographies, and pose a greater threat to banks — but Brexit-related uncertainty could hamper this upward trend.
- To better compete with fintechs, banks should up their hiring, especially within IT.With the hiring growth rate within banking at 17% compared with 82% for fintechs, and the growth of IT vacancies at 26% for banks compared with 37% for fintechs, it’s becoming apparent that financial institutions should up their hiring game. This would enable them to better compete with fintechs, which pose an increasing threat to banks as they broaden their product suite and lead in digital innovation.
- But hiring growth numbers could be dampened by Brexit and uncertainty surrounding it. Both fintechs and banks should look for ways to bridge the talent gap from a potential “hard-border Brexit." That’s especially true within the IT sector, as 25% of IT professionals come from outside the UK. The report also estimates that for certain IT specialisms, salaries have increased between 6% and 8%, likely as fintechs in the UK strive to stay an attractive option for the right tech talent.
Here’s the industry’s opinion, as told to Business Insider Intelligence:
“London’s vast pool of financial and technology talent and positive regulatory environment has made it a leading hub for fintech, attracting entrepreneurs from around the world. This has created an incredibly deep and rich fintech industry tackling challenges from small business lending to new models of consumer banking. As many of these fintechs mature into global businesses and achieve unicorn status, we see companies emerging in exciting new areas, such as insurtech. Brexit has the potential to impact the movement of people, and access to excellent talent will continue to be an important contributor to the industry’s development.” — Luca Bocchio, Accel investor
“From the ever intensifying activity within London’s fintech scene, we see a direct translation on the demand of skillsets across engineering, design, and sales and across the financial services domains such as banking, payments, insurance, capital markets, and market infrastructure. The city’s embrace of financial technology startups and scale-ups is imperative to remain a competitive, and attractive, place for high-grade talent despite Brexit.” — Aman Cheema, B-Hive innovation lead
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- TransferWise is in talks to raise another $300 million — putting it at a $4 billion total valuation
- Tandem and Monzo are aiming to close fresh funding rounds
- Santander is focusing on digital spend to keep pace with consumer-centric neobanks