The UK Fintech sector is booming but facing a recruitment challenge
As an entrepreneur and venture capitalist investor, I have a strong interest in the UK Fintech sector. Levels of investment in the sector remain high, despite ongoing Brexit uncertainty.
Research shows an increase in investment, but also cites concerns regarding recruitment of specialist talent. Here’s my take on some interesting new research from EY in conjunction with Innovate Finance.
Higher than ever levels of investment in the UK Fintech sector
According to the research, UK Fintech companies raised a third more average investment so far in 2019. Compared with figures from the last time the research was conducted in 2017, the sector raised a total average of £20 million by September 2019.
In 2017, the average amount was £15 million. Over the next funding round, the sector expects to raise a total amount of £2.6 billion worth of global investment. Series A funding, which is the first stage of venture capital funding, accounts for 26% of this amount.
So far, despite the ongoing saga of Brexit, the uncertainty doesn’t seem to be concerning global investors interested in the UK Fintech sector. However, the data does show that Fintech companies themselves are worried about the increasing difficulties of finding talented staff.
Is Brexit to blame for recruitment challenges?
The report shows 42% of Fintech company owners are worried about the Brexit effect on the dwindling pool of talent. Concerns have been mooted by a number of business organisations within the sector that the UK stands to lose its places as the number one Fintech leader in Europe following Brexit.
There are also massive concerns about losing access to the huge amount of talented European staff. While there is much to remain uncertain about regarding Brexit, it does seem that freedom of movement is set to end imminently. This will make it even more difficult to find and retain key talent in a sector that needs specialist skills.
Leaders within the Fintech sector have also warned the Government not to “be complacent” about the sector’s success over recent months. They want the Government to understand how important recruitment of key talent is to the future of Fintech in the UK.
Seeking suitable talent remains number one challenge
Out of the 224 UK Fintech firms surveyed in the research, 53% say that their biggest challenge lies in recruiting suitable talent. They’re looking for skills such as software development, software engineering and system architecture. And there is a dwindling pool of experienced and talented people at the right level.
There is also an issue with gender imbalance within the UK Fintech sector that must be addressed. Analysis shows that the workforce is split between 79.5% male employees, and 29.5% female. The last time the research was carried out in 2017, figures remained pretty much the same. It’s disappointing to see no change at all in redressing the gender imbalance in the sector.
The contrast is even more stark when we look at Fintech founders. Just 25% of UK Fintech firms have one female founder. About 10% of firms have an equal number of male and female co-founders and a tiny 2% have founders solely consisting of females. This is something I would very much like to see addressed in the coming years. For the Fintech sector to properly reflect the diversity of this country, we need to do more to encourage women to be part of it.
Gender imbalance must be redressed within the UK Fintech sector
I agree with the head of Fintech at EY, Tom Bull, who remarks that his company’s report shows that there is a lot to be done to redress the gender imbalance within Fintech. While there have been a number of initiatives run by the industry and by the Government in an attempt to do so, clearly these are not enough.
On a personal note, I really hope that the Fintech sector will continue to thrive, and to widen its horizons in terms of the talent it attracts. Recruiting within the industry has always been challenging, due to the specialist skills necessary. When the UK has finally left the European Union, there is no doubt that recruiting will be even more difficult.
Europeans who want to live and work in the UK will be subject to new Visa procedures and much more red tape. This could feasibly put people off coming to work in the UK Fintech sector, and is something that the Government needs to address.
High global investment levels are undoubtedly positive news for the UK Fintech sector. However, it’s vital that we don’t sit back and expect this to continue with such an uncertain economic future. Fintech plays a major part in the economic journey for the UK, and the Government and industry must move now to ensure future growth.
