How FinTech Growth is Changing the Types of Tech Roles Needed

How FinTech Growth is Changing the Types of Tech Roles Needed

In the last 20 years, the financial services ecosystem has been completely transformed – and incumbents, focused on meeting regulatory requirements, have arguably been outmanoeuvred by younger, more fleet-footed organisations. By cutting overheads, improving accessibility and unbundling services, companies from Wealthfront to TransferWise and PayPal to N26 have developed new markets and seen explosive growth.

According to PwC disruption is taking place at scale with FinTech start-ups seeing a compound annual growth rate (CAGR) of 41% over the four years to 2017, with some $40bn cumulatively invested in start-ups over that period.

However, while FinTech businesses are naturally focused on technological innovation, that’s not to say that FS institutions aren’t also investing in tech. Doing so is a critical requirement of meeting the demands of today’s consumers, who expect ready access to information (across web and mobile) and high-quality customer service as standard. The choice that consumers are offered is perhaps best summarised as being between the reduced costs and enhanced services of new finance and the respectability and institutional status of traditional finance. Naturally, these changes are reshaping the jobs market.

“It’s clear to Empiric that the FinTech ecosystem is transforming recruitment in financial services” says Mark Stevenson, Data Manager at Empiric and creator of Data! Data! Data! blog. “It’s opening up a plethora of new and varied data and AI job opportunities at both FinTech start-ups and traditional financial services players.”

Robo-advisors will be managing $8tr worth of assets by 2020

The single field that perhaps has the greatest transformative potential for FS is Artificial Intelligence. Best viewed on an application-by-application basis, the technology is being used for everything from fraud detection (identifying anomalous patterns of behaviour) to customer service (understanding customer queries and providing useful, meaningful information in return), while companies like Palantir are using algorithms to do everything from tracking terrorists and money laundering to making market forecasts.  AI may even solve the fundamental challenge of Big Data by automating the analysis of large datasets and providing easy-to-digest insights and market forecasts without human intervention.

As investment firms switch from human judgment to mathematical modelling and on to automated trading, the role of Quants is only going to get bigger – and robo-advisors are expected to have $8tr in assets under management by 2020 (up from ‘just’ $100bn in 2015). AI can analyse dozens of indicators and data points and then complete trades in a fraction of a second – something that it would be impossible for a human being to achieve.

Based on this, AI and machine learning are set to have a seismic impact on headcounts in FS – with an estimated 230,000 jobs forecast to be cut by 2025, including 90,000 in asset management and 58,000 in securities services. Over the same period, however, some 27,000 technology and data roles are predicted to open up, as firms automate functions and set algorithms to work.

Smaller, more nimble firms are likely better placed to apply algorithms and make innovative use of data – think Wonga or Kreditech, which look at a wide range of indicators when scoring the creditworthiness of borrowers. However, in the long-run, larger firms have access to more customers, more history and more data and hence, theoretically, have a much greater opportunity, using these advances to power optimised interest rates, personalized service and increased profitability.

Embracing a DevSecOps culture is vital to promoting and ensuring security

Following the Equifax hack – in which the personal details of 145.5 million people were stolen – security is an increasing focus across FS. What’s more, GDPR makes businesses legally liable for the theft of data – meaning security threats must be taken extremely seriously. Businesses have historically complained of a shortage of talent, but an industry-wide commitment to increased funding will hopefully begin to bridge this gap.

However, while a significant security incident could cause irreparable reputational damage to a start-up, traditional businesses also have a great deal to lose from cyber crime – as proven by the Bangladesh Bank robbery (in which $101m was electronically stolen in a heist that aimed to make away with over $1bn). Given this threat landscape, security is an increasing priority at all levels, so we can expect to see a far greater demand for CISOs in future, while more and more organisations begin to embrace a DevSecOps culture.

AI & data is key to exploiting opportunities from the billions currently outside the traditional banking ecosystem

Blockchain is also set to have a big impact over the next decade. Though the soaring (and plummeting) value of Bitcoin has attracted headlines, the advent of open, distributed ledger technology has an enormous and perhaps greater potential, allowing disparate partners and organisations to create shared records and to definitively authenticate transaction histories.

Perhaps the greatest opportunity is to extend financial services to the billions of people around the world who currently exist outside the traditional banking ecosystem; and to remove friction – and costs – from transactions. Hence, while institutions are increasingly curious about the opportunities presented by the technology, and demand for talent is significantly outstripping supply, the greatest innovations may well come from industry outsiders. And there’s no doubt that there are a widening range of specialities touching the FS industry.

As Mark Stevenson says, “It is worth noting that behind all of these impressive innovations is a workforce comprising highly skilled individuals whose key attributes don’t feature on traditional job specs. This could result in an overhaul of recruitment processes as new roles and requirements take priority.”

Looking ahead, individuals across all roles are advised to prioritise data manipulations skills and their knowledge of AI tools, enabling them to automate tasks and quantify inputs and outputs wherever possible. Just as traditional financial institutions are embracing digital transformation in order to remain competitive, individuals will need to develop themselves on an ongoing basis to seize the opportunities, and to overcome the challenges, presented by the digital landscape.