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Get Ready for a Talent Migration From Banks to Fintech Here's what that means for the already flourishing fintech ecosystem.

By Phillip Klein

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Marquee brands in financial services and technology as separate entities are losing employees to the fintech industry, a fast-moving combination of the two fields. Fintech is attracting and retaining the best talent out there, while banks are struggling to cater to a new generation of finance talent focused on innovation. The tradition of banks as the "face" of finance is waning, and banks may eventually become the regulated back-end infrastructure for the new face in fintech.

Risk mitigation and capital driving the shift

Just to be clear, this is not a COVID-19-related shift. Long before buzz-phrases like "The Great Resignation" began to dominate the news around talent and the future of work, an uprising by the rising stars in financial services was already occurring, with a notable migration toward fintech by some of the brightest.

One of the most important factors driving this change is the decreasing risk of fintech. Success stories such as Plaid and Klarna have helped to improve the perception of the sector as stable. Coupled with significant capital flowing into fintech, the opportunities for growth and upside became clear. Importantly, these strong capital flows allow many fintechs to offer employee packages rivaling those of highly compensated career bankers, an important factor for aspiring talent that's on the move.

Related: How Fintech is Changing the Face of the Stock Market

The cutting edge

Another key factor is the sheer thrill of being at the very cutting edge of technology. The speed at which technology is advancing in the fintech space is truly exciting, as many fintechs carve out a space for themselves in the history books. Prospective employees now enjoy a perceived level of comfort working for a fintech, while benefiting from the excitement and progressive perks of a startup.

Some of the success is due to fintechs having been well-positioned to embrace the hybrid workplace, with many already having supported remote working policies and other flexible paid time off policies, such as unlimited annual leave, before COVID-19. The pandemic also saw many workers move away from major cities to pursue roles with firms that have remote or more flexible working policies. While the pandemic may have accelerated remote working for more traditional organizations, fintech was ahead of that game. As we move into a post-pandemic world wherein some banks are already pushing for pre-pandemic operational models, the fintech industry is seeing the benefit of employees who enjoyed their taste of greater work-life balance and are unwilling to revert.

Key implications

Studying the industry as a whole, this shift could result in further innovation in the fintech space, as top talent migrates toward it. In particular, we could see more emphasis on offerings that expand access to financial services. While the start of 2022 has been met with the return of market volatility, we're likely to continue to see more partnerships between banks and fintechs, as well as more immediate M&A activity, as fintechs continue to develop increasingly exciting offerings for banks. A great example of this is how FinLync is aggregating bank APIs.

Another positive implication of talent migration is the incoming diversity of hires, which equates to diversity of experience. Fintechs need this greater diversity, including the experiential wisdom of veteran bankers, which is hard to substitute for.

Additionally, the offer of greater work-life balance for the industry is particularly important for women and parents, who often carry a heavy load of caretaking responsibilities outside of the office and struggle to remain in traditional financial services settings. This is a huge win-win for both parties, as fintechs can build and retain strong, senior teams while promoting diversity and inclusion. Meanwhile, talented senior employees have the opportunity to pursue work that is meaningful to them without sacrificing a big paycheck or their ability to support personal responsibilities.

Related: Breaking Down Small Business and Retail's Shift to Fintech

Building on traditional banking careers

The celebration of fintech is not intended to denigrate a traditional financial services career. Fintech companies find great value in traditional banking and the record of industry leaders being open to innovation, such as the many firms embracing open banking and creating many exciting API offerings.

Additionally, a background in traditional financial services is very useful, if not critical, to a successful career in fintech. Corporate banking, for example, is a space ripe for innovation, but due to its complexity, it can take a decade working on the ground to deeply understand it. Hands-on experience in industries like this can help make fintech solutions more impactful.

With this acceptance model, we can expect to see a significant shift in talent in the coming years. PwC has already announced a plan to boost headcount by 100,000 over five years, and digital transformation has further increased the need for talent.

The broader implications of this talent shift are encouraging. We will see a more flourishing financial technology ecosystem as traditional financial services and exciting innovations continue to meet in new ways.

Related: How Europe Became the Stage for a Fintech Revolution

Phillip Klein

CEO and Co-Founder

Phillip Klein is the co-founder and CEO of FinLync, a global fintech company founded in 2015 with a mission to give corporate treasurers and finance professionals complete, direct control of their data.

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