" class="no-js "lang="en-US"> EXCLUSIVE: "Can innovation solve the fintech talent crisis?" - Dexter Cousins, Tier One People in 'The Fintech Magazine'
Thursday, December 01, 2022

EXCLUSIVE: “Can innovation solve the fintech talent crisis?” – Dexter Cousins, Tier One People in ‘The Fintech Magazine’

Success creates its own problems. Dexter Cousins of Tier One People offers solutions to one of the most pressing

Ask any business leader about their top three challenges right now and talent is likely to feature among them. Record low unemployment, the great resignation, remote workers, soaring salaries and a global skills shortage have created the most complex talent crisis in the modern era.

Business leaders are pleading with government and the education sector to solve the problem. But with technology and business changing so fast, any help they provide could take years to produce any tangible benefits.Many business leaders I speak to feel helpless right now. But what if you could solve the talent crisis in your business today?

The good news is there is a simple answer. The not-so-good news? Like innovation, the solution may be simple, but success depends on the execution.

HOW CAN THERE BE A TALENT SHORTAGE?

I launched Tier One People in 2016. We help world-class fintech innovators like Revolut, TrueLayer and 10x Banking find executive talent. Over the past six years, I have advised more than 300 fintechs on recruitment. And I have been responsible for hundreds of leadership hires, bringing in top talent from around the globe.

Working daily with leading innovators has influenced my thinking and, a few years back, I began applying my learnings to fintech hiring. Planet Earth is home to 7.9 billion people. We are arguably the most advanced civilisation in the history of humanity. Every company, potentially, has access to a highly skilled and educated workforce, available anywhere, anytime (according to Statista, 83.72 per cent of the world’s population has a smartphone and therefore access to the internet).

Indeed, it’s these conditions from which fintech evolved. A startup with little capital can leverage Cloud technology and smartphones to onboard and serve customers anywhere, 24/7. So, I asked myself what would happen if I applied the same innovative thinking to talent? Could we solve the talent crisis in fintech by using first-principles and design thinking?

First-principles thinking solves problems by reducing them to their essential elements and building from the ground up. But before solving the problem, I had to understand it. So, I spent two years researching, including hundreds of founder interviews and data on 100 fintech startups. The research uncovered many problems, and I spotted recurring patterns, which helped me understand the real issue behind the talent crisis. Some of the problems I identified were:

  • Less than one per cent of fintech founders have professional expertise in talent and HR
  • Less than 10 per cent of fintech startups (<50 people) employ an HR professional
  • Startups that hired an HR professional as part of the founding team (first 10 employees) had, on average, half the staff turnover.

What became very apparent to me is that the ‘talent shortage’ problem in fintech was, in most instances, an internal issue as opposed to an external one.

NECESSITY DRIVES INNOVATION

Even with an HR/talent professional in place, hiring for fintech is complex. Fintech requires a unique set of skills and behaviours, making finding the right people difficult, especially if you embrace traditional recruitment methods.How we work, communicate, shop, bank, listen to music and watch TV has changed massively over the last 15 years.

But the way we recruit people has not. Have a look at the timeline (below right) of the most recent innovations in hiring. There’s an irony here that, like banking, the only innovation we have seen is digitising ancient systems and processes.

SORRY TO BREAK IT TO YOU…

There will always be a talent shortage in fintech if we follow first-principles thinking, because this involves asking ‘how do we solve the talent shortage?’, and this is the wrong question. In the corporate world, ‘talent’ has become a ubiquitous term used to describe every employee. We must distinguish between skilled workers and talent. A skills shortage and a talent shortage are two different problems. Commonwealth Bank in Australia employs more than 4,000 software engineers – that’s more software engineers than all banking-as-a-service companies in Australia combined.

Yet, it is still lamenting a talent shortage.

Whether a fintech or a tier-one bank, every company needs to innovate to survive. Therefore, if talent leads to innovation, the most talented people will always be in demand.In fintech, the expectations placed on employees are closer to those required in elite sports than in a bank. In elite sports , players are hired not just for their skills but for their ability to deliver performances under intense pressure.

And that talent is paid accordingly. Similarly, in the fast-moving, high-stakes, high-pressure environment of fintech, there are high levels of scrutiny, where people must own mistakes, adapt quickly and perform. If they don’t, the business may fail. But if they succeed, the rewards can be significant.

If no one has made ‘the thing’ you are making, people must learn on the job or ‘fly the plane as you’re building it’. Therefore, a person’s propensity to learn a new programming language under pressure is more critical to innovation than their proficiency in Golang. Contrast that environment to a bank.

“‘Where do I find talent?’ is not the first question to ask. It’s ‘how do I identify talent?’”

Based on my data, 90 per cent of people who move from a large bank/financial institution to a fintech startup leave within the first six months. So why is there such high turnover?

People are given a clearly defined task in a bank, with support, training, tools, and resources. Compensated for completing tasks promptly, if an employee doesn’t deliver, the bank won’t fail. If an employee makes a mistake, they can hide it or blame someone else. This culture is pervasive in large institutions and has led to three CEO resignations from the Big Four banks in Australia.

This type of behaviour can prove very destructive to fintech startups. So, if hiring from banks and financial institutions is too risky, where do you find talent? It seems like a reasonable question, but it’s not the first you need to ask. Instead, it’s ‘how do I identify talent?’.

I have created a simple algorithm for assessing talent in Fintech:

CORE SKILL SCORE SKILLS + LEARNING ABILITY + PERFORMANCE UNDER PRESSURE + OUTCOMES  = TALENT TALENT

At Tier One People, we assess every candidate on these four criteria. Using this assessment, only two per cent of candidates make it onto a Tier One People shortlist. Out of 150 leadership hires, 42 per cent are females following these principles. To date, the algorithm results in a 97 per cent success rate, compared to a 90 per cent failure rate when hiring people based on their experience in a bank.

APPLY DESIGN THINKING TO HIRING

Fintech 1.0 was all about picking the low-hanging fruit. Banks were doing such a lousy job of digital and had such contempt for their customers that any fintech offering decent CX (customer experience) could gain customers relatively quickly. And this is precisely how I would describe the talent market. Fortunately, companies are doing such a terrible job of digital and treating candidates with such contempt that anyone who can offer better CX (candidate experience) will hire top talent.Let’s face it, the candidate experience sucks.

Job platforms, chatbots, online application processes and video resumés reduce the time for the recruiter at the candidate’s expense. An effective talent acquisition strategy mirrors an effective customer acquisition strategy.Recruitment is all about sales and marketing. If you rely on job platforms as your primary distribution platform, you will always experience a talent shortage.

If you want to engage the best talent, an omnichannel strategy is essential, not buzzword bingo. We stopped advertising on job boards three years ago at Tier One People and used the budget to create a podcast. As a result, the number of inbound enquiries we receive from top fintech talent has tripled.Combined with our partnerships (UK DIT, FinTech Australia, Blockchain Australia), sponsorships, media appearances and content, a small business has created a globally recognised brand that attracts quality talent and clients.

Often, the best innovations come from reframing the problem and looking at it through the eyes of the customer.

So, when you start thinking of talent as people, as your customers, you are well on the way to solving your talent crisis


 

This article was published in The Fintech Magazine Issue 25, Page 108-109

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