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Market Insights SEEK Employment trends The fintech revolution: Impact on finance and banking jobs
The fintech revolution: Impact on finance and banking jobs

The fintech revolution: Impact on finance and banking jobs

Technology is changing how businesses are done, and that fast pace of change has given rise to many catchy terms. One of these famous terms is ‘fintech’.

What is fintech? 

As the name suggests, fintech simply means the implementation of technology in finance. It is the usage of technology, such as apps, algorithms / artificial intelligence (AI), devices and the Internet to perform functions related to finance, such as trading, asset management, payment services, financing, currency exchange and accounting. The advent of Internet of Things (IoT) greatly marketed the term fintech. Its application is vast, and given its nascent nature, it has generated a mass following as well as accelerated start-ups wanting a piece of the action.

Impact on finance / banking jobs

Fintech potentially has solutions that are alternatives to various services offered by banks / financial institutions and are therefore, generally direct competitors. Fintech companies are mostly start-ups. Though small they may be, they are nimble and operate in niche areas with comparatively lower overheads relative to bigger players such as banks / financial institutions. As such, there is a growing worry that fintech will be the onset of the collapse of finance / banking jobs. One cannot help but wonder the potential impact of fintech on these jobs.

1) Job losses – inevitable

Fintech companies are already providing various services that undercuts the financial sector. Crowdfunding and peer-to-peer lending allow individuals to bypass personal loans. There is even a fintech company that allows individuals to invest in properties with as little money as they want, eating into the space of traditional mortgages. Online and mobile banking services by fintech companies eliminate the need for physical presence when performing such services, resulting in gradual closure of branches.

With closure of branches and slowing businesses in traditional areas, job losses will be inevitable. A report by Citigroup suggests that banks could reduce the number of branches by as much as 50% over the next decade. Up to 2 million banking jobs will also be axed in the same span of time. Nordic banks have already seen the same reduction in branches since 2008.

2) Re-organisation, re-training, re-deployment

When encountered with structural changes, most parties often dwell on the negative impact. There are positive takeaways from the invasion of fintech. Fintech will alter the financial landscape. Faced with dimming prospects of growth and falling revenues, the bigger financial sector has the resources and experience to re-organise into more cost-efficient operations. Jobs may be lost, but likely restricted to operations that are prone to digitisation / automation.

In the long run, the threat of job losses could propel employees into re-training for tasks that are higher up in the value chain. This will not happen if employees prolong their stay in jobs that are prone to automation. As a whole, this may even prevent more negative impact from job losses as induction into automation-prone jobs will be reduced.

The threat of job losses also pushes companies to unlock latent potential in experienced, competent employees who remain in their current positions due to hierarchical reasons, lack of growth areas, or simply being in their comfort zones. Depending on experience and relevant skills, these employees could be re-deployed in other high-growth / high-profit areas. In such instances, job losses could be minimal.

3) Changes in recruitment trend

The growing fintech segment in employment, though gradual, will have pronounced impact on recruitment trend. While non-fintech industries generally look for experience and education excellence when recruiting, fintech industry look for different attributes.

They are likely to prefer candidates who are inclined towards technology-based tasks, agile (to navigate a quick-changing world of fintech), and with knowledge in regulation / compliance pertaining to the business in which the hirer operates. The skills that non-fintech employees have may necessarily be what fintech companies require. Such skills shortage requires proactive HR professionals / recruiters to take heed so as to better make the transition when operating in the fintech fraternity.

Any industry is prone to threats from improvement in technology, advancements in ideas and changes in social norms. There will be negative impact arising from these, but it would be folly not to see opportunities amongst these changes.

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