The UK may be Europe’s leading hub for fintech, but founders complain it still lacks one key ingredient; local software engineers.
Behind the fundraising breakthroughs and investment hype, financial-tech startups are offering ever-higher bonuses and salary packages in an attempt to lure the limited pool of domestic talent. Others are hiring from abroad or splitting their teams across the continent, including money-transfer startup Azimo, which has set up an entire hub in Poland to address the “talent-gap”.
Indeed, last year’s figures reveal that 42% of employees within UK fintechs are from overseas; mostly taking up software roles.
The root of the problem is a general shortage of engineers across the tech space. In London alone today, there are over 5,000 software engineer vacancies and over 6,500 for software developers according to Adzuna.
But fintech founders argue that they face an extra layer of friction, requiring not only technical skills but also an understanding of the rigid financial rules that these companies work under.
“Fintechs find it especially hard to hire because they’re operating in such a regulated industry. That means we can only hire the best,” Liad Shababo, the chief executive of newcomer Wollit, tells Sifted.
This sentiment is echoed by Christian Faes, cofounder of LendInvest — the online property lender with over 200 employees that flirted with an initial public offering last year.
“It’s quite a challenge. You can’t only hire from mortgage companies, and if you hire from normal tech firms, they don’t understand a thing about [financial] regulation. So you’ve got to have a bit of both,” he tells Sifted.
Faes adds that the company has responded by hiring a remote team of engineers in Ghana and Ukraine, but adds that distribution can be “a little bit uncomfortable” in terms of logistics and communication.
He also noted that, while LendInvest did not aggressively poach from other fintechs, “big banks are fair game”.
Hubs: A double-edged source
While there is a shortfall of engineers generally in Europe, the unrivalled number of tech companies and scaleups in London seems to have exacerbated demand and the underlying shortage of developers.
“London is a hotbed for business… [so] there’s a war for talent,” says Nicholas Heller, chief executive of financial services consultancy Fractal Labs.
“There’s a very small pool of candidates who have the skills to work on complex systems…[Meanwhile] every business is digitising and hence every business is recruiting similar profiles.”
In such a competitive landscape, it’s especially challenging for small fintechs, Wollit’s Shababo notes.
“Startups simply can’t compete on salary or perks [with Facebook and Google]… The only thing we can offer engineers that larger incumbents can’t, is the chance to indelibly shape the technological future of an impact-focused company they believe in.”
At the same time, UK talent is also being lured by the US; salary data shows the typical Java developer is paid 47% more on average in the US than in the UK.
As a result, the shortage of affordable talent is nearing critical, says Russ Shaw, founder of lobby group Tech London Advocates.
“We are faced with a talent deficit that, if not addressed immediately, could stop the progress of our most prized industry in its tracks,” he told Sifted.
Fintech recruitment battles
Beyond luring engineers with a “mission”, the fintech industry has joined the broader fight to find longer-term solutions for the talent gap amid a saturated market.
Particularly pressing is the need to ensure the Brexit agreement favours Innovator/Entrepreneurs’ visas and ends the cap on Tier 2 visas, given the UK’s dependency on foreign engineering talent.
“Without creating accessible employment routes for international talent, we will not see [more] companies like Revolut and TransferWise,” Shaw tells Sifted, noting that countries like Spain have key advantages, like its ties with Latin America to secure a talent-funnel.
Other solutions include up-skilling local communities and boosting STEM teaching in schools, which Azimo’s Michael Kent argues has fallen behind the rest of Europe.
There are also initiatives to invite — and keep — more women into the space. The Stack Overflow survey found female developers generally left after three years, reporting “toxic” work environments.
Startups should also be conscious of what coding languages they pick to build with, says Will Jones, chief technologist at Habito, noting that unpopular or unusual ones can be a deterrent.
“Keeping our stacks and processes current (modern development workflows; frequent, painless releases; strong technical ownership)… allows us to stand out as an attractive destination for engineering talent,” he tells Sifted.
Beyond that, it’s about holding on and investing in the talent you do secure, says Balderton’s head of talent Kiana Sharifi.
“Say you have five engineers who are very good but need some training and guidance. Making these five twice as productive and engaged makes more sense than hiring another five engineers,” she wrote in a Sifted article last year.
Until the talent-gap shrinks, however, there’s a worthy warning for the wave of fintech founders emerging in the UK: you may be able to secure funds, but you’ll have to get creative to lure the engineers you need to get you off the ground.