The ups and downs of the global economy, so changing, has also had an impact, at least to a considerable extent, on the interest that postgraduates of an MBA may have in fintechs.
Some consider that a return to the banking world from the fintechs is a safer bet, that is, returning to traditional banking, which gives candidates more security, due to the stability of the traditional banking industry in the face of crises.
For years, technology companies sought to seduce and did everything possible to extract the best talent from traditional industries, we mean senior staff. To do this, they offered him the opportunity for a leadership role in the future of technology and highly competitive salaries.
“The reason people wanted to join such companies is that they promised high salaries and large amounts of stock,” says Sam Burks, CEO of the Nicoll Curtin employment agency. “Even if they didn’t end up going public, they could still end up having a higher market value as a company, in some cases doubling and also tripling the original value in just five years.
And job openings came as valuations for these companies outperformed rivals in other sectors by multiples.
The data is chilling
San Francisco-based payment provider Stripe was worth $95 billion as of June 2021, while its UK counterpart Checkout.com was valued at $40 billion as of January 2022. By contrast, the UK’s leading lender, NatWest, one of the country’s largest banks, has a market capitalization of around $27 billion.
Job cuts to walk towards profitability
But the changing economic tide has left investors increasingly bearish on the tech sector. That, in turn, has forced the big players to make major job cuts as they try to prove to would-be funders that they have a path to short-term profitability.
For senior employees on the path to executive MBAs, which some see as a springboard for a career change, the tech sector still offers opportunities for exciting roles at the forefront of innovation. In this climate, however, executives considering such moves need to be more careful about the companies they choose. And this is a serious warning from senior recruiters.
The current international context
Geopolitical tensions and a likely recession have affected consumer spending, and rising food and fuel prices have prompted households to tighten their budgets. Big names in sectors that flourished in the period of the pandemic with low interest rates and high e-commerce, such as cryptocurrencies and “buy now, pay later” financial services, have had to make drastic cutbacks.
In London alone, at least 4,300 start-up employees have been laid off since the start of the pandemic, according to Layoffs.fyi, a portal that tracks layoffs in the sector. Around a fifth of these were from fintechs such as investment app Freetrade, revenue-based financing provider Uncapped, and SumUp, which provides payment services for small merchants.
“Some of our most established and long-term clients have had hiring freezes, and their revenue and profits have been affected by slowing and declining markets globally,” says Alison Power, co-founder and chief resource officer. of Finiti Search, which hires for global fintech sales teams.
The return to traditional banking
The effect of that has been a reversal of a years-old trend, says Burks, with the world of traditional financial services looking more attractive. As interest rates rise, banks’ profits have continued to grow.
“A lot of people in fintechs are going back into the banking world,” says Burks. “They are happy to receive a little less total compensation to be in a safer environment, especially with everything going on right now.”
This is echoed by a senior employee at a large bank, who says that staff hired for technical roles often ended up leaving to join fintechs, but the attrition rate has dropped in recent months, reflecting the change in trend.
Burks says that he recently placed individuals from crypto firms and “buy now, pay later” in traditional financial institutions with a lower base salary because they were seeking stability, although some were still taking the step in the opposite direction.
Those hoping to switch to fintech after an executive MBA still have options
Those hoping to make a career move to fintech after an executive MBA are not without options
Investors continue to pour money into early-stage fintechs with reasonable business plans, which require less capital than their later-stage, fully-fledged counterparts, offering them a path to growth.
Simon Benson, founder and director of fintech recruitment specialists Wilson Gray, says he still saw staff recruited for these smaller companies from the big-name fintechs where they have made a name for themselves.
“What’s attractive to a company with a Series A round of funding is the people who’ve been on that journey before, the proven talent that’s been down that road,” he says, adding that attracting those people can attract others. potential investors.
In the case of Fintech Freetrade, it had problems finding new sponsors at the expected valuation
Join a newer company
For employees who joined a new company after it was already established, there are also potential benefits to joining a newer company. “They get to be a part of building something and they get capital and options, and they can use their experience to get a bigger piece of the pie,” Benson says.
Power at Finiti echoes that point, adding that the largest and most established fintechs are replicating the failings of established players when it comes to jobs.
“We often find that the hiring process is more rigid and they have less flexibility in terms of offering something different to candidates without going through a lot of red tape,” he says.
What is the biggest challenge in FinTech?
The challenges that arise are diverse, for example, in terms of data security, there were 1,862 data leaks with an average cost of 4.24 million dollars in 2021. There is also the legal context in which they must move, for example, the Regulation and Compliance Laws. No less important is the lack of experience in mobile devices and in technological innovation in general.
Top 5 Fintech Challenges and Ways to Mitigate Them
Since the COVID-19 pandemic, the fintech industry has seen a massive investment of $134 billion in 2021. This corresponds to a year-on-year growth of 177%. According to Statista, the sector is also expected to reach €188 billion by 2024.
Although the industry is constantly growing, there are still many challenges facing fintech companies. Precisely from OUR WRITING we have gone out to find what are the most important problems in fintech, their solutions and current opportunities.
Fintech Challenges and Opportunities for Startups
The global number of fintech startups was already over 25,000 at the end of 2021. However, not all of them will make it past the first two years of business, so we don’t know by the end of 2002 what the exact number will be. subtract.
Challenges and missed opportunities are a heavy weight to bear. Let’s take a closer look.
Although there are dozens of challenges in the fintech industry, we are going to focus on the most important issues.
Venture capital raising
Venture capital is one of the key elements that make a startup grow. However, regardless of the growing interest in the industry, attracting the right investors remains a challenge. This is because potential venture capitalists often have a number of questions during the due diligence process:
– What are the problems solved by the product?
– Where are the potential risks for the business?
– How big is the market opportunity?
– What makes the founders think the product will be successful?
– How will the investment capital be used to achieve the objectives of the product?
As competition is high and investors are on the lookout for financial returns, convincing them requires a detailed financial plan, a long-term strategy, and validation of the idea. Validation can be completed based on existing statistics or unique user surveys.
Find a great investor
Having a great investor is beneficial in every way. The startup can get enough funds to realize all the plans, additional experience for that matter, and maintain its freedom of development. This is where a fintech startup can find a great investor.
The next problem is keeping the investor’s attention. There are thousands of startups waiting for funding, so standing out from the crowd is mandatory. Preparing a complete pitch deck presentation will provide the investor with all the information needed to make a decision. This is what should be included in a pitch deck presentation
– Brief description of the company.
– Problem and its solution.
– Market opportunity and target audience.
– Expected business model.
– Financial estimates.
Imagine yourself as an investor
A great strategy is to imagine yourself as an investor. Think of all the questions one might have when studying your project. Line them up and give an answer in your presentation.
Compete with big brands
A modern startup has to compete with financial powerhouses like PayPal and tech giants like Amazon. If the startup intends to be a B2C solution, it must find a market where the tech giants are the weakest. This could be an area where consumers are not getting enough offers or are dissatisfied with current services.
In the B2B segment, the startup must solve a major problem to get noticed. It could cover potential pain points like big expenses, regulatory fines, or even ease of use. Either option is great as long as it meets business needs.
Fintech in 2022: “Globe” or “Bubble”?
Considering the growing number of startups and investments, the fintech industry is more likely to be considered a “globe.” Investors determine whether to finance a company based on its long-term capabilities. Therefore, they approach the topic with thorough research.
For example, the total number of registered investments in Europe is growing every year. Only 1,847 investments were made in 2015, while in 2021 there were 8,397. This shows the growing number of opportunities and people willing to support them.
Emerging technologies like blockchain, machine learning, artificial intelligence, and Web 3.0 are driving the industry. They bring new solutions to the market and set new standards. That is why these solutions are the main opportunities for fintech startups to compete with tech giants.
5 Challenges of the Fintech Industry and its Solutions
We have researched the main challenges of the fintech industry and have chosen the most significant ones. Many companies find it difficult to deal with them, so we will also provide a solution for each one.
There were 1,862 data breaches costing an average of $4.24 million in 2021. This is a new all-time high, raising even greater concerns regarding data security and privacy. Companies must be aware that they risk losing not only their reputation, but also their money.
Creation of an APP
To avoid potential infringement, a fintech app should be built that includes these features:
– Authentication of two factors.
– Biometric authentication.
– 256-bit AES encryption.
– Notifications on all actions.
– Performing regular penetration tests is a good way to ensure hackers don’t disrupt your solution.
– You must have at least 1 test per year.
– Tests should be performed after each new update and integration.
Lack of mobile and technological experience
Many banks and finance companies use outdated software. This is a major problem because their apps are not easy to use or intuitive. Although today we can witness the constant change of focus to provide a better user experience, the process is too long.
The following features are a must for any mobile financial app:
– A first level UI and UX;
UX stands for “user experience” and UI stands for “user interface”
– Full data visualization.
– Payments with QR code.
You can use fintech application development services for a team of high-level experts to work on your project. This will allow you to implement any feature to compete with the major players in the market.
User retention and user experience
Keeping users engaged is one of the most common fintech challenges. Financial apps have only a 22.7% retention rate on day 1, rapidly dropping to 5.8% on day 30. Low retention means fewer users, which translates to reduced revenue.
It is possible to increase user retention by providing a better experience. Here are some examples:
– Gamification and a reward system.
– Personalized push recommendations.
– Easy to use UI/UX.
You can monitor the approaches used by your competitors to see how they impact the user experience. Seeing different methods in practice will help you choose the best options for your startup.
Personalization of the service
A recent survey shows that personalization improves customer experience by 64% and conversion rates by 63%. Companies must not neglect the importance of this approach in the future.
Here are some ways to customize your fintech software:
– Automatic notifications with usernames, topics of interest and data based on geographic location.
– Show users services and products in which they were previously interested.
Personalization typically involves the use of AI to determine a consumer’s interests. Artificial intelligence is among the most in-demand fintech development services for this decade, so it’s worth considering.
Hire an experienced fintech development team to make your startup stand out
The number of opportunities is overwhelming, which is why we have selected the top five technologies to use.
1º) Blockchain technology
A recent forecast predicts that the global blockchain market is expected to reach $22.46 billion by 2026, growing at a CAGR of 72 percent. .99%.
The technology removes third parties from transactions, provides a decentralized network, and creates digital ledgers. These features solve many challenges facing the fintech industry.
2º) Artificial intelligence
AI has already been used in fintech for some time. In most cases, it was implemented for real-time fraud detection and financial analysis.
This is what can be done with AI in fintech:
– Advanced cybersecurity and suspicious activity analysis.
– Improving the customer experience through chatbots and personalized services.
– Risk score profiles, and more.
AI is capable of mitigating many fintech challenges for financial services.
3º) Machine learning
Machine learning is among the top fintech opportunities and challenges in terms of implementation. It helps the AI adapt to new situations and identify patterns.
This is how machine learning is used to solve fintech problems:
– More loan approvals with less risk.
– Detection of fraudulent activities.
– Regulatory compliance analysis.
– Price prediction for stock trading etc.
It is a great addition to any advanced solution.
4º) Big data
Big data helps companies in financial data to obtain accurate information about their customers to adapt strategies and personalize UX.
This is how big data is used to mitigate the main problems with fintech:
– Create detailed user portraits for tailored services and marketing strategies.
– Improved risk assessment by analyzing multiple sources.
– Development of accurate fraud detection systems.
Big data development services can help you make the most of this technology. Combined with AI and ML, a powerful financial ecosystem is formed.
5º) Internet 3.0
Web 3.0 is a new version of the internet based on blockchain with a focus on decentralization, AI, ML (Machine Learning), and a better user experience. It is important to keep in mind that Artificial Intelligence is the broadest concept, where machines are capable of carrying out tasks in a way considered “intelligent”, while Machine Learning is a current application of Artificial Intelligence based on the idea that we should actually be able to give machines access to data and let them learn for themselves, meaning algorithms that make machines smarter.
This is how Web 3 will change the fintech industry:
– Improved data control for users.
– Access to any information for activities such as BNPL (Buy now pay later) which means buy now and pay later, or loans.
– Personalized and adapted content.
– Automation of processes for faster payments.
Minimization of errors and suspensions
Traditional banking systems will take centuries to adopt the new concept. Web 3.0 and big data in fintech have every prospect of success.