Smaller fintechs are still hiring up despite economic downturn

Hi readers, and hope you’re having a great week!

In this week’s issue, I spoke to headhunters to ask what they’re seeing in the London fintech hiring market — and I found out that smaller start-ups are fighting over candidates, even as big players cut back.

I also interviewed Chris Sweeney, chief executive of plug-in overdraft provider Fiinu, and we have Patricia Nilsson’s story on the card duopoly stopping work with PornHub owner’s advertising arm.

What headhunters can tell us about the state of fintech

Talk about the state of the fintech market, and discussions will probably centre on big names and the big numbers they’ve had to reduce due to global economic headwinds.

That’s reflected in data from Layoffs.fyi, which tracks lay-offs globally. It reported that 14,750 fintech jobs globally have been axed this year.

But among smaller start-ups, headhunters say that demand for new talent remains extremely strong, forcing companies to compete with each other.

“It’s a candidate’s market out there . . . and has been for the last 12 months, making it increasingly competitive (and hard) to attract talent,” said Alison Power, co-founder and resourcing director at Finiti Search, which focuses on fintech recruitment.

That has made smaller companies, which can offer more flexible packages, even more attractive to candidates than larger, bureaucratic rivals — provided they have sufficient funding to weather tough markets ahead, of course.

Simon Benson, founder and director at fintech recruitment specialists Wilson Grey, which works with smaller start-ups, also said that demand for candidates remained strong after a lull in 2020.

“We got a lot of inquiries for product designers and product talent, then it shifted to sales and has not let up,” he said. “Marketing is also very busy.”

He says that British fintechs looking to hire talent are having to compete with companies in other countries, as well as from other sectors including healthtech and edtech.

“It’s still a fairly young sector,” Benson added. “The pool is still quite limited.”

All of that can make it tough for start-ups, especially in a candidate’s market when employees may be getting outside offers — for higher salaries.

There has also been a shift within the kind of roles, with an increasing emphasis on candidates who have exposure to enterprise sales, he notes.

Start-ups serving enterprise clients may be more resistant to the current struggles of the fintech sector, which has seen valuations tumble as consumer spending drops and investors grow wary of pouring cash into companies without paths to profitability.

London-based cloud banking fintech Thought Machine doubled its valuation to $2.7bn in May as it brought onboard Morgan Stanley as client and investor alongside the likes of JPMorgan Chase, Lloyds Banking Group and Swedish financial group SEB.

And while the turmoil at the top of fintech continues, talent is moving towards the next generation of new, scrappy companies.

“I get these notifications on LinkedIn of people being headhunted from big name businesses into start-ups,” said Benson. “They take that experience, and use it to get a proper piece of the pie in a smaller business.” (Siddharth Venkataramakrishnan)

Fintech Fascination

Visa and Mastercard stop work with Pornhub owner advertising arm Patricia Nilsson reports that the card network giants are cutting ties with TrafficJunky, owned by PornHub parent MindGeek, after a court ruling found Visa could be held liable for illegal content on the pornography website. MindGeek teetered on the edge of collapse in late 2020 when Pornhub was cut off by Visa and Mastercard following an investigation that found unlawful content on the platform.

Robinhood to cut headcount by almost a quarter The end of the retail trading bubble has driven Robinhood to cut roughly 780 jobs, writes Madison Darbyshire. The app, which was a major beneficiary from the lockdown- and stimulus-fuelled trading boom, has seen its shares fall 50 per cent since the start of the year.

Digital asset industry on notice after SEC crypto clampdown US regulators have indicated that they will crack down on insider trading and fraud in the crypto industry as strongly as in traditional finance, report Scott Chipolina and Akila Quinio. The Securities and Exchange Commission has filed charges against individuals who allegedly created a $300mn “fraudulent crypto pyramid and Ponzi scheme” in recent weeks, as well as a case against former employee of crypto exchange Coinbase.

Quick Fire Q&A

Every week we ask the founders of fast-growing fintechs to introduce themselves and explain what makes them stand out in a crowded industry. Our conversation, lightly edited, appears below.

I recently spoke to Chris Sweeney, chief executive of Fiinu, which offers “plug-in overdrafts”, allowing customers access to credit including when they do not have access to a current account. It went public in London via a reverse takeover by Immediate Acquisition Plc and received a bank licence last month. It had previously raised £14mn in capital and debt.

What was the thinking behind Fiinu? In the UK, at the latest estimate, 55mn customers have access to current accounts. Traditionally, they have only been able to access an overdraft from their current account provider. But since 2019, with a change in provisions, 16.5mn have [lost] access. That creates a roughly £10bn funding gap in the market, which is being met by other products such as unregulated consumer finance, which we believe can be better filled with a flexible overdraft.

From our research, the two things that came up were that an overdraft is the second-most trusted financial service product after a mortgage and that a majority of our customers expressed preference for a plug-in overdraft, either to replace or in addition to their existing one. We know that in the UK switching current accounts has often been quite difficult, which is why we came up with a product truly independent of that.

Given the cost of living crisis, what role do you see Fiinu playing in supporting financial inclusion? We believe that we can provide a sustainable alternative to customers to meet unmet needs, but in doing that we want to provide a product that is affordable and continues to meet requirements going forward. There are some products out there at the moment that perhaps encourage customers to fund an excessive lifestyle rather than focus on the fundamental of their finances.

Why did you choose to list now, given the current market conditions? We wanted to make sure there was a mechanism for active dialogue with current and future investors to make sure that our capital requirements can be met going forward and our medium to long term growth aspirations aren’t hindered by access to capital.