We highlighted in our first article that forecasts estimate the UK fintech sector contributing £13.7bn to the economy by 2030. The Kalifa Review (the 'Review') attributes 70 per cent of this to job creation. Given the emphasis also placed on supporting businesses that are moving from start-up phase to the critical scaling-up phase, the Review highlights that fintechs will require a wide range of specialist talent, and not only in the sought after technology and data/decision science segments. Though positive, the government will be required to find ways of plugging skills shortages and removing barriers to accessing global talent, particularly with competing jurisdictions keeping pace with the UK’s investment in the sector (such as Singapore noted the Review).
COVID-19, identified as a key threat to the fintech sector, is also cited in the Review for its impact on accelerating the requirements to upskill employees in all industries. This is not only relevant to fintechs, but large financial institutions as well, which have been forced to grapple with ‘digital’ sooner than expected. Ensuring staff are retrained effectively should be high up on the business agenda of firms that are serious about engaging with digital transformation. The Review also highlights the struggle of fintechs themselves investing in training, often due to the cost and quality of available courses.
Inevitably Brexit, as the second threat identified, forms a significant consideration for talent acquisition from other jurisdictions. Fintechs must now take account of different immigration systems to access EU talent pools. This is against the backdrop of developments in France (Tech Visa), Canada (Global Talent Stream) and Australia (Global Talent Programme) all with the same aim of easing routes into their organisations, further compounding global competition. The Review advocates for the UK to develop a faster and more flexible system and to engage in deliberate brand building.
The role of apprenticeships and work placements at the Further Education level and suitability of Higher Education courses are also addressed in the Review. It was noted that across the education sector, more emphasis should be placed on aligning teaching with economic and societal needs and work placements should be used to bring students closer to the fintech industry.
In terms of recommendations, the Review puts forward three proposals to bolster the availability of, and access to, the right talent and skills in the UK fintech sector:
- Retraining and upskilling adults
- Enhancing access to global talent
- Growing the pipeline of domestic talent.
1. Retraining and upskilling adults
- Retraining and upskilling adults to meet the needs of UK fintech by ensuring access to short courses from high-quality education providers at low cost, delivered by an independent Steering Committee led by the proposed Centre for Finance, Innovation and Technology (CFIT).
- One of the objectives of the Steering Committee will be to ensure that educational resources keep pace with change in the sector. Given how dynamic and varied the fintech industry is, this will be no small feat. To achieve this, and whilst there are good examples of industry and academic collaboration, the Steering Committee will likely need to push for much greater cooperation and coordination than current levels. Input will be required from a range of fintech firms and those leading digital innovation in the more traditional financial services setting.
- The Review states that traditional financial services are also 'experiencing new skills requirements due to disruption from tech' which reflects the pressures on the financial services sector generally to engage with digital. In our view, this has the effect of bringing additional focus to the often less observed business to business (or B2B) side of the fintech market that sees technology-first businesses (including 'Insurtechs' and 'Regtechs') offering innovative services and solutions to existing financial services firms. The Review also refers to the 'financial services to Fintech Learning Pathway' case study which implies further collaboration between traditional financial services and fintech sectors through outplacement services. We may therefore see additional cross-sector synergies that buck the perception of some of the traditional businesses and newer business being only in competition; this is sometimes the case but not exclusively.
2. Enhanced access to Global Talent
- Creating a new visa category to enhance access to international talent for fintech scaleups through a ‘Fintech Scaleup Stream’. This would include enhancements to the immigration system (both in scope and in the actual processing of applications) and ‘reach out’ strategies including for job creators.
- Post-Brexit, and in light of various 'Global Britain' initiatives, it is no surprise to see opportunities for skilled migrant workers and entrepreneurs catered for in the Review’s recommendations. Given recent budget announcements (including proposed implementation of unsponsored visas for highly-skilled migrants), it is likely that we will see developments in this space – though query whether this will result in specific treatment for fintech or be of more general application.
3. Underpin skills and grow the pipeline of talent
- Building a pipeline of fintech talent by supporting fintech scaleups to offer embedded work placements to Further Education and Higher Education students and Kickstarters, and considering how to better support Diversity and Inclusion (D&I) in the sector.
- Though looking to existing frameworks to implement work placements in the fintech sector is valuable, placements will have to accommodate for the breadth and rapidly changing nature of the industry. SME fintechs may struggle to provide the level of supervision expected and required, and existing, larger financial institutions engaged in digital should not be overlooked as many will be well-placed to offer support.
- The considerations around D&I are welcomed, especially given fintech’s track record. Suggestions include providing a more evidenced-based D&I approach when allocating resources to the sector and obtaining better diversity data.
It will be interesting to see how the government assesses and takes forward the Review’s recommendations. We think it is fairly certain that the skills and talent topic will be a feature of formal proposals coming forward given alignment with broader governmental policy aims.