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UK fintechs are aiming to close their compliance skills gap while banks are focusing on upgrading tech capabilities


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Vacancies in the UK banking industry for tech-focused roles rose 7 percentage points (from 23% to 30%) between 2017 and 2019, while fintech tech-focused vacancies declined 2 percentage points (from 48% to 46%) in the same period, per a new report from Robert Walters.

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Despite overall vacancies at fintechs going up 53% in the last three years, the growth of tech-specific jobs in the industry has not kept pace, indicating that fintechs are shifting focus to other areas. These trends highlight how both industries have responded to existing changes in consumer demand and regulatory environments — changes that are now being further accelerated by the coronavirus pandemic, among other factors.

As UK banks go on a tech hiring spree and fintechs work to improve their legal standing, the sectors will become increasingly alike in the products they offer.

  • Banks are responding to rising digital channel usage to match fintechs’ digital offerings. Consumers are increasingly interacting with financial services providers via technology, with the UK online banking adoption rate reaching 73% in 2019. This is pushing banks to focus on hiring tech talent to improve their digital offerings. The coronavirus pandemic and the ensuing lockdown measures are also exacerbating this trend, forcing banks to scale back their retail branches and develop digital alternatives at an accelerated pace.
  • Fintechs are growing their compliance teams to meet new regulatory challenges. For example, a number of alt lenders have been accredited under the Coronavirus Business Interruption Loan Scheme (CBILS), such as Ebury and Fleximize, which required jumping through the regulatory hoops of the application process. Well-staffed compliance teams also enable fintechs to better build deep relations with the proactive national regulator, the FCA, such as by making use of its regulatory sandbox and tailored regulatory support. Brexit is accelerating this trend further, as fintechs look to ensure they can roll out innovative cross-border digital services, while remaining compliant.

Bolstering compliance measures, like acquiring licensing, will enable UK fintechs to provide services that were traditionally exclusive to banks — and fintechs should now focus on hyperpersonalization to continue standing apart from banks. As the fintech-friendly agenda in the country and government schemes introduced during the pandemic propel more fintechs, especially alt lenders, to the mainstream, these startups face a significant opportunity to present their innovative solutions to a wider pool of consumers. And their move to divert more resources to their compliance will only accelerate this trend.

But as banks simultaneously improve their tech skills, the competitive edge fintechs have in that arena could be dulled — as a result, fintechs will need to differentiate further. One way to do this is by developing hyperpersonalization capabilities, using AI and real-time data sets to tailor services to each customer’s specific needs. This would show customers a clear benefit of using fintech solutions over traditional banks, helping fintechs maintain their growth path.

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