Fintech firms halt hiring amid economic crisis
Tough times ahead for fintechs as half of all firms plan to stop hiring this year amid the challenging economic climate; new report findings indicate.
Due to an increasingly turbulent economic environment and funding crisis, half of all fintech firms have had to stop hiring new employees by 2023.
During the first half of 2022, over 4,000 fintech employees lost their roles across 45 companies, from mortgage lenders to firms processing digital payments, further highlighting the impact challenging economic times are having on a sector.
With banks falling like dominoes and a global recession looming, the evolution of financial software and the development of fintech innovations, coupled with stalled hiring activity, will have a greater impact on consumers than ever in 2023.
This forecast forms the key takeaway from ‘Exploring Fintech in 2023‘ report commissioned by the technology company Erlang Solutions.
A worrying new trend in fintech?
This year, the report’s findings expect as many as 51 percent of fintechs to halt their plans for new hires. A further 31 per cent do not rule out the possibility of introducing a freeze, while 16 per cent have already stopped hiring.
Large and medium-sized fintech companies have been found to be most likely to reduce staff compared to smaller market players.
Furthermore, the data shows that large companies are almost twice as likely to close offices or stores – and reduce software licenses and seats – than their mid-sized rivals.
On the contrary, smaller companies are the most likely participants to be focused on ensuring the delivery of a successful outcome for their clients in the event of an economic downturn.
Ailments alleviated by artificial intelligence
Despite the doom and gloom portrayed in the bulk of its findings, it also makes known the exciting new trends sweeping the fintech industry.
Among these is the recognition of the widespread use of artificial intelligence (AI), which looks set to have very successful use cases in the coming year and beyond.
Alongside this is the increasing positioning of sustainable initiatives at the heart of fintech’s operations. The report makes clear how sustainability is no longer “just a buzzword” but rather an integral pillar for achieving market success.
Elsewhere, Erlang Solutions has also identified new insights on embedded banking and blockchain technology from those at the center of the fintech revolution.
While the threat of global recession presents challenges for fintech companies, without seeing guaranteed survival, too Francesco Cesarinifounder and CTO of Erlang Solutions, “it’s clear that fintech has really supported consumers over the last few years of global challenges and will continue to do so.”
“As a people-focused consultancy, we want to support the creation of an industry that provides stability, flexibility and opportunity for both clients and consumers,” continues Cesarini. “This will likely involve greater collaboration to create a diverse ecosystem that works for everyone, and we hope our report helps spark those conversations.”