Fintech
Here’s how to protect yourself from them
Since funding has dried up for fintech in 2022 and 2023, more than 100 of them laid off staff. In 2024, there was hope that things would change, but the reality seems much more lugubrious.
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Just last month, TechCrunch noted that at least six major fintechs had made layoffs. PayPal, which had an entire company round of layoffs in januaryhas continuous finishing. Crypto Infrastructure Company Moonpay raised $555 million with the goal of hiring 200 people last week, but 10% of existing staff laid off the month before.
These are unlikely to be the last job cuts. The latest global fintech report from Boston Consulting Group and VC firm QED Investors says that “many fintechs have yet to apply [cost reduction practices] comprehensively.” The report says these practices range from “increased automated decision making around key processes” to large-scale organizational redesigns.
Cost cuts do not always mean job cuts, the report stresses wages and payrolls they represent only 35% of the cost structure for the average publicly traded fintech (compared to 60% for banks). Private fintechs, however, face an uphill struggle.
Fintechs that raised money during the industry’s heyday are living on borrowed time. The venture capital firms that fund them are focused on what could actually generate a profit. The report says only 5% of challenger banks are profitable, despite this being the top fintech sector for revenue growth from 2021 to 2023. BCG says funding is down 71% for the entire fintech sector; valuations as a multiple of revenue are down 80%.
Eventually, runways will run out. Jack Selby, a MD at Thiel Capital, estimated that many companies had about two years of runway remaining. eight months ago.
There is also the looming threat of AI. The report claims that Klarna loyalist, Buy-Now-Pay-Later, is using GenAI to do the equivalent work of 700 employees, while 90% of its current employees are using GenAI in practice today. CEO Sebastien Siemiatkowski Bloomberg TV said last month that it expects its workforce to decline by 20% each year due to advances in artificial intelligence. It bases this on average attrition rates in the tech sector, rather than specific layoffs, with AI reducing the need to hire replacements.
How to Protect Yourself from Fintech Layoffs
To protect your job security in the fintech industry, you must therefore ensure that you are holding a secure position in a secure company.
The report says GenAI is “making huge gains” in encoding, customer support and digital marketing, making them increasingly risky positions. This doesn’t mean you shouldn’t be a software engineer, but rather that you should make sure your role consists of more than just coding.
Smaller Fintechs Thrive on Hiring generalists, but specialists may have greater job security in larger companies. Product Designers & GTM (go to market specialists) are an example of this.
The fintech subsector you join is also important. Cryptocurrency revenues fell 16% from 2021 to 2023, while cross-border payments companies and challenger banks saw revenues increase 42% and 78%, respectively.
Some subsectors are seeing more significant variance than others. The CAGR for the top quartile of lending fintechs was 133%, while the bottom quartile was down 23%. Financial infrastructure seems like the safest bet, as the bottom quartile also saw growth of 4%.
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