As banking and tech employees seek new opportunities in fintech, uncertainty lurks

An exodus: Big banks and Big Tech are losing their employees to more flexible fintech companies, per Yahoo Finance.

Bankers, engineers, data scientists, and other skilled employees are leaving Wall Street, Silicon Valley, and London for roles at fintechs that offer a better work-life balance, higher pay, and better career prospects.

Moves from big banks like HSBC and Goldman Sachs to fintech startups such as Coinbase and Revolut are up 75% since the pandemic started:

  • 37 staff from Goldman Sachs and 28 staff from Morgan Stanley left for opportunities at Coinbase between January 2020 and April 2022.
  • 38 employees from HSBC, 32 employees from Lloyds, and 27 employees from Barclay’s went to neobanks Revolut and Monzo during the same time period.

Big Tech is also experiencing the same drain:

  • 197 staff from Amazon, 97 from Alphabet, 73 from Microsoft, and 72 from Meta landed jobs at Coinbase.

While the numbers are small relative to these firms’ entire workforces, the lure for tech employees is shaking up banking industry payrolls.

Not all roses: But the changing economic environment is putting a damper on the fintech industry. Inflation remains uncomfortably high, fintech funding has dropped off, and the crypto market is undergoing a reckoning.

  • Coinbase’s stock is down more than 60% from its IPO price in April 2021. The firm extended its hiring freeze last week and rescinded offers that were already accepted.
  • Buy now, pay later (BNPL) startup Klarna plans to lay off 10% of its workforce.
  • Payments fintech Bolt is letting go of about one-third of its workforce after receiving $355 million in funding in January.
  • And crypto exchange Gemini will cut 10% of its staff.

The big takeaway: Employees moving to these fintechs are taking a chance on change over perhaps more stable opportunities at an incumbent bank or Big Tech firm.

Here’s how that could play out:

  • The rising number of layoffs and hiring freezes at fintech companies could signal a larger fallout, and employees who left their jobs for an opportunity at a fintech might find themselves unemployed.
  • Incumbent banks and Big Tech firms may realize sustainable cost savings as employees leave, and they may not be willing to rehire.
  • Banks and tech firms could also find opportunities to scoop up suffering fintechs that would flourish with greater resources. A reorganization of that type would likely lead to more layoffs rather than hires.

Keep reading: We highlight some of the short-term challenges and long-term risks that fintech disruptors face—and how regulators could get involved—in our “Era of Uncertainty report.