COVID-19 is pushing companies to accelerate their innovations in a matter of weeks rather than years, such as accepting mobile payments or giving their brick-and-mortar store an online presence.
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The financial services industry is one of the bright spots in an otherwise gloomy environment of record unemployment and layoffs at companies of all sizes. Despite the current economic climate, companies in the financial services space are not only continuing to hire, but are fundraising and being acquired.
“Consumers are more open to using financial technology applications and are more trusting,” said Jillian Williams, principal at Anthemis Group. “Meanwhile, financial institutions are being forced to adopt technology because it is uncertain when social distancing is going to end.”
In funding news, fintech companies are seeing more opportunity, she said. For example, in January, Visa acquired Plaid–a network that enables users to securely connect their financial accounts to apps they use to manage their financial lives–or $5.3 billion. Days later, Visa invested an undisclosed amount in Very Good Security, which helps fintech companies better protect their data.
‘Stamp of approval’
Financial technology became popular following the economic downturn in 2007 and 2008, when new companies launched products with the claim they could better serve customers than banks, Williams said.
Back in 2010, companies in that sector represented 10 percent of total venture funding, according to Crunchbase research. In 2019, it was 16 percent with $43 billion invested.
Recently, companies in the sector received “a stamp of approval” from governments due to the recent U.S. Small Business Administration’s Paycheck Protection Program, she said. Banks, along with financial technology firms, such as mobile payment company Square Capital, could make loans, while people could receive their stimulus check funds via Venmo, she added.
Flush with cash and hiring
Even as companies lay off workers, financial services firms continue to hire. Data from HackerRank shows that interviews at financial services firms are up 39 percent since Jan. 1 among clients such as Goldman Sachs, PayPal and Morgan Stanley.
“There is massive acceleration to become a tech-first company,” said Vivek Ravisankar, co-founder and CEO of developer hiring firm HackerRank. “Heinz announced it will be selling direct-to-consumer. It is now easy to order via apps like Shopify. You are able to transfer money from one bank to another. We are seeing tech, fintech and retail, in terms of developers, starting to grow more because everyone wants to have an e-commerce presence. It is both frightening and exciting.”
Ravisankar said he credits those figures to another big shift: Companies are getting comfortable with remote hiring. Opening up the talent pool makes it grow larger by 10 times, he said.
“Now you can hire developers anywhere as long as they are talented,” he added. “That is a massive change.”
Despite headlines to the contrary, hiring is still happening at startups, especially among those who have been able to raise funding.
San Francisco-based Fast, which is building a one-click login and checkout platform to help rid the internet of passwords, plans to hire some 60 people to join its 23-person staff by the end of the year, Domm Holland, co-founder and CEO told Crunchbase News.
Driving Fast’s goals are not just demand, but also a $20 million Series A funding round the company closed in March. It was led by digital payment service firm Stripe, which itself announced a $600 million Series G extension a few weeks later.
“Where every sector is contracting, there is a credit crunch, people are losing jobs and companies are not actively hiring, we are uniquely growing and hiring,” Holland said. “We are very hungry for talent.”
The company is pre-revenue, but its login product is live on hundreds of websites, he said. Not surprising in this environment, one of his fast-growing customers is grocery chains. That sector of Fast’s business has grown 15 times since the COVID-19 pandemic began.
“There is a whole wave of people who have to now order groceries online and, for lots of them, that is another password to learn,” Holland said. “It’s not just grocery, but true of enterprise, in general. We are in a unique position because we can move the needle and move at a blistering pace.”
Tapping into the talent pool
As financial services firms look for their next employees, organizations such as New York-based Flatiron School are ensuring there is a pool of talent out there for them to find.
Flatiron School offers online and on-campus software engineering and data science courses across eight locations in the United States.
Its head of career services, Gretchen Jacobi, said technology has disrupted the financial industry. Now with social distancing due to the COVID-19 pandemic, every experience is disrupted.
Flatiron continues to evaluate which businesses are going to be resilient, which will see an increase in demand and which are hiring, as well as which businesses are freezing their hiring, said Jacobi. In addition, some companies that had offered jobs to graduates, rescinded them when the pandemic hit.
Many students come to the school to learn new skills so they can change careers, Jacobi said, adding that students who have a financial background, such as technology, accounting or marketing, have had success being hired.
“This shift is requiring consumers to go online to consume content, engage in an experience or buy something,” she said. “Brick-and-mortar is out, and small retailers are popping up with an e-commerce storefront where they didn’t have it. We are seeing a lot of activity needing to be supportive on the fintech side. There needs to be fraud protection and advanced payment processing. Fintech can find the tailwind, and we are seeing examples of students accepting jobs at this time in areas such as payment review.”