You might think you want a job in the growing fintech sector. You might think that working in fintech will be far more exciting than a boring old bank, but have you also considered this? - By virtue of is newness and high growth rates, the fintech sector is a prime candidate for consolidation. And if you work there, this means you can expect a lot of career disruption.
U.S. fintech companies received $1.5bn of investments across 124 deals in the first quarter of this year, according to KPMG. That’s despite the fact that many investors held back from making deals in order to assess whether the Trump administration would implement promised changes to trade and tax policies. Consolidation has subsided since the dizzying fintech frenzy of 2015, but is expected to pick up again soon. KPMG predicts that fintech firms in the robo-advisory, AI, data analytics and regtech sectors will all be targets for investment and M&A in 2018.
This is bad news if you want to work in the industry. The firm you join today could be gone tomorrow. Both buy-side and sell-side firms prefer to deal with a smaller number of large vendors and are tightening their capital and operation budgets. Fintech is consolidating. And a fintech firm that goes through a merger is very likely to cut costs.
Take ... Vela Trading Technologies
Vela Trading Technologies is a case in point. A trading, market data and analytics technology firm, earlier this year it acquired Object Trading, a provider of a Direct Market Access (DMA) platform, pre-trade risk controls and analytics applications. Once the latter is integrated, there will likely be simultaneous job cuts in some areas and new hires in others.
“We’ve made these acquisitions, rebranded and established a brand with a common identity with the two firms coming together, and we’re doing the same with Object Trading,” says Jen Nayar, Vela's CEO. “Bringing together SR Labs, which was founder- and tech-driven, with Wombat, which was part of a much larger organization, NYSE Technologies, was challenging, because they had very different cultures."
Nayar's NYSE colleague Ian McIntyre, the former COO of Vela who was a Wombat veteran, already left the firm after declining to relocate from Europe to the U.S.
It is unclear exactly how much trimming will be done once Vela has completely integrated Object Trading, but there will be new jobs too.
In particular, Vela is looking to hire engineers, software developers with a strong mix of C++ and Java experience, quality assurance (QA) specialists, client services professionals, DevOps (development and operations) specialists responsible for the packaged delivery of products and operators of the trading systems and managed-services business.
In addition, Vela is looking for technical sales engineers to run proof-of-concept with clients through to live delivery.
“We look for people with a strong technical background who’ve progressed into wearing a suit and candidates who’ve grown up in the software development space with hands-on experience of our products or similar products in this industry – trading applications, low-latency market data, line handlers and some have come from managing and processing big data,” Nayar said.
The pros and cons of joining a fintech firm
Like any person's move to a new role, there are going to be pluses and minuses to taking a new position at a small to mid-size fintech firm.
"For those moving from a large organization to a smaller startup, they will likely be able to work in an environment that will move faster with less bureaucracy and where decisions can be made much faster than what a candidate is typically used to," says Matt Stabile, data team manager at Averity, a technology recruitment firm. "They will also likely be put in a position with more responsibility than someone with a similar level of experience at a larger company given its smaller size.
"Finally, many candidates move to start-ups for the opportunity to work in a more fun, informal atmosphere with a high potential for fast growth," he says.
Conversely, the risk candidates face when moving firms can include the normal risks of any small company, namely that of failure, Stabile says.
"Further, I've often seen situations where small startups are acquired by a large company, which results in mass layoffs due to redundancies, as well as a dilution of the company's initial ethos in terms of culture, environment and the potential for individual career advancement," he says.
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