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Inside the war for fintech talent with untapt’s Ed Donner

There’s a serious shortfall for technology talent in financial services and fintech. untapt‘s CEO Ed Donner estimates there are 120,000 open roles for technology positions and that’s just in the U.S. alone. Globally, that number rises to around 400,000.

Donner joins us on this week’s installment of the Tradestreaming Podcast as we discuss the war for fintech talent, how top fintech companies build successful teams, and the role for artificial intelligence in matching talent with job openings.

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Below are highlights, edited for clarity, from the episode.

Financial services are hungry for technology talent
Hiring is always painful. Hiring technology people is particularly painful. Hiring tech people in fintech is especially acute for two reasons. First, the demand for tech talent in financial services and fintech is insatiable, off the charts. We’ve estimated there are an estimated 120,000 open technology roles in fintech in the U.S. alone. Globally, there are around 400,000 technology positions that need to be filled in our industry.

In addition, fintech also has something of a brand problem with millennial software engineers. They know what it’s like to work at Amazon, Apple, Facebook, and Google, but they don’t understand the interesting, exciting problems being worked on in finance. It’s a perfect storm of incredible demand with people going elsewhere and in the middle, you’ve got hiring managers pulling their hair out trying to attract engineers.

What successful firms do to lure top talent
Some of the best approaches to hiring we’ve seen are when companies recognize that hiring is a first-class problem they need to solve and put it at the top of their agenda. People sitting in the C-suite need to focus on bringing in talent. Companies really need to take time to get their brand out there and tell the story of the interesting problems they’re working on. Some hiring managers think narrowly, with preconceived skillsets of what they’re looking for. Successful hiring managers think broadly about the tech talent they’re willing to bring in. It’s the old adage that “A players hire A players”.

Making decisions quickly across the company is also really important. The current market doesn’t support poor communication with candidates. Candidates kept waiting will quickly find a home elsewhere and be taken off the market. Everyone across the company needs to make decisive decisions and communicate well with top technologists.

Fintech job descriptions are a way to stand out
Some of it starts with the job description, with the time you spend to articulate your value proposition to the tech people you’re reaching out to. It needs to be something thoughtful, exciting, and reflects your culture. That’s something Google is very good at and something historically that large financial services firms haven’t really focused on.

Look through tons of jobs descriptions and you’ll find “problem solving skills required”. Great, that tells me a lot. Spend the time and energy to describe what the person will be doing everyday in his new role. Really sell the role to top talent and explain the problems you’re solving. On untapt, hiring managers can record a short video that introduces themselves, their team, and the role they’re hiring for. We find it’s an effective way to make that personal connection and gets your initial message across.

What skills are most in demand in fintech?
Things have been changing recently. There are three areas I’d talk about. The first of which is software engineering. Within  this category, we’re seeing a shift in skillsets to more modern programming languages, like Python and Javascript. Next, we’re seeing an emerging profession around data. The data scientist is becoming the heart of many businesses. There are really two different roles here: the data scientist, who comes from a math and artificial intelligence background who knows how to code and a data engineer, who comes from a computer science background but knows about math and statistics. The two of them typically partner together to build data-centric solutions for financial services.

The third category is really emerging and it is a hybrid digital role. These are roles that roll up to the business and require an understanding of the digital space and knowing how to implement it in the business. These roles are on the rise and I expect to see them more in the future. Traditional front office and business roles will have to have this digital component.

 

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3 key pieces of advice to build a fintech startup from a leading investor

SenaHill's investing philosophy for investing in financial services

Building a financial services firm from the ground up is hard. There are all the vagaries of building a business from scratch: hiring the right people, finding the proper product/market fit, building a brand, and acquiring customers. But, for fintech startups, there are also the specific struggles of competing in the financial sector. Regulation requires firms to tightrope their growth and operations. Sure, there’s $1 trillion up for grabs in the financial services marketplace, but compared to other industries, it’s a long and expensive process to acquire new customers.

Around $12 billion of venture capital flowed into upstart financial services firms in 2015. The growing investing interest in early-stage fintech firms has compelled many generalist investment firms to dabble in the industry. But they’re only a handful of firms that live and breathe this stuff and are entirely focused on the sector. SenaHill is one of those firms.

The firm was founded by Neil DeSena (built Goldman Sachs’ industry-leading multi-asset trading system, REDI) and Justin Brownhill (founder and CEO of The Receivables Exchange, the first-to-market, real-time online institutional marketplace for the purchase and sale of working capital). SenaHill is a merchant bank which means it essentially provides 2 services: investment banking and principal investing. The firm doesn’t have outside limited partners, which means it invests its own partners’ capital.

Kyle Zasky, a partner at the firm, offers 3 tips to entrepreneurs making a go at building the next generation Goldman Sachs, BlackRock, or CNBC.

Find partners with real experience: Building a company in financial services comes with its own challenges. Zasky sees lots of entrepreneurs who have a sound product and strategy but just don’t quite understand how the finance industry works. “Founders need to do a lot of things right, including getting in front of the right partners,” Zasky told Tradestreaming. “In financial services, getting the right anchor clients is key.” Zasky should know — like all the partners at SenaHill, he’s an entrepreneur at heart. In 1995, at the age of 23, he launched his own electronic brokerage, EdgeTrade. 12 years later he sold his firm to Knight Capital.

So, Zasky and his SenaHill partners focus on their collective backgrounds when talking to young firms trying to make a dent in financial services. He encourages fintech startups to find investment partners who have large rolodexes and are willing to put in the hard work for their portfolio companies. “I almost feel like I have the same commitment to the 5 or 6 portfolio companies in my portfolio as I did to my own company when I was an entrepreneur,” he remarked.

Identify and hire the right people: Hiring people at early stage financial services firms is particularly hard: they’re in high demand and Zasky thinks most millennials would rather work at Facebook or Google than on Wall Street. Hiring is such an acute problem that SenaHill actually invested in a firm, untapt, that bills itself as something like an eHarmony for technologists and the finance companies looking to hire them. The firm’s platform takes programmers’ skills and via an algorithm, tries to match them to the skillsets required at hiring firms. When Zasky met the firm, he liked the business, liked the scalability, and because they were targeting fintech, he felt his firm had the connectivity to know the right people at banks and broker dealers. “You don’t have to work for Facebook to have a fulfilling career,” he remarked.

Work with a lifecycle investor: Every investor has his or her own model. Some are early stage and turn over the reins to a larger institutional investor later in a firm’s growth cycle. Others provide niche bridge financing. SenaHill’s Zasky says he gets in early and intends to continue supporting his portfolio companies down the road. That can come in the form of advising a portfolio company on a financing or putting more of his firm’s own money in. One SenaHill investment, Market Realist, appreciated this approach. The New York-based firm bills itself as the largest independent provider of ETF research along with comprehensive coverage of master limited partnerships, mutual funds, closed-end funds, real estate investment trusts, and 350 stocks of the S&P 500.

Michael Rodov, founder and CEO of the firm, said that he appreciated SenaHill’s MO. In his case, he looked to raise money from institutional investors shortly after completing a friends and family round for Market Realist. “When we had ups and downs, they’ve always been a great partner” he admitted. “When we had capital needs, SenaHill always stepped up to be a partner.”

For Rodov, this type of involvement was really important as he sought more investment as his firm grew. SenaHill also provided Market Realist with strategic partner introductions early on that helped launch the firm, which now services an audience of 800,000 investors. He’s been able to “lean heavily” on his investor, a firm he feels is respected widely. And that’s opened doors for him and Market Realist.

Photo credit: Engin Erdogan via Visualhunt / CC BY