How remote hiring could leave fintechs vulnerable
By Daniel Callaghan, CEO and co-founder of Veremark, the global background checking and applicant screening platform.
Fintechs are well and truly embracing remote working. Robinhood recently announced it was adopting a ‘remote first’ approach, while Revolut’s move to allow employees to work abroad for up to two months has been emulated and surpassed by Zopa and GoCardless, who both offer three months.
A knock-on – and less discussed – effect of this shift is that more fintechs are now also hiring remotely. Thanks to the pandemic, it’s no longer unimaginable for employers to hire staff they have never actually met in person.
More companies are now hiring internationally, too. London-based fintech Onfido brought in California-based Mike Tuchen as its CEO at the end of 2020 (more than six months later, he had only met one employee in person, Yahoo reported).
Fuelling this shift towards international hiring is the pressing need to fill talent gaps. A 2021 report by the Centre for Finance, Technology and Entrepreneurship found there were 40,000 job openings at the largest fintech companies. According to the study, the industry-wide struggle to recruit the right talent was “not because of a lack of candidates, but a lack of qualified candidates”.
Companies have long sought to plug gaps in homegrown talent by hiring foreign workers who have moved to the UK (or plan to): 42% of workers within UK-based fintechs are international, according to a 2021 report produced by the City of London Corporation, TheCityUK and consultants EY.
However this is becoming more difficult. The authors of the report note that changes to the immigration system brought in after Brexit had led to firms seeing “significant cost increases” to securing high-skilled talent.
Meanwhile the Global Talent Visa, introduced in February 2020 in an attempt to attract top tier talent to our shores, has been criticised by some for being too narrow in scope, too costly and too document-heavy, as ITPro reports.
In this context, recruiting people who live beyond our borders is a sensible option for fintechs suffering from staff shortages. Yet hiring remotely can pose a number of risks for employers.
For starters, encountering CV fraud is always a possibility during the recruitment process (and is far more common than you might believe, with one YouGov survey showing one in 10 British people have lied on their CVs), but it may be harder to spot when hiring people with unfamiliar qualifications from unfamiliar institutions from overseas.
Even when a candidate is skills tested to assess their competency for a role, there is always the possibility that – when done remotely – someone else is completing the test on their behalf.
Hiring someone less than trustworthy is, of course, a problem in any industry, and the headaches it can induce – costly rehires and the damage to a firm’s reputation – should not be underestimated.
But in the fintech world, where financial institutions and customers could be targeted for fraud or money laundering, it is particularly risky.
Attempting to bolster the recruitment process simply by adding more interview stages is unlikely to protect employers from these risks and can end up putting off potential hires.
Employers can counter these threats by introducing more rigorous vetting of job candidates. While some background screening is already common practice in the sector, such as running criminal and global sanctions checks, companies can go much further.
For example, rigorous employment history checks or academic checks can verify whether someone really does have the experience and qualifications they claim to have.
Meanwhile social media checks, which will identify any offensive language or questionable behaviour, are often overlooked but deeply important when it comes to avoiding reputational risk.
Firms eager to attract top tier talent might be reluctant to do anything that could make the hiring process any longer. And indeed, employers who make the process too complicated and demanding could risk putting off talent in a candidate market.
However, employee screening today has come a long way from labour intensive, phone reliant methods of yore, and they focus on the employee experience as well as the background checks.
Clearly there are huge opportunities for fintech firms who adopt remote hiring practices to seize – the primary one being access to an unlimited pool of talent. But those who do so without stepping up their screening processes could also expose themselves to huge risks.