SKILL SHORTAGE THREATENS THE GROWTH OF SCOTLAND’S FINTECH SECTOR

The financial technology, (Fintech), sector has experienced rapid growth during the pandemic, as a range of existing trends have accelerated by restrictions.

Rising demand for contactless payments, increased interest in online trading platforms during lockdowns, and improvements in mobile banking systems – as more people work from home – have all been capitalised upon by the tech firms looking to disrupt incumbent institutions.

Last year’s UK Government-initiated Review of Fintech by Ron Kalifa outlined the sector’s progress, while making recommendations on better policy, regulation, skills and investment.

The report recognised the momentum of Scotland’s cluster of Fintech firms, which included growing expertise in open finance, payments and regulatory innovation.

Figures from industry body FinTech Scotland showed that the community has grown from 119 in March 2020 to 181 such companies in September. However, while the coronavirus crisis has offered opportunities, when combined with Brexit, it has also led to shortages in staff with the right skills, which are in increasing demand for those looking to scale-up and expand.

Recent research by specialist recruiter Hays Technology shows that nine of the top 20 salary increases in Scotland during 2021 are related to the sector.

Security architects saw a salary increase of 17.3%, while IT development and operations roles saw an above average increase of 10%.

Justin Black, director of Hays Technology in Scotland, said: “Clearly, the high demand for tech roles that we’ve seen in recent years continues and salaries are increasingly rising as a result.

This is great news for Scotland which is the largest Fintech hub after London, but we need to make sure that the talent pipeline is sufficiently healthy to fulfil the demand going forward.”

Practical initiatives include work with Hays to support the Scottish Fintech cluster in recruiting for in-demand skills like cyber security, mobile banking, cloud applications, artificial intelligence and blockchain solutions.

FinTech Scotland is also working with Skills Development Scotland’s digital advisory group and with Deloitte on a pilot promoting the sector within five schools in Scotland during December, getting entrepreneurs in to speak with S2 and S3 pupils before they make decisions on subjects.

The research was undertaken alongside FinTech Scotland, whose chief executive Nicola Anderson said that skills shortages are something the industry body is trying to tackle.

Anderson said: “Nobody’s denying that this is an issue to be addressed, but the more we’ve moved into this home-working digital environment, there’s more innovation around recruitment – recruiting overseas but in similar time zones, better apprenticeship programmes and improving visa schemes from the UK Government.” 

Colin Frame, managing director at IT services firm Stellar Omada, believes there is a growing tech talent problem in Scotland and has taken steps to solve it at the grass roots, sponsoring an Digital Education and Innovation Centre at Heart of Midlothian FC, supporting technology skill development in young people.

He said: “I think this is a major problem in Scotland – you’ve got to fix the problem in schools and adopt a bottom-up view of how tech skills become embedded in individuals, giving people the opportunity to embrace it,” he commented, noting relative outperformance by nations like Ukraine and Israel due to their grass roots investment many years ago.

There’s just not enough people, the skills don’t exist, the problem is here and now,” Frame continued. “In things like software development and data analysis I’m still using the same people I was using 20 years ago.”

He added: “Universities seem to be maxed out – a lot of tech employees are retiring and we don’t have the pipeline of people coming through – you can only grow as big as your people allow.”

Myles Stephenson(pictured above), chief executive at payments-as-a-service firm Modulr, agreed that there’s a global supply and demand mismatch in engineering and tech talent, but argued that this potentially plays both ways.

He said: “It opens up newer markets to hire from, with so many people now working flexibly, but it does take away from some of the benefit Scotland has as a talent pool, so there are clearly pros and cons.”

He is also planning to invest in educational initiatives to support growth, building upon existing links with the University of Edinburgh to broaden the available talent pool.

Analysis by Dealroom and Adzuna in December found that Edinburgh had more than 2,000 tech job vacancies – an increase of 85% since last year. The average tech job in the capital is also offered £58,405 for a new role – the highest in the UK outside of London.

Technology Company AND Digital ran an online survey in October with a nationally representative sample of 551 UK-based decision makers. In addition, 50 tech firm leaders from Edinburgh were surveyed.

It found that 40% were concerned about the costs required to train and equip their people with the right data skills – such as analytics, engineering and machine learning.

Dave Livesey, executive for AND Digital’s Club Somerville in Edinburgh, said: “In an age where growth will be fuelled by the effective understanding, use and application of data, it’s vital that businesses do everything they can now to nurture and invest in an in-house talent strategy, placing data at the heart of business operations and opportunities.

“Those that make the necessary investments in talent now will gain huge competitive advantages in the near future.”