The RegTech industry has been going from strength-to-strength over the last few years, with more eyes on it than ever before.
This popularity has seen the number of companies involved in the market balloon, with the in-person challenges posed by the pandemic leading many to turn to the industry.
Despite this, there are still some challenges – particularly the shortage of talent to work in the sector. A recent survey conducted by the Cambridge Centre for Alternative Finance found that 38% of RegTechs identified this issue as a major challenge.
This viewpoint is broadly shared by Signicat, “The RegTech industry has been growing rapidly over the past few years, driven by increasing regulatory requirements and the need for more efficient and effective compliance solutions. However, one of the biggest challenges that RegTech companies are currently facing is the shortage of talent.
What is the talent shortage driven by? In this area, Signicat believes there are a few – namely the growing demand for RegTech solutions, the specialised nature of the industry and the limited pool of experienced professionals.
To deal with this drought of talent, Signicat suggested five key ways companies can address it.
“First, companies can focus on building their employer brand and reputation. One way to do it can be by combining marketing and HR actions and creating specific strategies. This includes showcasing their company culture, values, and mission and highlighting their commitment to talent development, employee benefits and career growth. This can help to attract top talent and differentiate the company from competitors,” said the firm.
In addition, Signicat promotes the investment in training and development programs for their existing employees – something which can help to build skills and expertise internally and create a pipeline of talent for future hiring needs. The growth and development of employees can also help to increase employee engagement and retention.
RegTech businesses can also look to diversify their talent pool by hiring from non-traditional sources, Signicat claimed. “This can include recruiting from outside the financial services industry or partnering with educational institutions to develop training programmes for students and graduates. This can help bring new perspectives and ideas to the industry and build a more inclusive and diverse workforce.”
Another key way to address the talent shortage for RegTechs is for the firms to leverage technology to automate and streamline certain tasks, freeing up time for employees to focus on higher-value activities. “This can help to reduce the need for specialised talent in certain areas and allow employees to focus on more strategic work.”
There is also the need for businesses to attract and retain more talent by investment in offering competitive benefits to the employees including a four-day work week, a remote working model, health insurance and more paid days off per year.
A key challenge for the RegTech sector is to make such it is adequately prioritising and promoting diversity and inclusion in their hiring practices and workplace culture. This, Signicat claims, involves implementing unconscious bias training for hiring managers, establishing diversity targets and metrics, and actively recruiting and promoting women and other underrepresented groups.
“Unfortunately, gender bias and discrimination are still prevalent issues in many industries, including the RegTech industry. Despite progress in recent years, according to research by Innovate Finance, the UK fintech industry is struggling with gender diversity, with women making up just 29% of employees and holding only 17% of senior leadership roles. This misrepresentation of women in RegTech continues to be a significant issue in the industry and directly affects to the talent shortage issue,” said Signicat.
By moving forward with these steps, Signicat believes companies can create a more inclusive and welcoming environment for all employees, which can lead to improved employee morale and a more innovative and productive workforce.
“In summary, by focusing on building their employer brand, investing in training and development programmes, diversifying their talent pool, and improving their benefits for employees, companies can attract and retain top talent and drive continued growth and innovation in the industry,” the firm said.
“Addressing the talent shortage in RegTech is a complex challenge, but one that can be overcome through a combination of strategies such as building a strong employer brand, investing in employee training and development, diversifying the talent pool, offering competitive benefits, and prioritising diversity and inclusion in hiring practices and workplace culture.
“However, it is crucial to understand that these actions should not be seen as a one-time fix but rather as a cultural shift towards continued investment in the mentioned initiatives. Only through this approach will companies be able to ensure a thriving working environment now and in the future.”
Crypto and Web3 challenges
A burgeoning part of the FinTech sector is the growing and nimble Crypto and Web3 markets. Whilst these areas are growing hugely in popularity, this is also an area that is proving to be left wanting when it comes to attracting and retaining talent.
Cristian Lupascu, CEO and co-founder of OMNIA Protocol, believes that the rapid growth of the crypto industry, particularly in Web3 and DeFi, has led to an increasing demand for skilled professionals.
“Full stack developers, blockchain devs, and protocol engineers are consistently sought after, yet there is a pronounced shortage of highly qualified cryptography and marketing specialists in the Web3 RegTech space,” said Lupascu. “Cryptography specialists are crucial for ensuring transaction security and privacy, possessing in-depth knowledge of encryption algorithms, privacy-enhancing tools, cryptographic protocols, and secure communication techniques.
Adjacent to this, Lupascu stresses, is that marketing professionals with an understanding of the technical nuances of compliance and DeFi have become invaluable, due to their ability to communicate complex concepts and navigate challenges associated with marketing in a heavily regulated environment.
How can businesses address this challenge? Lupascu cited OMNIA’s own journey, where are the firm’s initial foundational hires, it found it hard to find quality candidates. To tackle the talent shortage, the firm implemented various strategies including hiring a chief vibe officer to support its recruitment needs, expanding its hiring practices from local to global and diversifying work arrangement and allocating a 4-6 month lead time to fill competitive roles and practiced advanced resource planning. The firm also focused on cultural fit during the interview process to help reduce turnover.
What can be done to bring these shortages to an end? Here, Lupascu stressed that the Web3 RegTech space presents a unique challenge involving both producers and consumers of the products. “Producers require the engineering and developer expertise to create these solutions, while clients, the consumers, need the know-how to integrate and maintain them in their systems,” he said.
The OMNIA CEO added that as there are more non-developers than developers, companies should invest in system architectures that enable low-code professionals and subject matter experts in compliance, legal, and finance to utilize their products without extensive coding knowledge.
“By tailoring products and services to both developers, who typically create the products, and non-developers, who often need technical expertise for implementation, OMNIA bridges the gap between technical and non-technical professionals, fostering a more inclusive ecosystem. This approach makes RegTech products more accessible,” explained Lupascu.
Lupascu concluded, “We decided to focus on user-friendly tools and platforms, allowing individuals with diverse backgrounds to effectively leverage their skills. Consequently, experts in legal, finance, and compliance can contribute to the development and implementation of compliant systems within the Web3 landscape, reducing the pressure on the demand for developers, particularly in the implementation side.”
More training required
While the RegTech sector is continuing to grow in stature and presence in the financial market, there are still key areas where the industry is yet to put down its mark. According to Muinmos CEO Remonda Kirketerp-Møller, as RegTech is a relatively new sector, it does not yet have an established structure for the training and retainment of a skilled workforce.
“There are no real “RegTech-unique” profession/titles, and very few relevant training programs. RegTech companies, therefore, need to look for the closest relevant sectors for employees – finance and tech. This can be both a set-back and an opportunity.
“On the one hand, this means that not many candidates have relevant RegTech experience, and more ‘on the job’ training is required. On the other hand, as we hire people from the sector we are serving, we understand our clients better, and are able to design products that serve them better.”
Therefore, Kirketerp-Møller stressed that while finding the right employees can be challenging at times, and defining clear roles and establishing more relevant training programs can help in solving that, it is important to have such a close connection with clients.
Early training
According to Fola Oguntoye, head of HR and Recruitment for Zeidler Group, the sector has seen a shortage of the right skills and experience due to RegTech being a developing industry.
She said, “To overcome this issue, Zeidler Group looks to attract subject matter experts and graduates who have studied either finance related courses, law or technology. We then invest a lot of time into training our teams to make them subject matter experts.”
In the future, Oguntoye recommend more collaboration should be done with schools and universities to discuss the varied careers available in RegTech so that graduates can have a clear understanding of the opportunities that are available to them.
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