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Are Singapore Fintech Jobs Recession-Proof?

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As the spectre of recession looms large over the region, tech startups have been cutting back on costs and resorting to mass layoffs. Fintech companies in Singapore have been likewise affected, and the prospect of promising jobs in the bustling local fintech scene might be under threat in 2023.

Nevertheless, Singapore continues to be a beacon for the fintech industry, with talent the world over coming to seek jobs and a career track in an innovation-spurred sector that is revolutionising financial services. 

Despite its status as a global fintech hub, various economic tailwinds including the pandemic have put the Singapore jobs market as a whole under pressure. The likes of internet giant Sea Group have retrenched over 7,000 positions out of nearly 68,000 in the last six months while Grab Holdings has instituted austerity measures in Q4 2022 including a hiring freeze, salary freezes for senior managers as well as slashing travel and expense budgets.

Many high-growth IT companies went on hiring sprees during the COVID-19 pandemic to meet outsized demand for digital services. But now amidst weakening economic conditions, the tech employment pullback is widely seen as a consolidation maneuvre to rebalance teams and bottom lines to the new market realities this year. 

The Challenger Report outlined how over 97,000 jobs were cut in the tech industry last year, up an incredible 649% from the roughly 13,000 gigs eliminated in 2021. So far in January, major outfits like Amazon have announced it expects to lay off 18,000 people, while over two dozen US-based tech companies including Coinbase, Flexport and Salesforce have said they will reduce their workforce by at least 10% , according to industry employment tracker layoffs.fsi.

Specialised demand outweighs local supply

Interestingly, in spite of the prevailing market sentiment around tech jobs, the Fintech Talent Report 2022 from the Singapore Fintech Association and Accenture uncovered that the demand for specialised workforce in financial technology roles continues to outstrip the local talent supply.

This is in-line with the trend over the last several years, ever since Singapore became acknowledged as a fintech hub on par with its status as a global financial centre. The same report recognised Singapore’s allure as a financial innovation destination, with 84% of the 1,637 fintech leaders surveyed identifying the island nation as the location of their global headquarters.

Singapore also came in third in the Global Financial Centres Index 32 as a global centre for the financial services industry in general – behind only New York, London, and overtaking Hong Kong as the predominant FSI hub in the Asia Pacific region. 

This global recognition alongside the favourable but stringent regulatory climate, not to mention the deep concentration of startups in Singapore (alongside the presence of large overseas-originating fintechs like Revolut and Wise there) means that the opportunities for fintech jobs in the city-state are more plentiful than anywhere else in this part of the world.

But with rising interest rates amid high inflation, there is doubt about the ability of startups to continue raising capital in an increasingly recessionary climate. This could lead back to renewed retrenchment fears later in the year, and indeed, questions about the resilience of the sector overall. 

Is local fintech jobs market recession-proof?

After all, would financial markets be enamoured with a persistent negative outlook for venture capital-backed startups – which have long pushed for growth over short-term financial sustainability, and are constantly jockeying to present themselves positively in the hopes to go public or get acquired?

Startups are often compared with rocket ships, taking off on an upward trajectory with no limitation to how high they can achieve. Few want to talk about what happens when the rocket crashes instead. And once the situation seems untenable, cutting back on jobs might be an inevitable outcome, even for the high-growth fintech sector in Singapore.

Surprisingly, the SFA-Accenture survey of 1,637 fintech leaders in Singapore stressed that for sustained business growth, startups need to continuously prioritise the jobs agenda – not just in hiring the right talent, but in developing and retaining the best workers throughout the employment lifecycle. 

A majority of fintech leaders surveyed (72%) believe that sectoral growth will persist, and indeed will pick up pace as more opportunities become available. Although it is worth noting that this majority is less than the 2021 survey where 85% of respondents said the same.

Nonetheless, 95% of respondents said they expect an increase in their workforce in the short term (in the next year or two), up from the 84% who said similar in 2021. There are an estimated 14,000 fintech workers based out of Singapore, and the workforce is projected to grow at an average rate of 45% – a headcount increase of 6,000 overall over the next two years.

Tight competition for Singapore fintech jobs

With a relatively small pool of talent in Singapore, the demand is still higher than the supply and is exacerbated by several factors, according to survey respondents, with two-thirds saying the main reason is that ‘candidates expect higher pay than offered’. Other major factors affecting the talent gap were ‘difficulty in getting work permits for foreign employees’ (48%), ‘candidates not being a right fit for company culture’ (47%), and ‘candidates prefer to work for competitors’ (46%).

When asked how to plug these talent shortages, more than half of those surveyed said ‘making it easier for foreign employees to obtain work permits’ (57%) and ‘establishing more partnerships within the broader ecosystem’ (55%) had the best likelihood, while ‘offering higher salary packages’ (38%) was the ranked as the least effective option.

But in a tight labour market, fintechs would be competing with traditional financial institutions and an even wider ecosystem for the technology-centric roles, so offering better compensation and benefits might be inevitable to sustain development. 

Attrition rates might be more of an immediate problem, as over half of those surveyed reported that the average employee stayed at the company less than three years. Candidates often leave for the same reasons they joined, furthering their learning and career development, so startups should consider offering learning and development opportunities alongside the flexible work arrangements that the industry is a leader in.

So even though the fintech jobs outlook is not as dire in Singapore as much of the rest of the tech sector, all is not rosy. Ironically the opposite is still the most pressing problem: talent and skills shortages are cited as the single biggest threats for the space, ahead of inflation and cybersecurity challenges. 

In a post-pandemic setting where employers and employees alike are reevaluating their work strategies and desired outcomes, the fintech industry in Singapore needs to examine accessibility for foreign specialised talent to complement the local sector, improve collaboration across the tech spheres to grow competencies and share knowledge, and make their employment offers stand out too attract some of the thousands of fintech talent being laid off in other parts of the world.

Featured image credit: Pexels

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