Summary. FinTech companies face unique HR challenges that can impede growth despite their innovative approach to financial services. Operating with lean teams and often understaffed HR departments, these companies struggle with high turnover rates (13.2% industry average), talent acquisition for specialized roles, inadequate onboarding processes, and limited learning opportunities. Additional HR challenges for FinTechs include evolving regulatory pressures, employee engagement issues, outdated HR tools, and cybersecurity risks that can cost an average of $4.88 million per data breach. To overcome these obstacles, FinTechs must prioritize strategic HR initiatives, create compelling employee value propositions, focus on retention through growth opportunities, automate administrative processes, enhance onboarding, cultivate inclusive cultures, address cybersecurity proactively, and leverage untapped talent pools through remote work options.
As people get used to personalized, self-serve technology platforms, they’re demanding the same from their banks—slower-moving institutions that can’t respond as quickly as customers want.
Enter FinTech—the perfect combination of using technology to deliver financial services and products to consumers. However, FinTechs operate lean, with low headcounts, understaffed (or unstaffed) HR departments, and massive employee turnover each posing their own FinTech challenges.
HR challenges for FinTechs make solving recruitment, training and employee retention difficult. But these challenges can be overcome with the right approach. In this article, we’ll look at what problems you can expect, how to overcome them, and an 8-step approach to overcome these fintech challenges.
Relevant reading: FinTech Industry Challenges & How to Solve Them with Omni
Problems FinTechs are Facing in HR Now
The FinTech industry is booming, with innovation and disruption at its core. But as these companies race to revolutionize finance, they often face a unique set of HR challenges that can hinder their growth and success. Here's a breakdown of some key HR challenges for FinTechs:
Lack of dedicated HR functions
Many FinTechs, especially in their early stages, lack dedicated HR departments or personnel, leading to ad-hoc HR practices and a lack of strategic focus on people management. This is among the most common HR challenges for FinTechs.
Founders and managers often wear multiple hats, including HR responsibilities, which can divert their attention from core business objectives
High turnover rates
The fast-paced and demanding nature of the FinTech industry can contribute to employee burnout and attrition. It’s also highly competitive, with companies vying for top talent. This can lead to high turnover rates as employees are lured away by better opportunities The tech industry has one of the highest turnover rates of any industry, at around 13.2%, according to a recent LinkedIn study.
FinTechs require individuals with specialized skills in areas like software development, data science, and cybersecurity. Finding and retaining these specialized talents can be challenging. Building a strong employer brand that resonates with tech-savvy and ambitious individuals is crucial for attracting top talent in the FinTech space.
Limited focus on learning and development
The FinTech landscape is constantly evolving, with new technologies and regulations emerging rapidly. Continuous learning and development are crucial for employees to stay ahead of the curve. FinTechs need to invest in upskilling and reskilling their workforce to adapt to the changing demands of the industry.
Fragmented onboarding processes
According to a recent study by Glassdoor, organizations with a strong onboarding process improve new hire retention by 82% and productivity by over 70%.
A smooth and efficient onboarding process is crucial for creating a positive first impression and setting new hires up for success. However, many FinTechs lack structured onboarding processes, leading to inconsistent experiences for new employees, potential delays in their integration, and other HR challenges for FinTechs.
Inadequate performance management
Without a clear performance management system, employees may lack direction and clarity regarding their goals and expectations. In the fast-paced FinTech environment, infrequent feedback can hinder employee development and performance improvement and cause other FinTech challenges.
In fact, a Gallup survey shows employees who receive regular feedback are 3.6 times more likely to strongly agree that they are motivated to do outstanding work, highlighting the need for a comprehensive performance management strategy that solves HR challenges for FinTechs.
Read next: Create an Impact with These Tips for 1-on-1 Meetings
Evolving regulatory and compliance pressure
FinTechs operate in a highly regulated environment, with strict compliance requirements related to data security, financial transactions, and customer privacy. Staying abreast of evolving regulations and ensuring compliance can be a significant challenge for FinTechs.
Cultural and employee engagement issues
The fast-paced and demanding culture of many FinTechs can lead to burnout, stress, and disengagement among employees. Creating a positive and inclusive company culture that supports employee well-being is essential for attracting and retaining top talent.
Learn more: 11 Tips for Taking a Holistic Approach to Employee Wellbeing Programs
Dependence on outdated tools
Many FinTechs rely on outdated HR systems and manual processes, which can be inefficient and hinder growth. Automating HR tasks can free up valuable time and resources, allowing HR teams to focus on more strategic initiatives and overcome common HR challenges for FinTechs.
Cybersecurity risks in HR
HR departments handle sensitive employee data, making them a prime target for cyberattacks—especially if they are understaffed and working at a high pace, as is so often the case for FinTechs. Data breaches can lead to significant financial losses, reputational damage, and legal repercussions. IBM studies indicate the average cost of a data breach in 2024 was USD $4.88 million. Cybersecurity risks are definitely FinTech challenges a new or growing company would want to avoid.
Additional reading: Employee Data Management: How HRIS Can Help Achieve Accuracy and Security
Importance of HR to Achieve Long-Term Success
In the competitive environment of FinTech, HR plays a key role in achieving long-term success. These days, HR is a strategic partner that helps companies overcome FinTech challenges and attract, develop, and retain the talent they need to thrive in a rapidly changing industry.
Strategic talent management
Finding the right people: FinTechs require individuals with specialized skills in areas like software development, data science, artificial intelligence, and cybersecurity. HR needs to develop effective talent acquisition strategies to identify and attract these individuals.
Developing skills: The FinTech landscape is constantly evolving, with new technologies and trends emerging rapidly. HR plays a crucial role in providing ongoing training and development opportunities to ensure employees have the skills they need to stay ahead of the curve.
Retaining top performers: High turnover rates can hinder growth and innovation. HR needs to implement retention strategies, such as competitive compensation and benefits, career development programs, and a positive work environment to keep top talent engaged and committed.
Future-proofing skills in a rapidly changing industry
Anticipating future needs: HR needs to anticipate the future skills needs of the FinTech industry and proactively develop training programs and initiatives to prepare the workforce for the challenges ahead.
Upskilling and reskilling: As technology advances and new roles emerge, HR plays a crucial role in upskilling and reskilling employees to ensure they have the necessary capabilities to adapt and thrive.
Continuous learning: Fostering a culture of continuous learning is essential for FinTechs to stay competitive. HR can promote learning opportunities, provide access to online courses and resources, and encourage employees to pursue professional development.
Scaling workforce with business growth
Workforce planning: As FinTechs grow, HR needs to effectively plan for workforce expansion, ensuring the right people are in the right roles at the right time.
Onboarding and integration: Efficient onboarding processes are crucial for integrating new employees quickly and effectively, setting them up for success, and minimizing disruption to existing teams.
Organizational structure: HR helps design and implement an organizational structure that supports growth, facilitates collaboration, and enables efficient decision-making.
Strengthening employer branding
Attracting and retaining talent: A strong employer brand is essential for attracting and retaining top talent in the competitive FinTech industry.
Communicating values: HR plays a key role in communicating the company's values, culture, and employee value proposition to potential candidates. This transparency helps overcome HR challenges for FinTechs.
Building a positive reputation: Positive employer branding can enhance a company's reputation, attract investors, and improve customer trust.
Steps to Overcome HR Challenges for FinTechs
Overcoming HR challenges for FinTechs and building a thriving workforce can be accomplished by implementing proactive strategies and prioritizing people management. Here are some key steps to take:
1. Prioritize strategic HR over administrative HR
Move beyond simply processing payroll and managing benefits. Focus on strategic HR initiatives that align with business goals, such as talent development, performance management, and employee engagement.
Invest in dedicated HR professionals or teams with the expertise to develop and implement strategic HR initiatives. Use data and analytics to inform HR decisions and measure the impact of HR programs on business outcomes.
Read next: How Does HR Contribute to Business Success? Strategies for Growth
2. Create a strong employee value proposition (EVP)
Develop a compelling EVP that highlights the unique benefits and opportunities your company offers to employees. This could include competitive compensation, growth opportunities, flexible work arrangements, and a positive work environment.
Clearly communicate your EVP to potential candidates and existing employees through various channels, such as your website, social media, and recruitment materials.
3. Focus on retention through growth opportunities
Provide clear career paths, development programs, and mentorship opportunities to help employees grow and advance within the company. Invest in training and development programs to equip employees with the skills they need to stay ahead of the curve in the rapidly evolving FinTech industry.
Encourage internal mobility and provide opportunities for employees to explore different roles and departments within your organization.
Learn more: The FinTech Leader's Guide to Global Talent Management
4. Automate HR processes
Automate HR tasks, such as onboarding, payroll, and benefits administration, to improve efficiency, reduce errors, and free up HR staff for more strategic work.
Implement HR technology solutions, such as HRIS systems and performance management tools, to streamline processes and manage data effectively.
5. Enhance onboarding and performance management
Develop a structured onboarding process to integrate new hires quickly and efficiently, providing them with the information and support they need to succeed.
Implement a system of continuous feedback, providing regular performance reviews and ongoing coaching to support employee development and performance improvement.
6. Cultivate an inclusive and engaging culture
Foster a culture of diversity, equity, and inclusion where all employees feel valued, respected, and supported. Implement initiatives to promote employee engagement, such as team-building activities, recognition programs, and opportunities for feedback and input.
Support employee well-being by offering flexible work arrangements, generous leave policies, and programs that promote work-life balance.
7. Proactively address cybersecurity in HR
Implement robust data security measures to protect sensitive employee data from cyber threats. Provide cybersecurity awareness training to employees to educate them about potential risks and best practices for data protection.
Conduct regular security audits and vulnerability assessments to identify and address potential weaknesses in your HR systems.
8. Leverage untapped talent pools
Embrace remote work options to access a wider talent pool beyond your local area.
Consider hiring talent from other countries to access specialized skills and diverse perspectives.
Explore opportunities to hire non-traditional candidates, such as those with career gaps or from underrepresented groups.
Building a Future-Ready HR Strategy for Success
In an era where AI promises up to 30% efficiency gains and employee expectations are rapidly evolving, staying ahead of HR challenges for FinTech is important to build a future-ready workforce.
Take Qashier, for example, who slashed payroll processing time by 75% with streamlined employee data and time-off reporting.
"Omni’s highly adaptable and customizable HRIS empowers us to easily manage our distributed workforce across existing and future countries of operation. The intuitive interface and automated workflows streamline our processes, saving us time and minimizing errors. I wholeheartedly recommend Omni to any HR team seeking a scalable solution for their growth journey." - Lovely Tan, Philippines Country Head of People at Qashier
Read more about Qashier's success here!
Join forward-thinking FinTech leaders who are:
- Automating their workforce planning with data-driven insights.
- Streamlining global hiring across the APAC region with multi-country payroll and bank-grade security.
- Supporting remote work with integrated time tracking and performance monitoring.
- Ensuring compliance with local regulations through automated workflows and comprehensive reporting.
Don’t let HR challenges for FinTech, such as low engagement, high turnover rates, and manual operations, further hinder your business strategy. Schedule a demo with our team today and discover how Omni can help transform your HR operations.
