How to Mitigate the Biggest Hiring Risks in Fintech

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As the fintech industry grows, so does the appetite for more refined processes to aid start up and scale up businesses. But fast growth can sometimes mean cutting corners. When it comes to recruiting skilled individuals, is it possible to do it quickly, without the risk of a bad hire?

Software, mobile applications, and other technologies designed to enhance and automate conventional forms of finance for both corporations and individuals collectively fall under the umbrella term of "financial technology," or fintech. Fintech may range from simple mobile payment apps to sophisticated blockchain networks that store encrypted transactions. Any firm that modifies, enhances, or automates financial services for people or corporations is referred to as a "fintech company." Examples include peer-to-peer payments, automated portfolio managers, mobile banking, and trading platforms like Robinhood. It also holds true for the creation and exchange of cryptocurrencies.

According to alliedmarketresearch, the worldwide fintech technologies market was estimated at $110.57 billion in 2020, and is expected to increase at a Compound Annual Growth Rate of 20.3% from 2021 to 2030, reaching $698.48 billion. Its growth is, in part, down to the application of new technical breakthroughs to goods and services in the financial sector. By applying various technologies such as application programming interfaces (API), artificial intelligence (AI), blockchain, and data analytics, it further intends to compete with the current traditional financial techniques for the supply of financial services.

Hiring challenges faced by fintech companies 

Every industry has its challenges when it comes to getting best-fit employees. However, fintech has some unique factors which make staffing particularly complex. Fast growth, diverse skill sets, sensitive data and a competitive job market are some of the more common hurdles.

The job market: Many firms struggle to find and keep top personnel due to the industry's intense competition. The difficulty in finding candidates with the necessary technical expertise and experience is one of the major challenges in fintech recruitment. There is a small pool of people with the abilities that fintech organizations need, and these positions often demand expertise in areas like programming, data analysis, and cybersecurity. As a result, fintech organizations may find it difficult to fill available positions due to the intense rivalry for top personnel.

Skill sets: Finding and keeping people with a variety of skill sets is another issue facing fintech organizations. The fintech sector requires people with a mix of technical, business, and design abilities since it is fundamentally cross-functional. Finding workers with the ideal balance of abilities and experience may be difficult, especially for smaller enterprises that might lack the financial means to compete with bigger corporations.

Fast growth: While fast growth can be a sign of success, it can also lead to difficulties if the company is unable to effectively manage and sustain the growth. When it comes to hiring, there is a pull to do things as quickly as possible to keep up with demand. But hasty hiring processes can mean inadequate screening, insufficient checks and the cutting of corners in order to expedite the hire.

It's critical for fintech businesses to handle recruiting strategically, concentrating on luring and keeping the best candidates for their company. This can entail providing competitive pay and benefits, fostering a welcoming and inclusive workplace, and affording chances for career advancement. 

What are the risks of a poor hiring decisions in the fintech industry?

Fintech requires a unique set of skills. The experience of its personnel are crucial to the success of the organization. Which is why businesses may face a variety of risks and difficulties as a result of poor employment decisions.

Unethical behavior: The possibility of fraud or unethical activity is one of the major dangers associated with bad recruiting selections. If a fintech business employs a person with a history of financial impropriety, the risk is that they could exploit their position to carry out embezzlement, internal fraud or the theft of confidential data. Significant financial losses and reputational damage to the business may follow from this.

Workplace conflict: Poor recruiting decisions also run the danger of resulting in subpar staff morale and performance. If a fintech firm hires someone who is not a good match for the company, they can struggle in their position, which would affect other employees' performance and morale. The general productivity and culture of the organization may suffer as a result.

Security breaches: Additionally, poor recruiting decisions can result in legal and regulatory issues in addition to these dangers. Regulations pertaining to data security and privacy are among those that apply to fintech organizations. A fintech firm may run the risk of fines and other repercussions if it hires someone who is not in compliance with these laws.

To reduce the danger of making bad recruiting decisions, fintech businesses should be cautious and strategic when hiring, thoroughly analyzing the credentials, experience, and history of potential candidates. It may take up more time and money than an existing process, however this is an essential step in the recruiting process and could be much more cost-effective in the long run.

How to mitigate and manage fintech hiring risks

So, how do you reduce the risks of a bad hire in the fintech space? Firstly, it's critical to recognize and evaluate the possible risks associated with the employment process in order to reduce them. Regular risk assessments and a review of the employment practices and procedures can accomplish this. The possibility of fraud, security lapses, and non-compliance with laws are a few frequent concerns in the fintech sector. Organizations may take action to limit these risks by identifying them, assessing the likelihood of each, and considering the possible effects of each.

It's very important to eliminate or minimize potential risks when they have been found and evaluated. Thorough background checks and credential verification are two efficient ways to do this. The credentials and appropriateness of candidates for the position should be carefully considered by fintech businesses. Candidate understanding of the position's needs and ability to carry out their responsibilities can be increased by providing clear job descriptions and expectations.

Fintech businesses can take actions to mitigate risk even after the employment process is over. This entails rescreening or frequently observing the behavior and performance of new recruits, resolving any problems or issues, and carrying out regular performance reviews. Programs for staff training and development can be helpful in risk mitigation by assisting with the acquisition of the abilities and expertise required to thrive in the fintech sector. Fintech businesses may reduce the risks of employing new employees and guarantee the success of their business by following these procedures.

Fintech and the value of background checks 

When it comes to finding the right candidates, the fintech sector deals with a lot of difficulties. And at the root of all these difficulties is a lack of adequate background checks. Many fintech organizations are under pressure to immediately fill available positions as a result of the industry's fast expansion and the scrabble for qualified workers. In this rush, many businesses fail to carry out thorough background checks, which increases the possibility of hiring somebody with a poor ethical code, who isn’t a good cultural fit and/or casual approach to sensitive data.

The absence of background checks can have detrimental effects for fintech businesses. For instance, if a person with a history of fraud is employed, they can exploit their position inside the organization to steal confidential data or carry out other illegal activities. Financial losses, harm to the company's brand, and legal repercussions might all emerge from this.

The possibility for breaking rules is another issue brought on by the absence of background checks. Several laws, especially those pertaining to data security and privacy, are applicable to fintech organizations. Organizations that don't do background checks may be employing people who aren't in accordance with these laws, which might lead to fines and other consequences.

It's crucial for fintech firms to understand the value of background checks and to take the required precautions to guarantee that they are carried out thoroughly and in accordance with all applicable laws. Although it may take more time and effort, this is an essential part of the recruiting process and should be considered a non-negotiable.

The importance of background checks in hiring risk mitigation

In any industry - particularly the fintech sector - background checks should be an essential part of the employment process. They may assist businesses in identifying and reducing the risk of fraud, security lapses, and other problems that could have detrimental effects on both the firm and its clients.

Background checks can reveal important information about a candidate's job history, education, and other credentials in addition to confirming their criminal past. By using this information, businesses will reduce the risk of employing people who are not right for the job or who lack the necessary skills.

It's crucial to remember that background checks must be carried out in accordance with all applicable laws and rules. In order to ensure compliance with the government and other rules, fintech businesses should collaborate with a credible background check provider who has expertise performing checks in the financial services sector. This company should also have the required procedures in place.

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What background check do I need?

This depends on the industry and type of role you are recruiting for. To determine whether you need reference checks, identity checks, bankruptcy checks, civil background checks, credit checks for employment or any of the other background checks we offer, chat to our team of dedicated account managers.

Why should employers check the background of potential employees?

Many industries have compliance-related employment check requirements. And even if your industry doesn’t, remember that your staff have access to assets and data that must be protected. When you employ a new staff member you need to be certain that they have the best interests of your business at heart. Carrying out comprehensive background checking helps mitigate risk and ensures a safer hiring decision.

How long do background checks take?

Again, this depends on the type of checks you need. Simple identity checks can be carried out in as little as a few hours but a worldwide criminal background check for instance might take several weeks. A simple pre-employment check package takes around a week. Our account managers are specialists and can provide detailed information into which checks you need and how long they will take.

Can you do a background check online?

All Veremark checks are carried out online and digitally. This eliminates the need to collect, store and manage paper documents and information making the process faster, more efficient and ensures complete safety of candidate data and documents.

What are the benefits of a background check?

In a competitive marketplace, making the right hiring decisions is key to the success of your company. Employment background checks enables you to understand more about your candidates before making crucial decisions which can have either beneficial or catastrophic effects on your business.

What does a background check show?

Background checks not only provide useful insights into a candidate’s work history, skills and education, but they can also offer richer detail into someone’s personality and character traits. This gives you a huge advantage when considering who to hire. Background checking also ensures that candidates are legally allowed to carry out certain roles, failed criminal and credit checks could prevent them from working with vulnerable people or in a financial function.

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Background Screening for Fintech: Everything You Need to Know

Background screening for Fintech is crucial to help busy employers make great hiring decisions. With Fintech leading the way as one of the most disruptive sectors in the business world, employers are having to move quickly to keep up with regulatory and industry changes while still maximising recruiting opportunities.

Compliance background checks are increasingly important, with regulations such as MiFID 2, Sarbanes Oxley and PSD2, and the need for Equivalence across international financial markets. Background screening is one area where Fintech employers have a real opportunity… Automation is a no-brainer. It offers additional transparency, a better candidate experience, more effective and efficient employment screening processes - all at the click of a mouse.

This becomes even more important when you consider that failing to carry out due diligence can result in severe consequences. Background screening helps Fintech employers define, understand and manage hiring risks and remain compliant.

In this report, we discuss:

- What Makes Fintech Different?

- Why Should Employers Carry Out Background Screening in Fintech?

- AML and Compliance For Fintech

- How Fintech Background Screening Improves Customer Service

- The Role of Background Screening in Company Reputation

- The Best Background Screening for Fintech

- Background Checks for Fintech

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