Fintech vs. Banking: Career Choices

Fintech firms have been generating a lot of interest among investors and borrowers. One aspect that perhaps has not received due attention is that of career prospects, especially relative to banking.

Fintech, as the term suggests, is a combination of technology and finance. This combination serves three purposes: a) it reduces cost of providing a service; and b) it widens the reach of the said service and c) provides a better customer experience. The primary categories of professionals a Fintech firm would attract are Information Technology, Risk, Finance, and due to high growth rates and customer orientation, Sales. There are compelling reasons for candidates from these fields to choose Fintech over Banks or NBFCs. Let us look at a few of these.

1. Business Growth Prospects

Indian banks and NBFCs depend on credit growth for business growth. Ability to gain larger market shares or better capitalization may help achieve above average growth though most firms are range bound.

Let’s look at some numbers for comparison. Latest RBI data show that bank credit growth is currently hovering at a low of 5% with industrial credit, which has been continually weak for a while, actually shrinking 1%. Expectations are that in the medium term, credit growth will not nudge past 10%. Compare this with estimates by the Mape Group of 49% annual growth in Online Loans between 2014 (Rs. 205crores) and 2020 (Rs. 2,837 crores).

The sustained growth of global Fintech firms such as Funding Circle, Sofi, Lufax, Kabbage, and others that focus on either cost reduction, untapped markets, or disintermediation (or all of these) has attracted investments from not just prominent VCs but also tech giants (Google, Intel) and banks (Citi, Goldman Sachs, Morgan Stanley). These companies have created billions of value in markets that are much more competitive than India.

The macro reasons for optimism around Indian Fintech’s growth rates are also obvious: a large unbanked population, rising internet penetration, favourable government policies, growing focus on SMEs, and strong investor interest combine to make the coming years the Fintech era.

2. Chance to participate in this growth

The intrinsic motivators are also stronger with Fintech firms. With faster business growth come faster promotions, higher increments, more responsibilities, and a steeper career growth graph. More than material gains, this also offers achievers a chance to move into leadership positions faster, especially for sales professionals given the high growth rates. Some Fintech firms even grant employees ESOPS, and given continued strong investor interest, this can prove very valuable. With the prominent profile that Fintech has built for itself, companies have also built a strong brand value for themselves, which in turn enhances the profile of employees at all levels. There are opportunities to get in early and have a super exciting career.

3. Chance to develop multi-domain expertise

Since Fintech places equal importance on both the Technology and Finance domains, a professional gets exposure to both aspects. Employees from one domain end up learning from those in the other. As against this, an employee of a large bank would be fitted into a very restricted profile and spend years performing only that task. Moreover, despite the growth one sees in M-banking, technology is an afterthought for many traditional lenders and a support function created in response to a pressing market need.

These factors make Fintech a lucrative career option for professionals with experience in lending in core functions like Sales, Risk Management, Credit Analysis, Financial Control, Technology, and Legal.