At a time when the whole world feels trapped between what was and what will be, we sat down with Hugh Norton-Smith, a person who exists in that space for a living.
As an executive recruiter at Intersection Growth Partners, Hugh spends his days working as a go-between for financial institutions and high-growth fintech startups, shuttling talent between the old world and the new.
Among many other things, we wanted to know — what might this year of reckonings mean for fintech and the financial services industry generally?
Here’s what Hugh shared.
#1: The movement online is accelerating — fast.
Hugh anticipates that this moment of crisis will cause more financial institutions to double down on their digital transformation efforts, which comes as little surprise with so much of daily life moving online during the pandemic.
“I think that the current crisis is going to be an accelerant to online adoption broadly and fintech more specifically,” says Hugh.
#2: For many fintech companies, things are actually picking up.
Fintech companies, which are by definition digital-natives, are doing well in spite of the economic downturn and are at an advantage when compared to their brick-and-mortar competitors. “There’s an incredible secular tailwind in fintech there, despite all of the broad pain you’re seeing in the wider marketplace,” Hugh explains.
The incumbent financial services companies have sort of had their own Kodak moment. And I think they’re all thinking pretty hard about innovation.”Hugh Norton-Smith
#3: Legacy financial institutions are being faced with a stark choice.
Do we innovate or get left behind?
It’s not a new question and it’s one being faced across sectors. But for traditional banks, asset managers and insurers specifically, Hugh explains: “The incumbent financial services companies have had their own Kodak moment. And I think they’re all thinking pretty hard about innovation.”
#4: How banks face that choice will differ.
In some cases, the response will be digital window dressing and innovation theater. But not always. “For other organizations, it’s really sort of a central commitment to changing their businesses,” says Hugh.
#5: The old world and the new world are being forced to meet.
Legacy financial institutions understand the idiosyncratic and highly-regulated world of finance in ways that their challengers often can’t. Startups have vision and their employees have growth mindsets, but they often lack the regulatory muscle, the chief risk officers, policy people and compliance teams that old world institutions like Goldman Sachs have built up over decades.
Younger fintech companies, meanwhile, tend to have a handle on the more esoteric, emerging segments of the industry — things like cryptocurrencies — that legacy institutions are cautiously curious about in but largely unprepared for.
So what Hugh is seeing, and brokering, a lot these day are trades. Employees at places like JP Morgan leaving for fintech startups, and growth-minded, tech savvy folks being recruited to firms like JP Morgan.
#6: The transition between worlds isn’t always easy.
“The reality is that hustling at a high-growth, leanly-staffed fintech startup is very different from being an employee at an incumbent financial services firm,” says Hugh.
“Everybody in traditional financial services aspirationally has some desire to go and work at a Stripe or Affirm because it’s seen as sexy and interesting and new and novel. But at the same time, for us, we need to screen very hard about that cultural transition. And going in the other direction, some people in this marketplace want the reassurance of being aligned with a big, established organization, particularly if that firm isn’t going about digital transformation in a sort of half-hearted fashion.”
“It’s counterintuitive, given the meetings are now conducted through video, but I feel like I’m building a better, more natural relationship with candidates and with our clients that feels more human, a bit more trusted.”Hugh Norton-Smith
#7: Despite the pandemic, companies are hiring in new (maybe better?) ways.
Before the pandemic, hiring an executive team member generally meant meeting that person in-person. Eating with them, shaking their hand, or sometimes grabbing a cocktail!
Now, for most of us, that’s impossible. As a result, so many companies are now wooing their candidates over Zoom — and maybe that’s not a bad thing, says Hugh.
“It’s counterintuitive, given the meetings are now conducted through video, but I feel like I’m building a better, more natural relationship with candidates and with our clients that feels more human, a bit more trusted. At the risk of sounding a bit like an Instagram caption, it’s just really fun being your true goofy self with kids wandering around in the background and such.”
#8: Attitudes about remote hiring are transforming.
In Hugh’s words: “It’s been interesting seeing the different attitudes firms have in our space. Some are completely unable to push the trigger on hiring without seeing people face-to-face. They’re paralyzed. But others are continuing to hire at an extraordinary clip, making unusually large hiring decisions over video calls. And if someone told me that four months ago, I would have been completely baffled. But it’s been amazing how quick the transformation has been.”
The advice in this article comes from a longer conversation between Hugh & Rocketplace CEO Louis Beryl on our podcast, The Startup Stack. That episode “Engineers & Financiers” goes live next week. Subscribe now to hear it!