November 4, 2014
The payment industry in US has come a long way in the last 10 years. Arguably, it is one of the most dynamic and rapidly evolving industries globally.
$2,286 Mn+ investments have been done in payment firms by VCs & Strategic Investors in 2013 & 2014.
The availability and extensive use of digital channels has contributed significantly in this dramatic evolution of payment Industry. Due to the evolving mobile ecosystem that has bought new innovative methods for electronic payment, there has been a major shift in the preferred modes of payments.
While tech giants and start-ups have tried hard to keep up with the pace of evolution, it has presented new challenges to the companies in this space. One of the biggest challenges has been the availability of skilled talent. The industry requires specific skill sets to combat the seen and unforeseen challenges because of the dynamic nature of the industry.
As Robert Selander, Former CEO of MasterCard had said: In the current economic environment there is stress on our customers, and that preoccupies me. So do changes in the legal and regulatory landscape, but these concerns wax and wane. The way you get through them is by having the right people.
Companies are finding it tough to search for, hire and retain talent in the industry. Filling up certain profiles is taking up-to months of hunting. Look at what Industry participants and Academicians are saying about the talent shortage -
There is a shortage of mid-skilled jobs- high skill jobs grown by 7% and low skill grew by 3% and mid skill decreased by 8%- Bill Clerico, Co-Founder & CEO –WePay
Skilled professionals who have direct hands-on experience in niche areas such as mobile payments, are often in very limited supply and may not be readily accessible to the Organizations that seek them - Ema Partners International
The talent related problems in the Industry don’t just end here. There is also a paradigm shift in terms of the type of skills which are relevant today and those which will be required in the future. There is an increasing demand of new skills coming up that didn’t exist 5 years back. Consider skills such as Big data analytics, Modeling/forecast building, digital marketing and mobile app development.
When there is a demand supply gap in any industry, you fill the positions by hiring from other industries. In the payments industry biggest gap is in technology skills. However the issue is that there is 'war on tech talent' going on with multiple industries trying to hire the same PHP guys and Java coders. Infact if there is an influx of tech talent from Payments, there is a bigger outflow of talent as well to the tech players such as Google, Apple, Amazon and others who are building products in payments space.
Banks and financial institutions have played a significant role in the evolution of the industry. Skills needed for profiles related to traditional banking were different from the new skills needed to integrate different payment methods with the bank’s systems. Thus, banks are one of the major players in need of finding and hiring the right set of people. And they have to compete with nimble/sexy startups and large Fintech and tech giants now.
Some of the terms like Mobile POS, Contactless Payments, HCE and NFC based payments were not even known to the masses till the end of the last decade! These new ways of payments have created new job profiles with specific needs. Thus, these companies are also confronted with the challenge to find the talent base that understands these upcoming technologies and can identify and minimize the chances of fraud arising from them.
Shortage of talent pool is one of the most critical issues confronting the payments industry today. According to our estimates, the payments industry will create more than 40,000 new opportunities in the next couple of years. Companies are already finding it difficult to fill the available positions. In profiles related to advanced analytics and fraud prevention and detection, finding the right talent is getting extremely challenging for all firms. Even in more common profiles like product management and technical skills, the niche requirements of the payment firms make it difficult to attract and retain the right talent.
Payment firms quote various reasons for this issue. Colleges aren't able to keep pace with the rapid developments in the industry, and thus are not providing the right kind of training. The government isn't letting in enough high-skill immigrants. Trainings become antiquated in a few years; ramp-up time given to new employees is really less.
Companies in this space need to make sure they don’t let this problem hurt those amazing growth stories. As somebody said 'IF you can measure it, you can solve it'. Solutions can be found, by properly studying the talent landscape in the country, measuring the availability of relevant talent across different regions of the country, analyzing the trends and past records, and taking the hiring and expansion decisions based on the analysis. We call this Science as Talent Supply Mapping and it can show talent pool by cities, by skills and experience levels giving you a heat map view you have never seen before.
Given below is a sample heat map of talent pool of U.S. payment industry:
We are doing a comprehensive study on talent pool across the US. It will finally culminate into such heat maps and other meaningful data points for you.
According to our study, California along with New York and Texas have the largest talent pool. The skills we have focused upon are Technology and Coding skills, Analytics skills and Program/Project Management resources.
The US Payment Industry is broadly categorized into two segments from a talent perspective -
Traditional – that consists of POS players, Card Networks and Acquirers/Processors.
New entrants – that consists of remittance, Bitcoin, Wallet Companies, firms dealing with Fraud & security amongst others.
The talent pool landscape for the payment industry in the US looks very interesting. While experienced people for senior positions are key to all firms, the presence of fresh talent pool is becoming increasingly significant factor in deciding the location for many of the firms in the payment space. Many companies are running on wafer-thin margins in this space.
Our study will release later this week and would be available for pre-orders to our newsletter subscribers this week and all the other readers early next week.