Will Singapore’s talent shortage derail its fintech ambitions?

Photo: Daniel Lee

As technological development outpaces the rate at which candidates are trained, Singapore’s fintech firms are struggling to find the right person for the job.

By Joelyn Chan

In establishing itself as a regional fintech hub, Singapore has invested heavily in its digital infrastructure, implemented a strong regulatory framework, and pushed the importance of technology in education.

The fruits of its labour have been forthcoming. The city-state is a highly attractive location for fintech startups and investors. There are more than 400 Fintech companies in Singapore. The nation’s Fintech investments have approximately quadrupled to US$453 million in the first half of 2019.

By funds, Singapore is the third-largest fintech market in the Asia-Pacific region, behind China and India. With the imminent distribution of virtual banking licenses, Singapore can expect further investment in its fintech ecosystem.

However, Singapore is missing one piece of its fintech puzzle. 94% of Fintech companies surveyed by recruitment services firm Michael Page are concerned that Singapore is facing an acute fintech talent shortage. Companies cannot execute their big fintech ideas without technologically skilled workers. A talent deficit could stand in the way of the country’s ambitious fintech aspirations.

Talent scarcity is a pervasive problem

Singapore is not the only country facing an issue of talent scarcity. Hiring managers in Silicon Valley also grapple with talent development, retention and recruitment.

In Singapore, there is a surplus of candidates with higher education qualifications but a shortage of talent with technical expertise. Analysts from the employment site Indeed noted that the talent shortage was most acute in the field of software engineering, sales and business development.

In the short term, Singapore may have to rely on offshoring

In an interview with ASEAN Today, the President of Singapore Fintech Association Chia Hock Lai pointed out that Singapore’s talent shortage is in the technology space, rather than the financial scene. However, it is a manageable problem in the short term and long-term horizon.

He noted: “Singapore as a leading regional financial centre has a lot of financial talents. And this [tech] shortage is a global one, not just in Singapore.”

“Medium to longer-term, the Institute of Higher Learning is ramping up tech talents [programmes], shorter-term there is indeed a tech talent shortage but not as serious as reported.”

Chia cited offshoring as one possible short-term solution to Singapore’s technology talent deficit. Offshoring involves moving certain functions of the business overseas. A fintech firm, for example, might offshore its software development functions to tap into the talent pool of another nation.

“Many fintech companies based in Singapore [have] offices around the region so some software development will be done offshore [in destinations] such as Vietnam,” Chia said.

However, Chia acknowledged that many would rather hire Singaporeans “if cost and availability of tech talent is not an issue.”

This fits with what fintech firms are stating. According to Michael Page’s Fintech Employment report 2019, 63% of fintech employees prefer locally cultivated talent.  This is good news for Singaporeans who are reskilling with big data, cloud computing or Internet security capabilities.

Singapore has initiatives in place to alleviate long-term talent crunch 

To overcome the talent shortage, fintech firms will likely pursue a two-pronged approach; training local talent for some positions while actively pursuing skilled foreign talent. Amidst a global talent shortage, investing in local training programs will be essential for protecting firms long term employment interests.

Local universities and tertiary institutions have incorporated fintech modules into curricula. Slowly but surely, the local fintech talent pool will grow.

Companies with a large workforce can consider upskilling existing employees. With subsidies from the government, the cost to upskill could be lower than poaching another individual from abroad.

“Fintech companies can consider the various government schemes… to reskill or upskill [the] existing workforce,” Chia added. “There are significant subsidies in terms of training fees and salary support.”

As one of the region’s fintech hubs, the city-state needs high-calibre talent to guarantee the ongoing success of its fintech and technology sectors. With a sustained effort to develop local talent, Singapore will eventually achieve its lofty fintech ambitions to become a global fintech hotspot.