2022: The year of fintech job cuts
As we say farewell to 2022, FinTech Futures takes a look back at some of the stories that dominated the year.
Fintechs of all sizes faced challenging economic and market conditions this year as they adjusted to the post-pandemic ‘new normal’, causing many to initiate waves of job cuts.
Here are five of the most notable fintech job cut stories of 2022.
Open banking fintech Plaid to cut 260 jobs
Open banking platform Plaid laid off 260 employees as the firm adjusted to tougher macroeconomic conditions.
In a message to employees across the US, UK and Europe, Plaid CEO Zach Perret said that during the Covid pandemic, a “dramatic increase” in fintech adoption led to a sharp increase in usage by existing customers, “substantial revenue acceleration” and a large number of new customer signups. As a result, the firm hired “aggressively” and invested in new products to meet demand.
“Macroeconomic conditions have changed substantially this year,” said Perret. “Despite being well-diversified across every category of financial services, we are seeing customers across the industry experiencing slower-than-expected growth.
“The simple reality is that due to these macroeconomic changes, our pace of cost growth outstripped our pace of revenue growth.
“I made the decision to hire and invest ahead of revenue growth, and the current economic slowdown has meant that this revenue growth did not materialise as quickly as expected.”
Stripe lays off 14% of staff amid challenging economic climate
US fintech Stripe cut around 1,100 jobs, 14% of its workforce, as it wrestled with a “different economic climate” following the pandemic era e-commerce boom.
In an email to Stripe employees, CEO Patrick Collison said the firm “overhired for the world we’re in”.
After witnessing “significantly higher growth rates” over 2020 and 2021, Stripe transitioned into a “new operating mode” which saw its revenue and payment volume grow more than 3x.
But the world “is now shifting again”, Collison said. Inflation, energy shocks, rising interest rates, cuts to investment budgets and reduced start-up funding have all led to “a need to match the pace of our investments with the realities around us”.
Robinhood to cut 23% of staff
In August, stock trading app Robinhood announced it was to cut almost a quarter of its staff while its crypto arm was fined $30 million by New York’s Department of Financial Services (DFS) for “significant anti-money laundering, cybersecurity and consumer protection violations”.
The decision to shed 23% of its workforce followed a “broader company reorganisation into a general manager structure”, Robinhood CEO Vlad Tenev said.
Announcing the move to employees, Tenev said those in operations, marketing and program management functions would be particularly affected.
The news followed a previous round of layoffs in April, which saw the firm cut 9% of its full-time workforce.
Australian crypto exchange Swyftx cuts 21% of workforce
Aussie crypto exchange Swyftx laid off 74 employees – 21% of its workforce – as the firm looked to reduce the size of its business due to increasingly tough global economic conditions.
In a company-wide memo, co-CEOs Alex Harper and Ryan Parson cited an “uncertain business environment” of high inflation, rising interest rates, “highly volatile markets across all asset classes” and a looming global recession as reasons behind the decision.
“We started growing our team in a very different world and it’s now prudent to make sure our cost base is compatible with this extended period of economic uncertainty,” Harper and Ryan added.
BNPL giant Klarna to cut 10% of workforce amid “tumultuous year”
Buy now, pay later (BNPL) giant Klarna let go of approximately 10% of its global workforce due to ongoing challenging global economic conditions.
Klarna CEO Sebastian Siemiatkowski outlined in a statement to employees how the fintech unicorn was staying “laser-focused” on weathering the various storms unfolding in 2022.
Siemiatkowski cites the war in Ukraine, inflation, a volatile stock market, shifts in consumer sentiment and a likely recession, “all of which have marked the beginning of a very tumultuous year”.
“When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today,” Siemiatkowski added.
Expecting these economic and global events to persist, Siemiatkowski said senior leadership within Klarna evaluated the company’s organisational setup and “made some really tough decisions”.