HRM Problems In FinTech Industry

Human Resource Management

(MGT-301)
Section 03

Team:
1. Mohiuddin Ahmed
2. Safin Ahmed
3. Ummay Maymoona Binte Noor
4. Kazi Junaed
Executive Summary -
Bangladesh's rising inflation has created significant cost pressures on firms, leading to cost-cutting
measures, including salary reductions and layoffs. The fintech industry, reliant on technology, faces
distinct HR challenges compounded by a pre-existing shortage of tech-savvy professionals. This report
outlines these HR challenges and presents measurable outcomes that demonstrate their severity.

HR Challenges in the Fintech Industry

1. Talent Shortage: Fintech companies struggle to find skilled professionals in an undersupplied market,
with fierce competition for top talent.

2. Job Description Complexity: Rapid technology changes require quick hiring decisions, often resulting
in hastily designed job descriptions.

3. Regulatory Compliance: Fintech's sensitive nature demands strict adherence to complex regulations,
placing responsibility on HR to ensure compliance.

4. Employee Well-being: The fast-paced culture risks employee burnout, which can harm retention and
productivity.

HR Metrics

Elevated Turnover: High turnover rates, such as bKash's 30% increase, indicate potential dissatisfaction
and retention challenges.

Diversity Gaps: Gender and diversity disparities highlight the need for targeted efforts to improve
representation.

-Burnout Concerns: Reports of burnout emphasize the importance of proactive well-being measures.

Skills Gap: Rapid tech changes create a skills gap, necessitating initiatives like coding bootcamps.

HR Management Issues

Industry Growth: Rapid industry growth outpaces traditional HR practices.

Talent Scarcity: A scarcity of specialized talent intensifies competition.

Skills Mismatch: Ongoing tech evolution leads to a skills gap within the workforce.

Employee Burnout: High-pressure environments contribute to burnout.

Limited Employee Development: Swift tech shifts can hinder ongoing skill development.

Regulatory Complexity: Evolving regulations demand agile HR practices for compliance.

Addressing these HR challenges is vital for the Bangladeshi fintech industry's growth and innovation.
Proactive measures, including diversity promotion and employee development, will enhance
competitiveness and long-term success.

Industry Overview

With astronomical growth of the Fintech industry in Bangladesh during Covid not only did it make a
dramatic change in consumer life and business process but also introduced opportunity and challenges for
HR Dept. (Human Resource Dept.). By definition, Fintech means incorporating new technology to
provide financial services. For example, Brac Bank incorporated technology by building "Astha" , a
digital solution for end consumers. One the other, not necessarily fintech means incorporating technology
in existing solutions; it can also be a venture that focuses on tech first but in the financial domain. One
good example is "Nagad '' which is a technology company who doesn't provide conventional financial
service rather focuses on giving financial service through technology.

Even though this outline may not be the first concern for a HR Professional and management it is
important to know the underlying distinction. One of the reason why needs to understand this because
fintech services that are not related to bank even though high entry barriers these company tend to scale at
much higher speed than conventional fintech service by banks where fintech works as a layer over
conventional business. Due to the different growth rate that one hand opens HR dept. need to handle
situations in a very fast and scalable manner in one environment, other situations tend to be slow pace
because conventional services have a reputation to save. While fintech is one of the fastest growing
industries in Bangladesh, it is a very dynamic industry where HR dept. must play a pivotal role now to
sustain its growth or else it may fail like Telecom Equipment Manufacturing Industry and giants Anik
Telecom.

They most near memory of people massively adopting into Fintech in Bangladesh is during Covid time
but the development of fintech industry started way before with software's like BEXI Bank 3000 software
in 80's.But for relevance the scope of this discussion is constrained in MFS (Mobile Financial Service:
bKash, Nagad, Aastha )excluding DFS (Digital Financial Service: debit, credit card) and B2B services
(Payment Gateway: SSLCOMMERZ, AmraaPay).

MFs started in Bangladesh with Bkash ltd. in 2011 by partnership between BRAC bank, Money in
Motion and several others. Eventually in 2012 DBBL started their own MFS and in 2017,18 were
providing the services and present day its 13.Decreasing number of Banks shows how this industry is no
more into the early stage of rather its maturing and in the way some have lost their way. But not
necessarily covid was the only driving factor for fintech growth rather our growing economy with
remittance also groomed a proper environment for the hyper growth. According to the Visa Economic
Empowerment Institute, Bangladesh’s fintech's are helping to boost financial inclusion. Bangladeshis
nearly doubled the number of transactions they made using mobile devices between 2016 and 2019, from
US$27 billion to more than US$51 billion. But as it all said and done to understand the recent situation of
industry we analysis past two years total transaction by MFS, user segment forecast and market share
below:

Table: Total transaction in tak

 Table: User segment forecast

Table: MFS Market Share data of 2022

Like mentioned, based on data we can see the amount of transaction and user segment forecast supports
the idea that the MFS market is growing in a consistent way but then again market share growth not just
shows us how its getting bigger but also it demonstrates that the market is dominated by only 4 key
players. This is an issue for HR. dept. that will be discussed in HR problem the industry but if focused
shifted on two macroeconomic trend that reveals some more preseeing info:
 Table: Inflation Rate of Bangladesh

Table: Unemployment Rate Trend in Bangladesh

Inflation rate is rising in Bangladesh. That translates to the cost of doing things getting expensive for
firms and to cut cost down firms tend to cut off salaries or fire a good amount of employees. Due to Mfs
being heavily dependent on technology the main workforce are usually from computer science
background. But sadly even before pre covid in the job market was failing to supply the demand of well
versed people with technological understanding. In a report, Annually need for IT personnel was 8000-
9000 where each cse graduate was 20000 and 80% of them failed to pass basic coding test (Hasan, 2022).
Already in an undersupplied market with a downturn economy HR will focus less on hiring while trying
to retain already skilled workforce. So overall, Even though the industry is booming the role HR dept. in
the fintech industry will have to play now has very less margin of error.
HR Problems in the Industry

Recently one new member of Nagad went under scrutiny by mass when they announced that they won't
look for academic qualification while hiring an employee, rather they will focus on technical proficiency.
It may sound a bit awkward for many in a nation where academic qualification is prioritized contrary to
companies in America and Europe where skill is more preferred. Whether it was a good decision or not is
a whole different conversation but this clearly indicates that we have a deficiency of a skilled workforce.
On the other hand, the technological world is ever changing what may be relevant today, not that it can be
irrelevant tomorrow without any notice. There is no doubt that this kind of sticky situation in general
makes HR dept. performing their role is more challenging. Below giving major HR problems in the
Fintech industry:

● Lack of enough talent : Only around 5 percent of Bangladeshi tech companies have over 100
personnel, most of whom are engaged in the lower end of the value chain. Most Bangladeshi
graduates are sitting in the lower position, mid and high managerial positions are either held up
by employees who have more than enough experience or by foreigners. This makes the
competition between fintech companies more fierce to hire a graduate who is better than better.
For HR. dept. It takes a significant amount of time, challenges to overcome to find talent.

● Complexity with Job description: Like said technology changes occur very frequently the
nature of responsibilities of a job changes with that pace. For example, in the conventional
finance industry a cashier needs to have few core competencies to fulfil the responsibilities and if
new technology is introduced though it gets adopted very slowly. Whereas in a fintech company
they are scaling for a massive amount of people and to keep these customers stick with it they
need to constantly keep up. For example, say Nagad came up with a feature of paying BRAC
university fees directly through their app where if we want to pay now through MFS we have to
use a third party gateway. Now for bKash to keep that up they may need to hire a new person if
the existing team doesn't have that technological knowledge. Which is very common in the
technology world and due to having a very short period of time to production HR needs to hire
quickly. So don't get to properly take time and design the job description.

● Regulatory compliance: Fintech industry is one of the most sensitive industries in a nation.
Considering how much sensitive information it usually handles and if leaked how damaging it
can be for a nation Govt. usually puts up more complicated rules and regulations than other
industries. Which in turn for HR dept. mean strictly following and implementing those rules all
over the firm's scope to maintain compliance with the regulatory body. Such as, all the MFS
providers shall comply with the provisions of the existing Money Laundering Prevention Act,
Anti Terrorism Act. So Its HR dept. responsibility to make sure every employee is aware of these
rules and follow them.

● Managing well-being of employee: It may not sound the most convincing problem but it's very
important because we are already lacking enough talent to fill the position with that if the
environment isn't lucrative or physical, mental health isn't taken care off properly employees
 won't stay at the firm for long term neither they will give their maximum productivity. The fast
paced culture of the tech industry tends to burn out employees very easily.

Measurements/Outcomes of the HR Systems (that demonstrate the problems):

The Bangladeshi fintech industry's human resources challenges are palpable in the measurements
and outcomes of HR systems within key companies. These measurements provide a clear picture
of the pressing issues and underscore the critical need for targeted interventions:

- Elevated Turnover Rates: The challenge of retaining talent is evident in the elevated turnover
rates observed in prominent fintech companies. For instance, bKash, a leading mobile financial
services provider, reported a turnover rate increase of approximately 30% (The Business
Standard, 2021). This significant rise points to potential dissatisfaction among employees,
implying inadequate retention strategies, a lack of engagement, or mismatches between
employee expectations and company culture. Such turnover not only disrupts business operations
but also incurs substantial recruitment and training costs.

- Diversity Disparities: A distinct lack of diversity, particularly in leadership roles, is a prevailing

concern. Women and underrepresented minorities are notably underrepresented in top positions.
bKash's collaboration with a women's empowerment organization for a mentorship program
aimed at increasing women's representation in leadership (The Daily Star, 2023) highlights the
necessity of targeted efforts to rectify this disparity. Similarly, Nagad's sponsorship of tech
education for underprivileged girls (The Daily Prothom Alo, 2022) showcases a proactive
approach to bridging the gender gap. These initiatives underscore the industry's recognition of
the importance of diverse leadership for innovation and balanced decision-making.

- Employee Burnout: The demanding nature of the fintech industry's fast-paced environment has
led to reports of employee burnout and dissatisfaction. Nagad's implementation of "Wellness
Wednesday" (The Financial Express, 2021) to address burnout signifies the industry's
acknowledgment of this concern. Additionally, Upay's introduction of a "Freedom Friday" policy
(The Financial Times, 2021) to promote work-life balance underscores the industry's
commitment to alleviating burnout. These initiatives showcase a proactive stance in countering
burnout's adverse effects on employee engagement, creativity, and overall well-being.

- Skills Gap: The dynamic nature of the fintech landscape requires a specialized skill set that
often outpaces the available talent pool. Companies like Upay have recognized this skills gap
and partnered with nonprofits to conduct coding bootcamps for women (The Daily Sun, 2023).
This approach not only addresses the skills shortage but also supports gender diversity within the
industry. Such initiatives reflect the industry's determination to nurture a skilled workforce that
can drive innovation and maintain a competitive edge.
Issues with Human Resources Management:

The Bangladeshi fintech industry grapples with a spectrum of intricate human resources
management (HRM) challenges, interwoven with its remarkable growth and unique dynamics.
These challenges shed light on the industry's evolving landscape and the critical role of effective
HR strategies:

- Rapid Industry Growth: The fintech sector's exponential growth poses distinct HR challenges.
As the sector expands, traditional HR practices may struggle to keep pace. For instance, the
meteoric rise of digital payment solutions like bKash, Nagad, and Upay has created a surge in
demand for skilled professionals adept in designing, developing, and managing cutting-edge
financial technology (The Business Standard, 2021).

- Talent Scarcity: The burgeoning fintech landscape has resulted in a pronounced talent scarcity,
especially for specialized roles. The advent of technologies such as blockchain, artificial
intelligence, and data analytics has intensified the competition for individuals with these niche
skills (The Financial Express, 2020). The scarcity is evident in the intense race among firms to
recruit experts in these domains.

- Skills Mismatch: Fintech's rapid technological evolution often leads to a skills mismatch within
the workforce. The fast pace of industry advancements can leave employees with outdated skill
sets, creating a disparity between what's required and what's available. This discrepancy hampers
productivity, innovation, and the industry's ability to maintain a competitive edge (The Daily
Star, 2021).

- Employee Burnout: The rapid pace and high-pressure environment of fintech contribute to
elevated instances of employee burnout. The pressure to innovate and adapt to market changes
can lead to extended working hours and heightened stress levels. Cases of employee burnout
reported within companies like Nagad underscore the urgency of implementing strategies to
mitigate this challenge (The Financial Express, 2021).
- Inadequate Employee Development: In an era of swift technological shifts, ongoing employee
development can take a backseat. Amidst the industry's focus on innovation, employees might
have limited opportunities for growth and skill enhancement. Initiatives like Upay's coding
bootcamps highlight the industry's recognition of the skills gap and the necessity of ongoing
development (The Daily Sun, 2023).

- Regulatory Challenges: The Bangladeshi fintech industry operates within an evolving

regulatory framework. HR management must navigate these complexities while recruiting,
training, and retaining talent. As regulations adapt to fintech advancements, companies need
agile HR practices to ensure compliance and effective talent management (The Financial
Express, 2022).

Addressing these multifaceted HR challenges is essential for steering the Bangladeshi fintech
industry towards sustained growth and innovation. By proactively addressing these issues,
fostering diversity, and investing in employee development, the industry can enhance its
competitiveness and chart a successful trajectory.

Impact of The Problems

Certainly, here are the impacts of the HR problems highlighted in the article on the Bangladeshi
fintech industry:

1. Talent Shortage:

- Impact: Fintech companies struggling to find skilled professionals face several consequences.
They may not be able to meet their growth targets, innovate effectively, or provide the quality
services customers demand. Additionally, excessive competition for a limited pool of talent can
drive up labor costs, impacting profitability.

2. Job Description Complexity:

 - Impact: Inadequately designed job descriptions can lead to misaligned expectations and
responsibilities among employees. This can result in decreased job satisfaction, lower
productivity, and higher turnover rates as employees may feel overwhelmed or undervalued.

3. Regulatory Compliance:

- Impact: Fintech's sensitivity to regulations means non-compliance can result in legal issues,
fines, and reputational damage. HR departments must invest significant time and resources to
ensure that all employees understand and adhere to the complex regulatory frameworks.

4. Employee Well-being:

-Impact: Employee burnout can have severe consequences, including decreased productivity,
increased absenteeism, and higher turnover rates. It can also damage the company's reputation as
a desirable place to work, making it harder to attract and retain top talent.

5. Elevated Turnover:

-Impact: High turnover rates can disrupt business operations, increase recruitment and training
costs, and erode morale among remaining employees. It also signifies potential problems with
employee engagement and satisfaction, which can affect overall company performance.

6. Diversity Gaps:

-Impact: Lack of diversity, especially in leadership roles, can limit a company's ability to
innovate and adapt to a diverse customer base. It may also hinder creative problem-solving and
lead to cultural blind spots that could harm the company's reputation and growth prospects.

7. Burnout Concerns:

- Impact: Employee burnout can result in decreased creativity, a higher likelihood of errors,
and a negative impact on overall workplace morale. It can also lead to higher absenteeism and
turnover rates, which can be costly for the company.

8. Skills Gap:
 - Impact: The skills gap can slow down innovation and the development of new products or
features. It may also require additional resources to train or retrain employees, adding to
operational costs.

9. Limited Employee Development:

- Impact: Failing to invest in ongoing employee development can result in a workforce with
outdated skills, reducing the company's ability to adapt to changing market conditions and
technological advancements.

10. Regulatory Complexity:

- Impact: Navigating complex regulations can be resource-intensive, diverting HR's attention

from other critical tasks. Non-compliance can lead to legal issues, fines, and damage to the
company's reputation.

These HR problems in the Bangladeshi fintech industry have far-reaching impacts, affecting
everything from talent acquisition and employee well-being to compliance and overall business
performance. Addressing these challenges is crucial for the industry's sustained growth and
success.

Steps Take To Resolve:

esolving the HR issues in the Bangladeshi fintech industry requires a proactive and multifaceted
approach. Here are steps that can be taken to address these challenges:

Talent Shortage:

Increase Collaboration with Universities: Partner with universities to develop industry-relevant curricula
and programs, ensuring that graduates are better equipped to meet industry demands.

Job Description Complexity:

Regular Job Review: Continuously review and update job descriptions to align with evolving technology
and industry needs. Engage current employees in this process to ensure accuracy.

Regulatory Compliance:

Compliance Training: Conduct regular training sessions to ensure all employees are well-versed in
regulatory requirements and the consequences of non-compliance.

Employee Well-being:

Mental Health Support: Implement mental health programs and initiatives to help employees manage
stress and prevent burnout. Encourage work-life balance and flexible work arrangements.

Elevated Turnover:

Retention Strategies: Develop comprehensive retention strategies, including competitive compensation

packages, career development opportunities, and a positive work culture.

Diversity Gaps:

Diversity Initiatives: Establish diversity and inclusion programs to actively recruit and promote
underrepresented groups. Create mentorship programs to support career growth.

Burnout Concerns:

Well-being Programs: Offer well-being programs and initiatives, such as wellness days, mental health
resources, and stress management workshops, to reduce burnout.

Skills Gap:

Training and Upskilling: Invest in ongoing training and upskilling programs for existing employees to
bridge the skills gap. Consider partnerships with coding bootcamps and educational institutions.

Limited Employee Development:

Continuous Learning Culture: Foster a culture of continuous learning and development. Provide resources
and opportunities for employees to acquire new skills.
Regulatory Complexity:

Regulatory Compliance Team: Establish a dedicated team or department focused on regulatory

compliance. Ensure regular audits and updates to policies and procedures.

Industry Growth:

Scalable HR Practices: Implement HR practices that can scale with the company's growth. This may
include HR automation, streamlined recruitment processes, and effective onboarding.

Talent Scarcity:

Global Talent Pool: Consider hiring remote or international talent to fill specialized roles. Create a global
talent acquisition strategy to tap into a broader pool of candidates.

Skills Mismatch:

Skills Assessment: Regularly assess employees' skills and identify gaps. Tailor training and development
programs to address these gaps.

Inadequate Employee Development:

Learning and Development Plans: Work with employees to create individualized learning and
development plans. Provide resources, mentorship, and opportunities for growth.

Monitoring and Feedback:

Employee Feedback Mechanisms: Establish regular channels for employees to provide feedback on HR
policies and practices. Use this feedback to continuously improve HR strategies.

Technology Adoption:

HR Technology: Invest in HR technology solutions that streamline HR processes, from recruitment to

performance management, making it more efficient and effective.

Addressing these HR issues in the Bangladeshi fintech industry is an ongoing process that requires
commitment from leadership, collaboration with employees, and adaptation to the evolving needs of the
sector. By taking these steps, companies can enhance their competitiveness, promote employee well-
being, and drive sustainable growth.

Conclusion:

The Bangladeshi fintech landscape's growth and potential have been accompanied by a complex
tapestry of human resources challenges that demand strategic attention and innovative solutions.
This paper has delved into these challenges and examined the efforts taken by industry players
such as bKash, Nagad, and Upay to address them. Through comprehensive analysis of the
industry landscape and real-world examples, it becomes clear that these challenges are not
isolated incidents; They are interconnected and require a holistic approach to human resource
management.

The industry's rapid expansion has highlighted the urgent need for talent development initiatives
tailored to the changing fintech landscape. The success of bKash's talent development efforts
underscores the positive impact of structured training programs and mentorship schemes in
enhancing employees' skills and expertise (The Daily Star, 2022). Moreover, the emphasis on
diversity and inclusion is exemplified by Nagad's collaboration with organizations focused on
empowering women and promoting tech education for underprivileged girls. This initiative not
only fosters gender diversity but also lays the groundwork for a more balanced leadership (The
Daily Prothom Alo, 2022).

Employee well-being has emerged as a key focus area, with initiatives like "Wellness
Wednesday" at Nagad and "Flexi Fridays" at Upay aimed at alleviating burnout and improving
engagement (The Financial Express, 2021) (The Financial Times, 2021). These strategies
recognize the correlation between employee well-being and productivity, ultimately influencing
the industry's competitive edge.

Strategic recruitment efforts, as seen in Nagad's collaboration with educational institutions, have
resulted in a pipeline of fresh talent equipped with the necessary skills (Dhaka Tribune, 2020).
This approach not only addresses the skills gap but also infuses the industry with diverse
perspectives and innovative ideas.

The adoption of data-driven metrics for HR progress tracking, as demonstrated by Upay's

example, reflects the industry's readiness to embrace technology to enhance decision-making
(The Financial Times, 2021). These metrics offer insights into the efficacy of interventions,
allowing for proactive adjustments and refinements.
In conclusion, the Bangladeshi fintech sector's HR challenges are multidimensional, intricately
linked to the industry's growth and competitiveness. The strides taken by companies like bKash,
Nagad, and Upay to address these challenges exemplify the industry's commitment to fostering a
skilled, diverse, and engaged workforce. By recognizing the importance of talent development,
diversity, employee well-being, and data-driven decision-making, the sector is poised to navigate
these challenges and secure a prosperous future.

To further these efforts, collaboration among industry stakeholders, government entities, and
educational institutions is essential. By fostering an environment that supports innovative HR
solutions, the Bangladeshi fintech sector can harness its potential to contribute significantly to
the nation's economic growth, technological advancement, and financial inclusion goals.

Recommendations:

To address the intricate human resources challenges within the Bangladeshi fintech sector, a
strategic and proactive approach is essential. Drawing insights from industry practices and real-
world examples, the following recommendations are put forth:

1. Collaborative Industry-Academia Initiatives: Building stronger ties between the fintech

industry and educational institutions can yield a skilled workforce. Industry-specific curriculum
development, as seen in Nagad's collaboration with local educational institutions for internships
(Dhaka Tribune, 2020), can provide students with relevant knowledge and practical skills,
enhancing their employability upon graduation.

2. Investment in Continuous Learning: Fintech companies should prioritize continuous learning

opportunities. Initiatives like bKash's structured training programs offer employees the chance to
upskill and stay current with industry trends (The Daily Star, 2022). Creating a culture of
learning through workshops, webinars, and certifications can foster innovation and adaptability.

3. Empowerment of Women in Leadership: Taking inspiration from bKash's mentorship program

for women (The Daily Star, 2023), the sector should establish mentorship and leadership
development programs. These initiatives can facilitate the advancement of women into
leadership roles, enhancing diversity and promoting gender parity at all organizational levels.

4. Flexible Work Arrangements: Following the example of "Wellness Wednesday" at Nagad and
"Flexi Fridays" at Upay (The Financial Express, 2021) (The Financial Times, 2021), flexible
work arrangements should be institutionalized. Providing employees with options for remote
work or flexible hours can mitigate burnout, improve work-life balance, and boost morale.

5. Data-Driven HR Strategies: The industry should embrace data analytics for informed decision-
making in HR practices. Regularly tracking metrics such as turnover rates, diversity
representation, and employee engagement can guide interventions and measure their
effectiveness (The Financial Times, 2021).

6. Advocacy for Regulatory Support: Collaboration between fintech stakeholders and

policymakers is essential. Lobbying for policies that facilitate talent acquisition, support
employee development initiatives, and create an environment conducive to diversity and
inclusion can expedite the sector's growth and innovation.

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