Boom! That explosion is the Asia Pacific (APAC) Fintech market blowing up. Expected to grow at an average annual growth rate of 81 percent, exceeding US$178 billion through 2026, the region is an undisputed world leader, flush with well-funded Fintech businesses and start-ups.1
Pivotal to its success is its skilled talent pool, with “workforce skills” within Singapore and Hong Kong winning these locales top ranking in terms of market outlook, according to a 2022 APAC capital markets survey.2
However, in the rush to hire workers, are Fintech companies taking the time to protect against employee-driven risks by properly vetting job candidates? Chances are, not always. Here’s why businesses must better understand candidates—before offering them a job—and how background checks cand help you get to know them during the hiring process.
Two reasons for concern.
As head of the global Fintech market, APAC is on centre stage, backed by a culture of hard work and a deep commitment to business integrity. While employees are ultimately responsible for the success of individual businesses within the industry, they can also be roadblocks to growth and advancement.
1. Insider theft and fraud.
A well-known 2020 PwC study on global economic crime and fraud revealed that 37 percent of business crime and fraud is internal, meaning it’s perpetrated by employees. An additional 20 percent of crime and fraud results from collusion between internal and external perpetrators. Taken together, that means a stunning 57 percent of fraud stems from inside the business.3
Consider the American case of Fintech CEO Sheng-Wen Cheng. In 2021, he was sentenced to six years in prison for multiple fraud schemes and fraudulently applying for $7 million in Covid-19-related small business loan assistance and more.4
Or, take the case of German-based Wirecard. After being unable to justify €1.9 billion in its accounts, it finally owned fraud spanning over two decades. The company’s rapid international expansion spilt into parts of Asia including Singapore and the Philippines, which became a focal point of the accounting controversy.5
Apart from causing internal losses that can soar into the millions, incidents of insider theft and fraud can put Fintech firms on the radar of regulators, sparking intense scrutiny and the potential for costly fines, penalties and reputational damage. That’s because Fintech usually falls under the same strict regulations as the finance and banking industry. Put simply, employee fraud can stop a start-up (or larger Fintech) in its tracks.
2. “Wrong hire” regret.
Sometimes in the rush to snag top talent, Fintech companies can act too fast and end up, regrettably, making the wrong hiring choices. This can mean hiring an analyst who lacks the right training or experience, or a high-profile CEO who falsified an Ivy League education. Or, it can mean hiring a candidate who simply doesn’t “fit” or align with the company’s culture.
In any case, wrong hires can have big consequences. First, it costs a lot to replace them. This involves advertising the position; the time, money and resources spent interviewing candidates (often multiple times); and the cost of onboarding and training the new employee. All told, the final price tag quickly reaches into the thousands. According to the Society for Human Resource Management (SHRM), the average cost per hire for every new recruit is $4,425, while that same cost to hire an executive is $14,936.6
Yet, there are other ‘soft costs’ that add up fast. Employees who lack the right training, experience or education can hurt productivity, causing missed deadlines and product launch dates. Meanwhile, those who aren’t a good fit can deplete morale, especially in a smaller, start-up where employees are investing untold amounts of energy, hours and sweat equity in the business.
So, how can Fintech firms avoid these mistakes and make more informed hiring choices? Two words: background checks.
Know more about candidates, before you hire them.
Before making big purchases and investments—think: buying a new vehicle or investing in a new business—you do your research. The same concept applies to hiring new employees because, after all, they are the best investment a business can make in its future success.
Background checks provide important candidate research. With the right combination of industry-focused background checks, things like identity verifications, employment/education verifications, reference checks and financial regulatory checks, you can achieve three critical hiring goals.
- Confirm the information provided by a candidate is true. Though most resume discrepancies are honest mistakes, it’s not uncommon for candidates to intentionally falsify current or past employment details. Always confirm candidate-provided information. This includes validating their identity (ensuring they are who they say they are), looking for discrepancies in their stated work experience, education and degrees, and verifying their professional licences and credentials.
- Comply with regulatory requirements. Since Fintech falls under finance and banking regulations, specific regulated background checks are required for certain positions. Usually, these checks search for past industry offences and financial crimes, and confirm that a candidate’s professional licence is active and in good standing.
- Better understand candidates from every angle. Reference checks, global reputational checks, adverse media searches and other tools can help you build a more complete picture of a candidate, including their soft skills, so you can gauge if they’ll be a good fit within the business.
To learn more, or to discuss how easy it is to integrate background checks into your hiring process, contact us today. First Advantage can help. To see a list of background checks commonly used within the Fintech industry, download our Fintech Tip Sheet.
1 APAC Fintech Market | Size, Share, Growth | 2021 – 2027 (marketdataforecast.com)
3 PwC’s Global Economic Crime and Fraud Survey 2020
4 Fintech CEO Sentenced To 6 Years In Prison For Multiple Fraud Schemes, Including $7 Million Covid-19 Pandemic Loan Fraud And Securities Fraud | USAO-SDNY | Department of Justice
5 Wirecard: Another Fintech Fraud – Seven Pillars Institute
6 Talent Acquisition Benchmarking Report (shrm.org)