Scotland’s traditional financial services industry must adapt to the challenge of disruptive new technologies by creating a dedicated ‘hub’ for entrepreneurs, according to a leading trade body.
Scottish Financial Enterprise (SFE) is leading calls for the creation of a centre for excellence to help ‘fintech’ enterprises – such as crowdfunding and blockchain ledgers – to enter the market.
Graeme Jones, Chief Executive of SFE, said otherwise Scotland, which has a proud history in financial services, risks losing out to fast-developing global fintech hubs including Sweden, Germany, Hong Kong, Australia and Singapore.
Speaking at a fintech conference, hosted by Scot-Tech Engagement in Edinburgh, Mr Jones said: “We want to build a thriving globally-connected fintech eco-system within Scotland.
“It’s quite clear that we don’t have at the moment a truly dedicated fintech space for the whole of the eco-system to use and a fintech hub, whether that be virtual or physical, is required to bind the community, connect the community and accelerate forward.”
“Deloitte have been doing a lot of research around this and we’ve been looking as well at comparing, benchmarking ourselves against global fintech hubs such as Sweden, Germany, Hong Kong, Australia, Singapore, India and Israel.
“It’s a global threat if you like, as these cities you might say are a little bit ahead of us, but it’s also a global opportunity. Typically, these large city operations are characterised by having a hub, if you like a gathering point for all parts of the eco-system.”
Mr Jones said SFE has been working with leading banks such as RBS and a Fintech Strategy Group set up last year to look into the matter is due to report before Christmas.
SFE was asked in November last year to “facilitate” investigatory work around the potential of financial technology in Scotland. It began that work in January this year – assisted by Scottish Enterprise and Deloitte – and has presented its findings twice already to the Financial Services Advisory Board of Scotland (FiSAB), which is chaired by the First Minister, Nicola Sturgeon. Other members of the group include Keith Brown, Cabinet Secretary for Economy, Jobs and Fair Work and Paul WheelHouse, Minister for Business, Innovation and Energy.
In a minute published on FiSAB’s website, the First Minister was reported to have acknowledged that fintech is a ‘field with great potential and that work will have to continue at pace to take advantage of the opportunities offered’. The board also acknowledged that incubators like CodeBase in Edinburgh may be able to ‘useful facilities and expertise’. E-Spark, another collaboration hub, has reportedly been identified as a model to follow.
Mr Jones said: “We now have a once in a decade opportunity to articulate to the Scottish Government what we need, and what we want, to achieve our full potential for financial technology in Scotland. Our desire is to create a truly great and thriving industry.”
The FiSAB board said, however, asked for a clear definition of fintech so a consistent message can be delivered in order to develop talent, skills and investment in the sector. And it must be broader than just start-up businesses, acknowledging that centres like London are ‘already ahead of us in this respect’.
Fintech currently encompasses financial technologies as diverse as blockchain – the technology that underpins distributed financial networks such as Bitcoin – to peer-to-peer lending platforms such as KickStarter and Indiegogo. It also includes new ‘digital challenger banks’ which are providing increasingly convenient and customer-focused banking and insurance services.
The conference heard from Scottish fintech firms including FreeAgent, an accounting software package, Sustainably, a giving platform that rounds up purchases and delivers micro donations to causes people care about.
Picture by Nicola Kenny