Scotland classified as ‘large and established’ cluster in new UK Government fintech report
Scotland hosts the third largest volume of fintech companies in the UK according to a new government report.
The Edinburgh to Glasgow corridor has been identified as one of the ‘large and established clusters’ for financial technology firms across the UK.
London ranks top as the only ‘super hub’ that hosts two thirds of all fintechs across the country – with emerging ‘nodes’ around the capital acting as feeder clusters driving growth in the sector.
The Kalifa review of fintech, carried out by Ron Kalifa OBE, the former chief executive of World Pay, calls for high-profile taskforce to lead innovation in financial technology as part of the UK’s growth plans after Brexit.
The proposed ‘Digital Economy Taskforce’ would recruit senior figures from across government and regulators to coordinate policy and remove red tape.
Of Scotland, the report says: “Scotland is another example of an established cluster between Edinburgh and Glasgow. Its status within fintech is more widely known nationally and internationally, hosting the third largest volume of fi ntechs within the UK.
“It has strong roots in financial services with many large financial institutions such as RBS and Aberdeen Standard Life choosing Scotland as its HQ. Edinburgh University supplies a rich pipeline of data skills and talent.”
It identifies the sub-sectors of ‘Wealthtech, RegTech and Payments’ as particularly strong performers in Scotland and spotlights companies such as Sustainably, an app which rounds up everyday transactions enabling people to donate to their chosen good causes, named by Richard Branson as his favourite start-up in 2019.
FinTech Scotland – set up to represent the interests of the growing community of companies – is also singled out for praise and the reason why the sector is especially buoyant in the country, compared to other cities and regions in the UK.
The report states: “Fintech Scotland has developed the Edinburgh to Glasgow corridor into a leading European cluster focussing on Open Finance and regtech.
“Starting with 26 fintech firms, today the ecosystem boasts 151, with more in the pipeline. The fintech cluster has benefited from a strong governance model which brought together entrepreneurial firms, large FS institutions, global tech companies, public sector bodies, academia and regulators – a total of 28 strategic partners.”
In 2020, investment into UK fintech stood at $4.1 billion in 2020 – more than the next four European countries combined.
Stephen Ingledew, Executive Chair of Fintech Scotland and a member of the FSR working group, said: “Fintech has the potential to revolutionise how we live, whether it’s paying for our shopping or managing our money or setting up a business”
“Crucially, it can play a pivotal role in stopping the exacerbation of economic and social inequalities. Fintech innovation is fast-growing right across the UK and offers great potential for Scotland through investment, innovation and jobs.”
“We have been fully involved in the Review to share our learnings from the last three years, in which we’ve managed to build an inclusive and vibrant cluster, a model which The Review recognises can help foster innovation and collaboration in boosting recovery of the UK economy.”
Rishi Sunak, Chancellor of the Exchequer, said: “Fintech is one of the UK’s great success stories and will help us seize new opportunities around the world. “We must now build on our global reputation for fostering innovative start-ups and ensure firms can access the talent, finance and support they need to scale up here in the UK.
“This review will make an important contribution to our plan to retain the UK’s fintech crown, create more skilled jobs, and deliver better financial services for people and businesses.”
Ron Kalifa OBE said: “We must continue to nurture our start-up culture, but crucially we must also give our high growth firms the support to become global giants. “With the right reforms that encourage entrepreneurialism, investment and make it easy to attract and invest in talent, Britain can usher in a period of dominance that can help us build back better from Covid-19.”