Innovation has been part of the fabric of Scotland's
financial services scene throughout its long and rich history. With
customer expectations changing, possibly more in the last decade
than ever before, it's just as well.
It's clear that consumers of financial products are showing
increasing willingness to experiment with different providers and
products. That, in turn, is creating ideal conditions for some of
the new technology-focussed businesses in FS to challenge
traditional banking models.
It is, perhaps, no surprise then that Edinburgh, in particular,
has seen a swathe of financial technology (Fintech) companies set
up – evolving out of hubs, such as CodeBase, across the
One of the most exciting things about Fintech is that it's
changing and evolving all the time, with new and disruptive
technology becoming mainstream. It is also starting to add value by
changing and improving traditional business processes.
For example, Fintech start-ups are developing products that aim
to give consumers more financial confidence and guidance –
helping them to better understand how they spend and save money. In
some cases, this could mean incorporating external big data or
crowd-sourcing advice from peer networks to create benchmarks and
Another trend coming out of the sector is the use of
gamification techniques – for example, apps that can help
consumers, or "players",) plan their savings and simulate
how different products might work for them; all in an incredibly
engaging way, like we're used to in the world of gaming.
Imagine using a savings account in the same way you do Pokemon
From a business perspective, the use of cognitive analytics and
artificial intelligence (AI) - for example, to better analyse new
tax regulations or new accounting standards - is starting to emerge
to help organisations make better decisions.
Within the Fintech sector itself, we're seeing the continued
emergence of new Fintech hubs and open collaboration between
different centres, with the recently announced Global Fintech Hubs
Federation. This will help bring together the international
community of financial technology players, which is an exciting
development and could help Scotland emerge as an international
In Scotland, we're working with Scottish Enterprise and
Scottish Financial Enterprise to help grow Fintech in Scotland. We
have all the ingredients required to become a real hotspot for the
sector – but there are several steps we need to take if
that's going to happen.
A big part of what we're doing is setting out an action plan
with four main parts. The first aspect, involves setting out a
clear aim. We need to know what we're trying to achieve, before
we can outline how we're getting there. So, we're working
together to look at exactly what we want to accomplish in
The next piece of the puzzle is skills. We have a great deal of
talent in Scotland, which sets us apart from a lot of other
potential Fintech hubs – but we need to make more of it. Our
universities are among the best in the world and our financial
institutions have all the expertise we require: we'll be
looking at how we can bring these two closer together with our
indigenous Fintech firms to pool knowledge, capabilities and see
how we can learn from one another.
We've reviewed how we market Scotland as a place to do
business and work. Some other hotspots, like Copenhagen, are very
good at telling the world about what they do. But, in traditionally
Scottish fashion, we're not brilliant at that. To remedy this
situation, we'll be looking at how we market Scotland as a
place for Fintech firms and talent to base themselves.
Finally, we need a physical space in which all of these things
can come together – like Level 39, Europe's largest
technology incubator, in London. That will be crucial in inspiring
the next generation to take up the opportunities that Fintech
We have a huge opportunity...
In 10 years' time Financial Services will look radically
different. We have such a huge opportunity to play a role helping
our clients' address the disruption the industry is facing, and
develop new technologies and solutions from the knowledge base we
have at our disposal.
We have an important responsibility and role to play across the
wider industry helping guide and nurture new talent, and support
We are beginning to weave a fine Fintech tartan - yes there is a
challenge (like anywhere) with encouraging and enabling the range
of demographic, yes we all need to connect better, yes there are a
few things to do to really set up a sustainable talent pipeline -
BUT – it's all there. What we now need is focus,
leadership, connection, and commitment from each group in the
eco-system to really drive Scotland on to the Fintech
Writing in the Economist newspaper on 8 October 2016, US President Barack Obama called out artificial intelligence (AI) as one of several areas where ‘in recent years we have seen incredible technological advances'.
The blockchain is fast becoming a symbol of the fourth industrial revolution. After steam, electricity and computing, this is the term coined by Davos founder Klaus Schwab for the deep digital transformation that Schwab says is now upon us.
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