Stephen Ingledew is a man in a hurry. The energetic chief executive of FinTech Scotland dashes between appointments in a smart suit and trainers, as if to show that the pace of change must not dip in the race to make Scotland a successful global hub.
As a regular marathon runner, Ingledew – who started the job four months ago – understands the need to stay ahead of the pack to secure a top five finish.
One of Ingledew’s first pronouncements in his new job was that he wanted to help Scotland into the world’s five leading fintech hubs – an ambitious target considering the top five are London, Singapore, Silicon Valley, Switzerland and New York.
However, Scotland has already jumped from nowhere to 17th and Ingledew is not short of ambition.
“There is huge enthusiasm and a recognition that fintech is a very important area for Scotland, from the First Minister down,” he says.
So what’s Ingledew’s elevator pitch? Where does Scotland stand out?
“We have a very strong financial services heritage and a track record of entrepreneurial tech and fintech start-ups,” he says.
“We have real strength in data science, a skills base from the universities and within financial services – and a very supportive public sector, which is easy to underestimate.
“And Scotland is more of a village compared to London or New York, so it’s easier to navigate – and easier to collaborate.”
Last year, Graeme Jones, chief executive of Scottish Financial Enterprise (SFE), was leading the fintech charge – and he is delighted at the progress made.
“The last 12 months have been a phenomenal year of delivery. The creation of FinTech Scotland and Stephen’s appointment have given Scotland a real competitive edge.
“I think creating FinTech Scotland was one of the most significant milestones in Scotland’s financial services history. Easy access to big data and changing customer needs have created a great platform for fintech and Scotland is up there.
“Financial services have a new role to play and we are all on that journey. We have all the components in Scotland to capitalise on this fusion of financial services, technology and data.
“There is no complacency, but people are looking north and they are very impressed. They see Scotland’s cooperation and connectivity as a real positive.”
Ingledew exudes positivity, but he knows that isn’t enough. “I’m a naturally positive, progressive and forward-looking person, but I’m a detail person as well,” he says.
This came through in a Facebook Live interview with The Scotsman, where he urged Scotland to think big but act small. He explains: “We have to break it down into small, achievable actions that keep Scotland moving forward. I want to capture and bottle the enthusiasm across the sector and make it tangible, something that leads to an outcome.
“How do we turn the dials and move forward? I think about that all the time.
“While each component part [of the fintech community] is strong, they do not always work together as well as they could.
“I see one of my roles as a coach; not just improving individual players but helping them understand what they need to do – to create a stronger team which will get better results.”
One area where Ingledew thinks Scotland can progress is the crucial relationship between large financial institutions and small, agile fintech firms looking for solutions to the significant challenges thrown up by the pace of technological and regulatory change, such as open banking.
Jones says there has been massive change here: “Two years ago, big banks might have seen fintech as a threat, which was disrupting old operating models.
“That’s long past now. The barriers are down and the big financial institutions are working with fintechs, partnering with them or buying them.
“SFE members are 100 per cent behind this; they have invested £250,000 to set up FinTech Scotland.”
Kent Mackenzie, a director and head of fintech at business consultancy firm Deloitte, agrees and highlights the £53 million Royal Bank of Scotland (RBS) deal to take FreeAgent under its wing in March as highly significant.
“There is a lot more fluidity in the model and a cultural change – the big banks are not saying, ‘Keep the doors closed, they’re coming to eat my lunch’, any more.”
Louise Smith, one of Scotland’s fintech envoys and head of design (personal and business banking) for RBS, has seen this cultural change close up.
“Amazing stories are emerging like FreeAgent. RBS partnered with them, we are now investing in them and our customers say they love the service,” she says.
“I think we’ll see more models like that as fintech in Scotland develops. RBS is looking at others.
“More broadly, the financial services market is looking at how they can work with techs and fintechs to address customer pain points more quickly.
“It’s about investing in technology – sometimes in-house, sometimes with fintechs – and at the same time we are working to educate customers about the changes.”
The fintech hatchery at RBS’s Gogarburn headquarters will help grow more close and mutually beneficial relationships between big banks and SMEs, says Smith, who has often described the need for large financial institutions to “behave like a start-up” to ensure innovation is also coming from within.
She sees this broad cultural shift as part of an “acceleration phase” for FinTech Scotland in 2018.
“The year 2016 was about mobilisation – setting a vision, a culture and a clear plan. In 2017, we moved to delivery, based on a quarterly plan, and started demonstrating real progress and creating a decision-making structure.
“We decided to create an independent company [FinTech Scotland], although not all hubs have that, because it gave us something to gravitate towards. Now 2018 is about acceleration.”
Smith is keen to see Scotland move up the fintech league, but understands it is in a battle for status and talent, especially with burgeoning European players such as Berlin and global hubs including Tel Aviv, the Asia Pacific region and, increasingly, India.
However, she adds: “We need to concentrate not just here in Scotland but to develop deeper strategic relationships globally.”
One of the big fintech debates in Scotland is whether to focus primarily on incremental improvements or disruptive change.
“Financial services and technology are clearly not new,” says Ingledew. “There have always been incremental improvements and better digital engagement.”
Disruptive innovation – doing things very differently – is much more transformational. That might relate to the customer experience or it might be using artificial intelligence to replace what has traditionally been done in the back office of financial institutions by staff.
“Regulatory and compliance work, for example, can increasingly be done by intelligent machines; it’s not just about replacing them, it’s doing it better because there are no human biases.
“This need not be a threat to jobs – it can be an opportunity to release people into a job where empathy and creativity are needed.”
Ingledew, who was managing director, marketing and customers, at Standard Life for four years, says: “Change has always been my mantra and motivation – and this role is all about that.”
He sees massive opportunities in Scotland for fintech in asset management and administration, with the likes of JP Morgan, Morgan Stanley and Citibank having moved significant operations here, alongside Martin Currie and Baillie Gifford.
“We have £130 billion of assets under administration in Scotland and this is an area where we can use fintech to develop and grow, and manage those assets in a safe, secure and technology-enabled environment,” says Ingledew.
All the major fintech players agree that trust and security is a big issue for fintech – and that, without the trust and confidence of consumers, the sector cannot move forward.
“It’s one of the biggest areas of focus for the big banks,” says Smith.
And it’s not just the big banks, Ingledew stresses: “Transparency and trust is really important to new fintechs and how they commercialise their business model.
“They need to show how they make they money, whether that’s a way of managing your personal finances, using your identity and data or peer-to-peer lending.
“This is really important as many financial services businesses have been quite opaque in the past.”
Callum Sinclair, head of technology at legal firm Burness Paull, agrees, saying: “Trust is so important. How do we gain the trust of very cynical, increasingly choosy consumers when so many new brands are coming onto the market? Surveys consistently show the Scottish accent is more trusted, so can we capitalise on that and can fintechs convert that trust to online products? If not, a lot of good technology will be lost.”
One area where the new fintechs can gain a market advantage is by demonstrating cultural change, alongside trust and transparency.
“Look what Nucleus Financial has achieved up against big companies like Standard Life and Aviva,” says Ingledew.
“Its technology is complex but the business is very people-orientated. It is inclusive, transparent, humble – all the things financial services haven’t been.
“And it has succeeded – it’s not what David Ferguson has achieved at Nucleus, but how he has achieved it.”
Ferguson’s success has been recognised by the industry and he was appointed chair of the board of FinTech Scotland this month.
Ingledew continues: “We need more role models like Nucleus. Scotland wants to be the data capital of Europe and we have a real opportunity to achieve that.
“However, it’s not just the data, it’s how we interpret it and use it well. We have an awful lot more data, and better data, available to use the human skills we have to interpret it in a much smarter, more effective way that delivers for both consumers and for business.”
Ingledew sees many smart, effective businesses coming over the horizon, highlighting young companies such as Castlight and Gigly (both looking at fairer financial decisions), Share-In (investment platforms which raise capital through your immediate networks) and Amiqus (compliance software).
“It’s all about democratising financial services. They are all looking at people first, not the machine.
“We can all shape the future but humans need to sit at the centre of that change. Make sure people come first, not the technology.”
As well as growing its own fintech businesses, Ingledew is clear that Scotland must attract inward investment. “We need companies moving to Scotland. Previse [London-based] came here, as well as Modulr” – a business with “a mission to stop payments being a barrier to business growth”.
“We are also talking to Australian businesses looking to come here.”
Sinclair agrees that inward investment could be a game-changer for fintech in Scotland and thinks it might come from China.
“Stephen Ingledew’s appointment has given fintech in Scotland an important ambassadorial face, especially when we have delegations from overseas.
“There is a definite interest in Scotland from Far East investors and I think we will see some investment coming into the tech and data space.
“There are fewer opportunities remaining in Tier 1 locations like London for Far East investors and the potential to find a real gem in Scotland is a big appeal. They have the resources and the appetite for risk. If we can get one big fintech in Scotland, that would be massive.
“The tech sector as a whole has benefited from the halo effect of Skyscanner and the ecosystem that has grown up around it.
“Growing unicorn companies is very difficult but hopefully we can grow some of our fintechs, like Money Dashboard or Nucleus, to real scale.”
If Scotland can do this, and attract more inward investment, do we have enough talented people to feed the sector?
“Fintech talent in Scotland is an opportunity and a threat,” says Ingledew. “It’s not just about having technical knowledge, data management skills and digital, it’s applying them in a commercial environment.
“It comes back to collaboration, between academia and industry. One of my jobs is to make that bridge stronger and match demand from the fintech industry with supply from the universities.
“We have to develop new, relevant programmes – if we don’t do that we will fall behind.
“But it’s not just about graduate programmes. We need people with financial services experience moving to SMEs and start-ups – we need that knowledge transfer using secondments and career changes, and to look at things like MOOCs (massive open online courses) to effect change at scale.”
Scotland’s effort to become a top five fintech hub needs many complex actions and it needs them to be delivered quickly.
However, with constantly changing technology and the fundamental shift in approach ushered in by open banking, it is not just about a quick fix, it is about embedding fintech in Scotland for generations to come.
You could say it’s a marathon and not a sprint. n