Fintech is challenging and re-shaping traditional operating models, products, processes and customer experiences across the entire financial services industry.
The use of technology to support financial services is not new, and indeed it has been happening for decades.
But the fintech revolution that is now underway is creating an unprecedented rate of technological change globally, which will lead to much of financial services being unrecognisable within a few years.
In recent times, we have reached a tipping point where our customers, rightly, expect their experience to be focussed on their needs, not on those of the provider.
Accessible, transparent and easy- to-use financial services products and services are at the heart of these demands.
At the same time the industry needs to reduce costs and manage complex risks more effectively.
These may seem like competing demands, but fintech can provide innovative solutions to meet the needs of both and deliver the efficiencies and reduced costs that they both require.
The opportunity to consider and deploy innovative fintech solutions to meet these challenges is attractive to customers and the industry and is becoming increasingly necessary.
This in turn is fuelling a growing industry of both in-house innovation and start-ups, focussed on providing solutions and services designed to respond to the challenges faced across the industry.
Fintech is now embedded in the industry and it is no longer an option for financial centres across the globe to consider whether or not to be centres for fintech. We must all embrace the challenge, or we won’t be financial centres for much longer.
Across the globe, the race to be the next big global fintech centre is on and Scotland is very much part of that race.
The competition is stiff: emerging fintech centres with the components in place to build successful eco-systems for financial innovation can be found around the globe, but they can be found here too.
In Scotland we have a long history of championing innovation in financial services and a vibrant and established financial services industry. Combine this with our first-class universities leading the way in data science, analytics and risk, and we are well on our way to success as a global fintech centre.
But we can’t be complacent – the regeneration of industrial cities such as Sheffield, Bristol and Manchester, means competition is strong from within the UK, as well as from around the globe.
Scotland has to step up in order to compete on an increasingly competitive, demanding and international stage.
Last month brought the first formal recognition of Edinburgh as a fintech hub by the Global Fintech Hubs Federation, the first city in the UK outside of London to achieve such recognition.
Over the past 15 months, Scottish Financial Enterprise and its members, have been working towards a fintech strategy and vision for Scotland.
We want to create a much stronger, connected community and focus on maximising the effectiveness and potential of our rich and connected talent network.
By doing this we hope not only to accelerate the growth of the fintech sector right now, but also to inspire our next generation of leaders and influencers to consider careers in fintech.
It is to them we must present the opportunities of a very different, technologically-driven, Scottish financial services industry.
Is fintech a threat or an opportunity? It has the potential to be both, so the choice is very clear: we must stay ahead of the game and embrace the opportunities that fintech brings, because if we don’t, others will, and therein lies the threat.
Scotland is not only well-placed to succeed, but the industry is already forging ahead with partners across governments and academia to create a true force in the global fintech arena.
Scotland has a great window of opportunity here, but it is not one that will stay open to us forever and we need to move decisively. n
- Graeme Jones is chief executive of Scottish Financial Enterprise