Graeme Jones: Growth of fintech in Scotland has been remarkable

Graeme Jones, who steps down as chief executive of Scottish Financial Enterprise at the end of 2020 after five years, reflects on the expansion of fintech during his tenure.

Graeme Jones reflects on the growth of fintech during his tenure as chief executive of Scottish Financial Enterprise.

The progress made by the fintech sector in Scotland over the last five years has been nothing short of transformational.

When I joined Scottish Financial Enterprise (SFE) as chief executive in January 2016, there was no sense of fintech being a discrete sector of scale in Scotland. The growth of fintech in Scotland since then, and the recognition of its importance, has been remarkable.

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There are now more than 140 fintech businesses operating in Scotland, reflecting the fact that this country is a very attractive fintech location thanks to our expertise in banking, insurance, long-term savings and asset management.

We also have great partnerships with academia and government, as well as a deep pool of talent.

However, if you want to be a sector, there has to be a glue to provide cohesion. That, initially, was SFE, before the creation of FinTech Scotland in early 2018. With the tremendous efforts of Stephen Ingledew and his team, we now occupy a global leadership role in fintech and the sector was externally ratified as a European cluster of excellence at the start of 2020.

That recognition helps attract further investment – like the previous arrival of significant players including FNZ and

Modulr – and creates a virtuous cycle of growth.

Fintech has always been about finding solutions to problems and this has been brought to the fore during the Covid-19 crisis, which has accelerated change across financial services from entire offices transforming to working from home overnight to creating innovative solutions for customers at pace.

As an industry, we recognise our vital economic role and our societal responsibilities in supporting our customers, colleagues and communities. Financial services in its many forms, including fintechs, are supporting millions of Scottish households and businesses

during this difficult time and I think innovation has really helped with that.

Over the past few months, we have seen a huge uptick in digital banking and a desire to simplify complex financial services processes through technological innovation. That’s what fintech is all about.

With the arrival of the Global Open Finance Centre of Excellence in Scotland, this trend will only ­continue. These things are very hard-won and reflect the strength of collaboration across the Scottish fintech ecosystem.

You can have lots of little fintechs dotted around, but to be successful, they must be part of a cohesive hub with large financial service institutions, universities and government.

That’s what we have got here, and as the umbrella body FinTech Scotland is able to leverage that collective strength.

When I first got involved in looking at the potential of fintech five years ago, there was a lack of cohesion – and a fear from large financial services institutions that young fintech businesses wanted to eat their lunch. They were concerned that fintech start-ups would take their work and saw them as a threat.

That has now completely evaporated and everyone sees

that collaboration is the way to

go – and that partnership approach is evolving in real time in Scotland.

We’ve seen Royal Bank of Scotland buying FreeAgent and Castlight becoming part of Experian. Then you can look at the fantastic success of Nucleus Financial, FNZ and others.

Different models are emerging, and over the last five years that has accelerated in a very pronounced way; the impact of Covid-19 has ­continued the acceleration of that innovation.

Five years ago, it was all about understanding and valuing what we had, and trying to get a profile. We created a sense of urgency and an understanding that Scotland was the right place to build fintech businesses.

We have made great progress and I’m sure my successor as chief executive of SFE will continue playing a role as we seek to make Scotland one of the very best fintech clusters in the world.

We continue to be helped by

the successful parallel development of data science in Scotland. Fintech and data are a great pairing.

Fintech is about using new and innovative technology to deliver better products and processes for financial services organisations and their customers. What you need to power that innovation is data. You cannot have a successful fintech sector without data; the two are hand in glove and real sources of competitive advantage for Scotland.

It’s a source of personal pride that I have been able to contribute to the growth of fintech in Scotland. Others will judge my role, but I’m delighted to have been able to play a part in connecting things up and putting energy into the sector.

It’s also been great fun working with such a dynamic and exciting sector – and I am incredibly optimistic for the future of fintech in Scotland.