How can Scotland become a global fintech hub within five years?

We asked what is the biggest challenge between us and our fintech goals. These are the voices from across the industry.

Picture: Shutterstock
Picture: Shutterstock

Louise Smith, head of design, personal and business banking, Royal Bank of Scotland, and a fintech envoy for Scotland

There are a number of challenges we need to overcome to enable Scotland to become a global top five fintech hub. This is my “big five” to make the top five:

Persistent and targeted investment (partners and public funding)

Attract and importantly retain talent across the broad spectrum of digital roles i.e. much greater fluidity between design and creative industries as well as data engineers, data scientists and digital engineers. There is a good platform to build from across a number of cities now but we need to ensure we continue to connect it with a clear and consistent engagement plan

Continued partnering with tech and fintechs in Scotland and ensure we talk about successes. FreeAgent is a good example and there are others. We need to continue to drive at a much larger scale and with businesses at different levels of maturity

Mentoring and support (which includes investment) across the communities. We have a number of hubs and hatcheries and need to continue to drive this at scale – at start-up and, importantly, beyond as businesses mature

Infrastructure that supports all areas of Scotland and ecosystems where people can connect quickly and easily.

Dr Devraj Basu, senior lecturer, Strathclyde University

Fintech is an emerging area that draws on many disciplines, chief among them finance, computing science and data analytics.

The major innovations in fintech use deep insights from these fields, all of which are well developed disciplines, together with technological to take on key problems in business.

The challenge for Scotland, or indeed any aspiring fintech hub, is to attract and bring together individuals who are able to work together across the various disciplines and understand the business challenges that fintech can help solve.

Fintech thus requires an innovative and interdisciplinary mindset and Scotland, with its tradition of innovation in technology and finance, among other things, and its many outstanding universities, is well placed to meet this challenge.

A major challenge will be breaking down the disciplinary barriers and distance from industry that university policy in the UK has encouraged over the last 30 years.

Stephen Ingledew, chief executive, FinTech Scotland

It’s about having the confidence and bravery to recognise that, with things moving so fast (and the ambiguity that can create), we have to make decisions and not let things be done to us.

We must shape the future.

The other big challenge is about people; we need to recognise it’s not just about technical knowledge, it’s about applying that knowledge in a new world.

We need to provide good businesses with positive working environments to allow talented people to do that.

Dr Ramona Blanes, lecturer, Glasgow University

The biggest challenge is to attract talent to Scotland as well as to encourage such talent to remain.

To do this, Scotland needs to find a niche in the financial services sector.

The Government needs to develop a nurturing ecosystem to inspire entrepreneurs (and intrapreneurs) within and outwith the country – for example, setting up fintech-specific innovation hubs in schools, or encouraging and supporting the setting-up of such hubs at universities.

It shouldn’t stop there as many fintech entrepreneurs in Scotland find it difficult to progress beyond the initial stage, so the Government should also set up and support accelerator hubs and encourage financial institutions and technology companies based in Scotland to collaborate with/mentor/support firms in these hubs.

Finally, the government could also partner with other fintech hubs like Dubai, Singapore or Hong Kong to enable Scottish fintech firms to make a smooth transition into other markets.

Andrew Smith, chief technology officer, Nucleus Financial

Scotland has a fantastic financial services heritage, providing an invaluable basis to becoming a leading fintech hub.

However, some things in fintech are just different, and the sooner we embrace these differences, the sooner we’ll be able to attract and grow top fintech companies.

Fintechs can offer new ideas and ways of working.

We need people that can adapt, whether learning new skills, taking the risk to work in new companies, working in more agile ways or moving outside their comfort zone.

Fintechs have user experience at their core, and develop products through continuous testing, rather than the traditional approach to financial product design.

Any hub needs a critical mass, allowing start-ups to integrate with more established firms to share learning and create joint success.

Ultimately, new ideas need funding.

Financial structures are needed to allow new businesses to come to market, weather the journey to profitability and make a difference to the customers they serve.

Huw Martin, managing director, Head Resourcing

The biggest challenge to me is a lack of focus and being a little bit inward-looking.

If we do it organically and wait for the gems to come along, it will take a very long time.

We’re not yet as good as we think we are. To be a hub, you need a substantial amount of successful organisations who are creating products and commercialising them – and we are not there yet at any kind of scale.

In that respect, we are dwarfed by the likes of London, New York and Singapore – but we have the energy, government support and financial services.

We need to put vested interests out of the window and pull together with an inward investment focus and bring skills in from the outside.

Fiona James-Martin, partner and head of interim practice, Carlyle

One of the key challenges we face in Scotland is how to develop and retain talent, specifically emerging leaders, in our businesses.

As the workforce evolves, it is becoming increasingly evident that the up-and-coming generation of business leaders, “millennials”, have different priorities and perspectives when it comes to building successful careers.

Flexibility in working practices, access to a wider range of internal and external opportunities, clear lines of progression, immediate feedback; all of these factors hold much more importance for a talent pool that is forming a growing percentage of our workforce.

To succeed on a global stage, financial services businesses have to adapt their more traditional practices in order to effectively harness this talent.

There is real opportunity here for greater collaboration with fintech companies, who have an innate capability for developing talent and providing workplaces which offer millennials attractive opportunities for continuous learning, growth and challenge.

Callum Sinclair, head of technology, Burness Paull

Scotland’s size and scale is the biggest challenge to breaking through to become a top five fintech hub.

There are other hurdles, of course: around Brexit uncertainty, talent pipeline, infrastructure and connectivity, availability of funding, a complex regulatory environment.

But in the face of fierce international competition from other hubs, the fact that we’re a relatively small nation will be a significant challenge.

However, Scotland has a record of punching well above its weight.

The key ingredients for the “fintech cake” are all here (as we explored last year). We are a nation of innovators and networkers.

By collaborating and making connections, continuing to invest in our talent and being bold and agile (Scottish Government, traditional financial services and small and medium-sized enterprise disruptors alike), we can continue to build an ecosystem that will propel us into the top five.

Alex McCutcheon, SAS business consultant, Sopra Steria

In one word – talent. Scotland faces a problematic gap between demand and supply in the emerging fintech climate.

With the increasing trend of fintech being used as a commodity in the market, this gap may even get wider in the next five years.

To overcome this obstacle, Scotland must invest down three avenues.

First, to provide and support Scottish educational institutions with tools and knowledge which will allow them to train a modern workforce that is literate on concepts such as cybersecurity and artificial intelligence.

Second, encourage current companies in Scotland’s ecosystem to retrain professionals to meet the demand for innovation and help incubate Scottish fintech.

Finally, ensure that we not only attract the top talent from our global competitors, but that we are able to retain the already well established global professionals working within our borders.

Andrea Bracciali, lecturer, Stirling University

To stay in the group of the top players in fintech, Scotland will need to be able to keep leading on innovation and to keep competing internationally, in a more and more borderless sector.

Also, it will need to cope with the expected dramatic shortage in a highly-skilled and innovative workforce. Scotland is extremely well positioned to achieve such goals, thanks to an already thriving fintech ecosystem, an advanced research and educational system, capability and infrastructures for attracting investments, and the support of an agile public sector.

Scotland will overcome forthcoming challenges if it is able to integrate all the above resources and support them working together, and together with their European and international connections.

Jason Stone, partner-manager, Avaloq

As with any business, emerging fintechs require the ability to assemble the best possible team, raise capital and access customers.

Collaboration Scotland’s key priority is to build a strong community of fintechs who can collectively support one another and understand that growth works for everyone in Scotland.

By creating a unique open ecosystem for innovation, Scottish fintech has all the right components to be a world-class fintech hub.

Our unique strength in Scotland is the proximity of every possible partner or customer.

Having a strong focus for fintech in Scotland aids scalability and our ability to lead.

Data-driven innovation is our unique competence, backed with the operational excellence in financial services.

Peter Ferry, founder director, Wallet Services

Any fintech or other software company trying to succeed and scale has the same challenges; to win business and build leading technology quicker than global competition.

Scotland can be a challenging environment to do this. Seed funding finance is slower and the local market smaller than other hubs.

One strength is in the diversity of its skills base, across multiple disciplines and particularly across several world-class universities.

The biggest challenge to Scotland becoming a global leader is the lack of a cohesive strategy around the start-up ecosystem.

There are numerous small-scale schemes, grants competitions and academic links, each focused on a particular industry or area, but no clear direction in coordinating these to accelerate the tech and business assets to global success.

If someone at the highest level in government showed true technology leadership and invested political capital in setting targets and co-ordinating all our investment and assets, Scotland could become a global hub.

Andrew Berry, director, risk analytics, Deloitte UK

Fintech hubs in cities such as London and Singapore have been successful due to their proximity to large B2B and B2C customer markets, supportive regulators, a wide mix of local and foreign start-ups and access to extensive funding and capital investment.

Scotland is an emerging hub due to its rich heritage in financial services, its history as a hotbed of innovation and invention and its 19 universities that provide a skilled pool of talent in data science, gaming, app development, encryption and security.

However, Scotland needs to develop further its capabilities and strengths – for example, raising its global profile as an attractive destination for start-ups and talent, and widening its network of angel and institutional investors.

By focusing on the wider fintech ecosystem, leveraging a supportive government and assets such as CodeClan and the Data Lab, FinTech Scotland has the ability to achieve its vision of becoming a top five fintech hub.