Can you create a fintech ecosystem in a strategic and structured way, to the benefit of all parties? The University of Strathclyde – a fintech pioneer which launched Scotland’s first MSc in the subject in September 2017 – certainly believes so.
Much of fintech’s development has been attributed to agile young businesses identifying new products and ideas and working with established financial institutions to take them to market.
In this context, an ecosystem evolves, but not always in a structured way, due to the fast-moving and sometimes unco-ordinated nature of any emerging economic sector.
However, academics at Strathclyde believe the concept of ‘Strategic Fintech’ can be used to build and shape an ecosystem and could deliver very significant benefits for everyone involved in fintech across Scotland.
“It cannot just be about the evolution of technology, it needs to be about the creation of an ecosystem,” says Daniel Broby, director of the Centre of Financial Regulation and Innovation at the University of Strathclyde.
“Strategic Fintech provides a framework to manage disruption at both business and societal levels. It spans fintech taught at business schools, entrepreneurs and disruptive business models, new ways of delivering financial services, regulatory challenges and changing financial skill sets. It also provides the insights needed to navigate the reshaping of financial markets.”
So what does this look like in practice? The university has designated fintech as a strategic priority and is committed to being at the heart of Glasgow’s fintech community, which includes the Glasgow City Innovation District (GCID), a partnership involving the university, Entrepreneurial Scotland, Scottish Enterprise and Glasgow City Council.
GCID is a hub for entrepreneurship, innovation, and collaboration, and it builds on Scotland’s rich tradition of scientific excellence and industrial co-operation. Working with these and other partners, the university will develop an emerging fintech cluster through encouraging positive fintech initiatives already up and running – such as its Fintech Accelerator – and introducing and supporting more.
“A cluster approach can act as an effective mechanism to bring together colleagues across different faculties and departments,” says Martin Hughes, Strathclyde Business School’s strategic investor relations manager. “This allows new teaching and research collaborations, the chance to extend the university’s well-developed industry engagement, and the potential to create new commercial opportunities.
“The university is effectively an ‘anchor tenant’ of the Innovation District as we seek to play our part to enhance firms and place competitiveness through economies of scale – bringing together economic, physical and networking assets – to derive benefits from having key people in close proximity.
“The university can provide talent, physical and virtual hubs, and entrepreneurial development. The GCID can allow the university to realise its full potential, and become part of the broader fintech industry, and – alongside our partners – support the development of a fintech cluster.”
Strathclyde’s strategic approach to fintech involves three linked interfaces – academic, industry and entrepreneurial – which tie in closely with its three key functions as a university – teaching, research and knowledge exchange.
On the academic side, Broby says: “We have created a Fintech Academy to stimulate new opportunities and develop ideas. It will generate fresh, useful and strategic fintech research and draw on this expertise to inform our delivery of relevant learning experiences to ensure Strathclyde fintech students graduate ready to make immediate positive contributions to Scotland’s growing reputation as a global fintech community.”
In terms of the industry interface, Hughes states that the university wants to strengthen relationships with established financial services institutions as well as emerging fintechs, saying: “Daniel developed the idea of a Fintech Innovation Lab, which we see as an opportunity for pre-competitive collaboration across the industry. We want the Fintech Innovation Lab to become a place for industry to use and to carry out projects.”
With regard to entrepreneurship, the university is expanding its Fintech Accelerator, which is in its first six-month programme. It has spawned exciting ventures like BankPal, founded by MSc Fintech student Daniel Sloan, which aims to provide a simple, low-cost alternative lending solution to traditional overdrafts and improve consumers’ financial literacy.
It is one of four fledgling businesses which have been offered access to money, mentoring and entrepreneurial support through the accelerator, to help plan future investment, capital growth and develop a strong value proposition.
The others are Listings Ledger, which provides estimated valuations for private companies; SimpliTasker, an app designed to help individuals and businesses book on-demand services and get matched within seconds with trusted and background-checked service providers, and Nudge Blockchain, which facilitates the transactions and management of work contracts.
“The university has taken the decision to invest in fintech start-ups and we are excited about extending that activity into the Glasgow City Innovation District,” says Professor Eleanor Shaw, Senior Vice Dean of Strathclyde Business School.
“To prosper, the fintech community needs more companies to engage with emerging technologies. We see Strathclyde as being able to support the start-up and growth of more fintech companies by helping them develop and test their value proposition, and by ensuring they have the right business model in place in order to develop and grow. Such start-ups have the potential to provide high-value employment opportunities for Scotland and to make a disproportionate contribution to our nation’s economic and social wealth.”
Hughes adds: “We want to have the Fintech Accelerator fully operational within the GCID to help both existing firms and new business to benefit, to create an area rich in innovation and entrepreneurship.”
This is part of the bigger picture of Strathclyde’s strategic fintech approach. Hughes says: “We see ourselves as a socially progressive university and – as well as economic returns – we want to understand the social impacts of what we do. For example, fintech offers new and important opportunities for financial inclusion.”
Broby says the prospect of Glasgow jobs in the “new back office”, created by financial transactions moving to distributed internet-based platforms, should not be undervalued.
“Some people see areas such as transactional reconciliation and risk and oversight as the boring side of fintech, but as financial transactions migrate to the internet, you need new protocols.
“The role of finance in Glasgow is largely a spoke to London’s hub. Financial institutions are here because of a skilled, abundant workforce, but that exists in other parts of the world. We have to build an ecosystem so when decisions are made to outsource elements of a business from London, they see the bigger fintech picture – the strategic approach.”