Finance data - captured, stored and managed by financial services firms - is the personal and business information that is created when people buy and use financial products and services.
In its “roadmap”, industry body FinTech Scotland said this data could, with consent, be digitally shared with others for consumers’ benefit as part of an “open finance” system - and could be widely used to create new financial products and services.
The report said: “There are now several UK government-led initiatives in flight that could pave the way for open finance, including development of the National Data Strategy, Smart Data Review, and the Pensions Dashboard. The key to success is providing a coherent and standardised framework to enable the data to be unlocked safely and securely and the approach to framework implementation is critical.”
The roadmap reiterated FinTech Scotland’s support for the Smart Data Foundry (SDF), an open finance project established at the University of Edinburgh in 2018 which encourages research and innovation by providing a secure environment that can host open finance data.
Since the Covid-19 pandemic, the project has helped UK and Scottish government departments analyse economic data and worked with the Information Commissioner’s Office. The report said the SDF’s work helped demonstrate “the demand for data-driven FinTech research and innovation”, adding that its close links to academia, business and government would help make a “real difference” to people’s lives.
But FinTech Scotland warned other countries were picking up pace on the UK’s progress towards open finance: “The UK’s initial dominant position has been equalled and could potentially be surpassed,” it said, citing the introduction of Australia’s Consumer Data Right (CDR). “This could challenge the advances made in the UK and underlines the imperative for more research and innovation in open finance.”
Open finance data will create more opportunities through the application of emerging technologies, resulting in new data-driven innovations, emergence of new business models and significant improvement to customer and business engagement with the financial services industry, said roadmap contributors.
FinTech Scotland said insights generated from open finance data could be useful for policy makers, regulators, and governments, allowing “the legislative and regulatory landscape to evolve, and create the environment needed for the future of finance.”
The road map also outlines strategic aims for climate finance, financial regulation and payments and transactions. Over the next decade, FinTech Scotland hopes to create an additional 20,000 fintech-related jobs, as well as boost the country’s economic gross value added through fintech innovation from £500 million in 2021 to £2.1 billion by 2031.
Fintech is disrupting global financial markets and it is growing but there is still a lot to do to attain the advances that could drive meaningful change. Scotland has a lot to offer based on its financial heritage, strength of our universities and culture of entrepreneurism. The FinTech Scotland cluster demonstrates what can happen through collective action and this roadmap provides a framework to move forward in the right direction.
Yvonne Dunn, Partner and financial services technology expert at Pinsent Masons