FinTech Scotland launches 'ground-breaking' lab to stimulate collaboration and bridge skills gap

The initiative’s backers say the research is poised to deliver swift and tangible results.

FinTech Scotland has pushed the button on an initiative that it hopes will create major employment and business opportunities, as well as enabling future talent in one of the fastest-growing sectors of the economy.

The Financial Regulation Innovation Lab (FRIL) is being rolled out in conjunction with both the University of Strathclyde and the University of Glasgow, in a bid to “revolutionise and shape” the future regulatory landscapes in the UK and globally. It promises to “champion” the frontier of financial regulation and harness cutting-edge technologies as more of us embrace digital banking and use apps to manage a range of services such as savings, investments and pensions.

The new lab delivers one of the strategic recommendations laid out in the FinTech Research & Innovation Roadmap, launched in March 2022, and aligns with the recently announced UK innovation initiative, the Centre for Finance, Innovation and Technology (CFIT), formed in response to the Treasury’s fintech - financial technology - sector review, otherwise known as the Kalifa Review.

Nicola Anderson, chief executive of FinTech Scotland, says the cluster body is 'uniquely positioned' within the Scottish financial technology industry to lead the initiative.

Not-for-profit cluster group FinTech Scotland was founded at the start of 2018 as a joint initiative by the University of Edinburgh, Lloyds Banking Group, HSBC and Scottish Enterprise (SE). It is now supported by a broad range of global financial services, technology and professional services firms as well as major universities, the Financial Conduct Authority and SE. Bosses at the organisation said the new lab would engage participants in “industry-led innovation challenge calls”, integrate academic research with an “industry-relevant agenda”, design and implement a skills and education programme and facilitate knowledge exchange through the likes of workshops, roundtables, conferences and trade missions.

Chief executive Nicola Anderson said: “FinTech Scotland is uniquely positioned within the Scottish fintech industry to lead such an initiative as it will work to inspire collaborators across Scotland, the UK and globally, enabling those around the world to see Glasgow’s financial services capabilities. Bringing the fintech community of industry, academics and regulators together to explore, test and experiment with new technologies is an important part of our mission.”

Chairman Stephen Ingledew added: “Once more, FinTech Scotland is taking proactive measures to showcase the effectiveness of how a cluster approach can accelerate the UK’s ability to seize competitive advantage in the future of financial regulation and fintech innovation. FRIL will allow us to continue to endorse the opportunity from the fintech sector to support growth across the UK economy.”

FRIL, which is specifically funded by the Glasgow City Region Innovation Accelerator programme, led by Innovate UK on behalf of UK Research and Innovation, will work with industry participants, including large established financial institutions, the wider fintech community, academics, voluntary organisations and regulators across the UK. The research will cover various aspects of financial regulation, including the use of automation and artificial intelligence (AI) to combat money laundering and simplifying ESG (environmental, social and governance) regulation compliance through “explainable intelligent automation”.

More and more people are switching to digital banking and using apps to manage a range of services such as savings, investments and pensions.

Inevitably, AI features large in the planned research programme. The first four industry-led innovation calls to be issued in conjunction with the lab include utilising emerging technologies to simplify compliance process and monitoring. Addressing the future challenges of financial crime will be another key focus for research.

Professor Eleanor Shaw, head of the Adam Smith Business School at the University of Glasgow, said: “The Adam Smith Business School is very pleased to be a founding partner alongside our colleagues in FinTech Scotland and the University of Strathclyde to deliver FRIL. The opportunity to transform the regulatory landscape is remarkable and we are excited to work with partners across all sectors to deliver a collaborative centre of excellence for cutting edge developments in financial regulation.”

Professor David Hillier, associate principal and executive dean of the University of Strathclyde Business School, added: “We have significant capabilities across the university in emerging technologies including AI, space and quantum, which we look forward to leveraging through FRIL. We look forward to continuing our work with industry, policy makers, regulators and innovative SMEs [small and medium-sized enterprises] to drive actionable solutions and deliver on FRIL’s ambitious agenda.”

In April, FinTech Scotland confirmed that it was on track to hit its targets for economic growth a year on from publishing its 2022 innovation roadmap in a bid to drive a fourfold increase in job creation over the next decade. The blueprint identified priorities for the UK to accelerate its financial technology ambition through research and development (R&D) and targeted innovation. Over a ten-year period, the goal was to deliver an additional 20,000-plus fintech-related jobs as well as produce an increase in economic gross value added (GVA) through fintech innovation from £500 million to more than £2 billion.

One year on, industry-led collaborations were said to have driven “growing action” against each of the strategic themes. Those collaborations include a 100 per cent increase in the number of fintech enterprises in Scotland focused on climate finance, along with accelerated fintech partnerships and fintech adoption through innovation labs launched with Lloyds Banking Group and TSB. The outcomes of those tie-ups are helping UK customers towards carbon efficiency, FinTech Scotland said.

April’s year-on update also revealed that there had been a 26 per cent increase in the number of fintech enterprises developing “innovative solutions” using open banking. The industry organisation highlighted an accelerated fintech adoption and creation of commercial opportunities through the launch of Phoenix’s innovation forum, to build greater engagement and support the well-being of the pension provider’s customers, driving forward “greater financial inclusion”.

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