Managerial Insights | Building a roadmap for Scottish fintech success

by James · September 12, 2022

The last two and a half years have presented significant challenges for global business. Despite this disruption, FinTech Scotland chief executive Nicola Anderson believes the Scottish fintech sector has flourished.

And with the annual Scotland Fintech Festival approaching, Anderson says the sector now has a community of around 210 SMEs. A significant growth compared to pre-pandemic figures and testimony to the strength of the established community.

“Unfortunately we’ve lost one or two along the way, but we’ve continued to win and grow and this really shows the capabilities we have across the financial services, fintech and wider technology sectors.”

“Even in the middle of this period, we have actually continued to grow as an ecosystem – and this is growth in terms of the number of fintech SMEs and in terms of investment,” she says.

During the pandemic, Anderson believes the sector has risen to the occasion and demonstrated its potential to deliver positive, impactful solutions for consumers and the economy – and there are likely more to come.

“We saw these businesses across the board from Covid, we saw them adapt and we saw them lean into the real issues that are affecting people,” she says.

Amid a spiraling cost of living crisis, Anderson says she is confident the Scottish fintech sector will once again step up and help struggling consumers.

“And in addition to thinking about the cost of living crisis, we see the same situation. These organizations are really thinking about the needs of people and businesses, and creating solutions that will help address or support people in these times.”

Scotland’s innovative fintech SMEs are broad in their specializations and areas of focus, adds Anderson. Increasingly, startups such as Inbest or Snugg are tackling issues that are at the forefront of society, for example rising energy costs or access to benefit support.

Similarly, while concerns about climate change are also increasing, Anderson says we are also seeing dynamic Scottish companies emerging in what is likely to be a major growth area in the coming years.

“A big topic at the moment is the climate agenda,” she says. “And we’re seeing more and more innovative fintechs start to think about how they can play a role in developing practical solutions that will have a big impact”

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Scottish fintech sector leads the way

Looking ahead, Anderson believes the Scottish fintech sector will play a key role in supporting economic recovery and sparking a new wave of innovation in the UK’s £173bn financial services sector.

Earlier this year, FinTech Scotland launched its research and innovation roadmap, which outlines key focus areas for the sector over the next decade. And the cluster organization has bold ambitions for the future of the ecosystem.

The roadmap outlined targets to create more than 20,000 jobs over the next 10 years and increase economic value (GVA) from £598 million to more than £2 billion over the same period.

A key focus of this roadmap, Anderson explains, centers around fostering a culture of responsible innovation with regulatory compliance at its core. In the long term, she says that this will not only increase its appeal among consumers, but create a sustainable environment where entrepreneurs and startups can build products responsibly and with people in mind.

“The importance of responsible innovation is enormous, because in the long run it contributes to the adoption of innovative new technologies, products and services, which in turn create jobs and economic opportunities.”

The roadmap also seeks to encourage the development of collaborative, cross-sector relationships – bringing together industry, the public sector and academia to ‘unlock’ the capabilities of the UK’s research community.

Indeed, the roadmap acknowledges that Scotland has “one of the highest proportions of world-class universities per head of population” in the world, adding that Scottish universities “lead the way in technology research and innovation”.

Tapping into this wealth of institutional talent will be a key driver of future fintech success in Scotland.

Since the publication of the roadmap, Anderson says there have already been some remarkable examples of responsible innovation coming off the stage and creating tangible, real-world impact.

Current financial institutions, of which Scotland has no shortage, also recognize this and are making huge efforts to work with fintech entrepreneurs to tap into the culture of innovation woven throughout the ecosystem.

“It is this kind of collaborative approach that helps create better outcomes for people and drives innovation across the fintech and finance sectors here in Scotland. It allows us to support some of the hardest hit people during this cost of living crisis, she says.

Cluster Excellence

The past few months have seen a number of “exciting” moments for the Scottish fintech sector, says Anderson. Perhaps the most notable of these has been recognition with a cluster award.

The European Secretariat for Cluster Accreditation (ESCA) confirmed the award following a comprehensive audit of the organisation’s progress and delivery record since January 2020.

In particular, ESCA highlighted a number of key improvements, including a 22% year-on-year growth in the number of fintech SMEs operating in the ecosystem.

The award also paid tribute to the cluster’s exemplary leadership and the growing culture of collaboration between fintech companies, large businesses, universities and public bodies across the UK.

Anderson believes the award represents “absolute validation” for the ecosystem, shows its potential and will act as a means of benchmarking performance against other clusters in the UK and further afield.

“I have to give full credit to everyone involved in the FinTech Scotland cluster for this. Because it’s a great validation of the approach we’re taking to building fintech innovation,” she says.

– This will give us the opportunity to compare ourselves with other cluster organisations. It is essential for us going forward and keeps us focused on the key activities that will help us achieve success.

“So it’s a real testament to all the committed, action-oriented participation across the cluster that we’ve achieved this.”

Set an example

As well as acting as a stamp of approval, the recent excellence award will demonstrate that Scotland’s fintech ecosystem is an attractive place to do business for organizations from across the UK and further afield.

Furthermore, it adds to its credentials as a regional leader in the UK’s burgeoning sector. Recent statistics from Tech Nation show that investment in the UK’s fintech industry reached an all-time high in Q1 this year.

And since January 2022, the sector has already attracted $9.3 billion in funding, marking an increase from $8.67 billion in the same period in 2021 and defying the economic downturn.