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A £250 Billion Opportunity: How fintechs can lead the charge in greening UK homes for Net Zero

One of the newer startups of the Scottish fintech ecosystem, Snugg, is dedicated to making energy efficient homes simple and affordable for everyone. Co-founder Robin Peters spoke to us about his concept of climate finance and challenges, as well as his recommendations for fintech companies entering the space.

In the UK, homes make up a fifth of total carbon emissions, and it is estimated £250 billion pounds of investment is needed to make homes energy efficient if we’re to hit our net zero objective by 2045. To get there, the private sector will have to play a significant role in support of that. While investment in large infrastructure projects, such as wind farms, are supported by quite mature financial vehicles, there has been very little progress in innovative finance solutions for homeowners. 

“One of the key challenges is that investment related to decarbonising homes is generally quite expensive and intrusive. And frankly, the investment case often isn’t very attractive to people,” points out Peters. “So it’s quite a difficult nut to crack, but also extremely important.”

Climate finance plays an important role in tackling this challenge because it brings together different elements of the private sector to underpin finance initiatives to help the world achieve its net zero ambition. The goal is to not only direct investment into getting projects off the ground, but it’s also about helping financial services customers to invest in climate-positive activities. 

Yet there are a number of barriers that need to be overcome, including the need for more consistent government policy around green incentives, and the fact that general consumers have got to want this more. Further, there needs to be more integration across the supply chain. “People need things to be made simple for better take-up of the pro-climate incentives that are on offer,” explained Peters. “There should be a deeper alignment amongst the different providers across the supply chain, for example, between a trusted installer, the financial provider, manufacturers and the government.”

The financial sector now also has an opportunity to pave the way more seamlessly. Firstly, they can put all their data to more intelligent use by targeting personalised initiatives and engaging with customers in a more meaningful way. Secondly, there is scope for innovation in green financial products, such as pay-as-you-go (where people can repay loans based on savings they have achieved from making their homes more energy efficient) or property-linked finance (where a loan is linked to a house rather than a person). Peters notes a slight degree of reluctance in the financial sector at present, yet he is optimistic that in the future there will be better auditing of banks to assess whether financial products are truly delivering. 

 

His top  three recommendations to Scotland’s fintechs wanting to incorporate climate concerns into offering?:

  1. Focus on the data: There’s a lot of data out there that can be improved and interrogated for better insights
  2. See the opportunity: A perception shift is needed to see that this is an opportunity for real innovation. There’s a huge investment opportunity for financial services, yet patience is needed as banks can be particularly slow in adopting truly new innovations
  3. Collaborate: It’s an incredibly dynamic market which literally needs to grow by a factor of ten in the next 4-5 years. There’s also an enormous amount of innovation, and sharing different ideas with emerging players and other participants will help come up with the best solutions for the market.

Defining Climate Finance

Kirsteen Harrison, the Environment & Sustainability Advisor at the digital-assets platform, Zumo, is a stubborn optimist with a fierce conviction that businesses should be a force for good. As such, she works with leaders to facilitate the mindset shift required for businesses to thrive in a net zero future. 

She notes that the term climate finance’ is a multifaceted concept, which in her view, may be used as an all-encompassing term and often gets confused with green or sustainable finance. “Climate finance has been specifically defined by the United Nations Framework Convention on Climate Change (UNFCCC) as finance for climate mitigation, adaptation or resilience,” Harrison explains. “To me it also includes generally enabling and delivering  flows of climate finance to the parts of the world where it’s needed most.”

To support the flow of climate finance, financial institutions are having to establish transition plans that show not only how they will meet their own net zero targets, but to ensure financial flows actually shift towards supporting decarbonisation. This requirement has not quite yet filtered down to most fintechs. Harrison cautions that the requirement for fintechs to consider the financed emissions they are facilitating will arrive sooner than they think, and that the pace towards transition will move extremely quickly and not in a linear fashion. “I think as businesses, we tend to look at past events and timelines as a way to predict what might happen in the future. And with climate change we cannot do that, that is actually quite a dangerous thing to do,” cautions Harrison. “In terms of evolution, I think it is going to be much faster than we are used to seeing. Not only is that needed, it’s to be encouraged.” 

Harrison also believes that improvements to ESG investing need to be made. She acknowledges that while this is a fast-evolving landscape and there is rightly a fear of greenwashing, there is nevertheless a much higher burden put on ESG investing. “ESG investments rightly need to prove that they meet certain criteria through data, whereas non-ESG investment does not.”

She has confidence, however, that blockchain technology will be a true enabler for delivering climate finance. Because blockchain provides an immutable ledger, it can ensure that finance is delivered to the points it actually needs to be delivered to, which is especially important for jurisdictions lacking in good governance structures. Blockchain can also play an important role in supporting the role of quality carbon credits and renewable energy certificates (RECs) by avoiding legacy issues such as double counting.  

Harrison has three main pieces of advice for fintechs wanting to incorporate climate finance into their offerings:

  1. Do it authentically: Rather than simply launching a green product, sustainability principles need to be embedded in your business alongside credible net zero commitments.
  2. Stay two steps ahead: Because we’re working within such a rapidly changing landscape, planning needs to determine what might be needed in three, five or seven years’ time, or risk quickly becoming out of date. 
  3. Be mindful of financed emissions: A big part of the carbon footprint of the financial industry is financed emissions’,  which are the greenhouse gas emissions linked to investment and lending activities. Fintechs need to very carefully consider how their work might be impacting financed emissions, and, if necessary, pivot and support climate-friendly choices and investments instead. 

Awareness is key. Ultimately, fintechs need to take responsibility for the impact that investment decisions can have on harming the environment, as well as the impact that they as technology providers might have on affecting the system as a whole for the greater good. In doing so, they will attract and retain new talent, increase trust in their brand and prepare themselves for the fast-evolving sustainability disclosures landscape.

New partnership to tackle financial fraud using synthetic data

In the ever-evolving landscape of financial fraud, Authorised Push Payment (APP) Fraud has become a prominent concern for both regulators and financial institutions. In 2022 alone, a staggering £485.2 million was lost to APP Fraud scams, accounting for a significant 40% of all financial fraud losses during that period. To combat this growing problem, the Financial Conduct Authority (FCA) and the City of London Corporation have teamed up with Smart Data Foundry to provide innovative solutions and support their mission to eradicate APP Fraud.

 

Smart Data Foundry’s aizle Synthetic Data Engine

At the heart of this collaboration lies Smart Data Foundry’s cutting-edge aizle® synthetic data engine. This powerful tool is being harnessed to create a synthetic dataset tailored specifically for APP Fraud. This dataset will be accessible through the FCA’s Permanent Digital Sandbox, providing a resource for innovators and stakeholders in the fight against APP Fraud.

 

Understanding APP Fraud

APP Fraud occurs when individuals are deceived into transferring money to fraudsters posing as legitimate entities or individuals. The consequences of falling victim to these scams are devastating, particularly for those who are financially vulnerable. It is a pervasive issue that requires comprehensive and innovative solutions to address effectively.

 

TechSprint Initiative and Continued Development

Recognising the urgency of the problem, the FCA and the Payment Systems Regulator (PSR) organised a TechSprint event in September 2022, focusing on combating APP Fraud. Smart Data Foundry played a pivotal role during this event by providing their APP Fraud synthetic dataset. Building on this momentum, Smart Data Foundry has continued to refine and expand their dataset to meet the evolving needs of the industry.

 

The Importance of Quality Data

Access to high-quality data is essential in the fight against financial fraud. It enables innovators to test ideas, develop proofs of concept, and refine models effectively. The APP Fraud synthetic dataset, provided by Smart Data Foundry, covers the entire lifecycle of APP Fraud, offering a representative and relevant resource for researchers and organisations striving to combat this growing threat.

Bryn Coulthard, Chief Product and Technology Officer at Smart Data Foundry, stated,

“We focus on creating high-utility synthetic data to enable innovation within the financial services industry. We are delighted to continue partnering with the FCA with our APP Fraud datasets to help play a part in tackling this growing problem and to help ignite and accelerate innovation in this space.”

Photo by Sora Shimazaki: https://www.pexels.com/photo/crop-cyber-spy-hacking-system-while-typing-on-laptop-5935794/

Fintech leaders among key speakers for scottish scale-up event

Leaders behind innovative fintech businesses will be among the speakers at this year’s Invest2Scale 2023 being held in Edinburgh.  They include Thomas Gillan, CEO of Edinburgh-based payment orchestration provider BR-DGE and Mohsin Rashid, CEO and co-founder of consumer-facing fintech ZipZero. In June, the company moved its headquarters from London to Aberdeen’s ONE Tech Hub.

Callum Murray, the founder and CEO of Amiqus Resolution will also take part in the event as a contributor during a fintech panel discussion.

They will join keynote speaker Shane Corstorphine, the founder of Scaling Up Consulting and a former senior executive at Skyscanner, at the Invest2Scale event on 31 October.

Shane set up his consultancy business, which provides coaching for CEOs of rapidly scaling businesses, in 2019 after exiting from Scottish-founded unicorn company Skyscanner where he served as both CFO and Senior VP of Growth. He was an integral part of the tech company’s C-suite team that saw it scale from around 75 people to more than 1,500. Shane is also a non-Executive director for the market-leading Forge Holiday Group and for Glasgow-based healthcare scale-up, Simple Online Pharmacy.

The 2023 Invest2Scale event, which supports scalable Scottish companies with high growth prospects, will be chaired by Michael Moore. A former Scottish Secretary who served in the 2010 Coalition Government, Michael is now Chief Executive of the British Private Equity and Venture Capital Association.

Other speakers at Invest2Scale 2023 include Gemma Hamilton, an investor at BGF, an established and independent fund that has committed over £3.5bn of investment into SMEs across the UK & Ireland; and Carol Thompson, CEO of Glasgow-based BDD Pharma, who has led its growth as an integrated development and clinical trials company.

Also addressing the event will be Mike Reid, founder and Senior Partner of Frog Capital; Mark Boggett, CEO at Seraphim Space, the world’s leading specialist investor in the SpaceTech domain; and Federico Charosky, founder and CEO of Edinburgh-headquartered global cyber security services company Quorum Cyber; Craig Johnson, co-founder and Director of Strategic Partnerships at ENOUGH; and Hayley Raeper, People Lead at digital development partners xDesign.

Launched in 2022, Invest2Scale helps revenue-generating scalable Scottish companies which are ready for high-level growth by providing them with direct access to investors and VCs. The event is led by law firm MBM Commercial, accountants and advisers CT, recruitment specialists Eden Scott, and Angel Capital Scotland (formerly LINC Scotland).

Michelle Lownie, CEO of Invest2Scale founder company Eden Scott, who will also be taking part in a panel discussion at this year’s event, said:

“We are delighted to have secured such a strong line-up of speakers for Invest2Scale 2023. Our roster of expert guests all understand and have direct experience within the scale-up community and will bring huge value to this event by sharing their stories and offering supportive insights for companies that are on the verge of global growth.”

Further information on Invest2Scale 2023 can be found at: www.invest2scale.com

Unlocking Financial Innovation with Digital identities and Open Finance

Open banking data is hugely valuable as it allows us to address the lack of trust that innately exists in a digital-first financial services engagement. In actuality, it is our bank accounts that best reflect us as physical people, spending money every day and creating a footprint of data. By using open banking data we can leverage the identity and data we already have with our banks, so that third parties (like lenders) can understand us just as well as our bank understands us.

James Varga, Founder of DirectID, is passionate about Open Banking and the opportunities it provides to redefine the credit and risk industry. In 2011 he founded DirectID with a mission to leverage the identity and data that users have with their bank accounts, helping them prove their identity, financial health, and credit risk in seconds.

“One of my core fundamental beliefs is this idea that we should be able to manage our own individual data,” says Varga. “In the very near future, I think we’re going to start to hit that challenge around the sharing of identities and related standards, which will push us towards a consumer-centric data sharing model, where consumers are empowered to manage their varying sources of data and share them with third parties. But we’re not quite ready for it yet.“

Over the past few years, he notes that the industry has started to view digital identities as an enabler and opportunity, largely because we need to rely on a trusted exchange of information to make decisions. In a centralised view of the consumer-centric data sharing model, identities are treated as a utility with control over identifiers as a result. However, it is extremely difficult to maintain control within this centralised system due to the sheer scale of data relationships that exist. The decentralised model, meanwhile, places the consumer at the middle. This model recognises that value is found, not from controlling the identifiers, but from within the data and services related to that data. There are examples of decentralised models that we can draw on, for example, the domain name network and mobile phone numbers. Such a decentralised model won’t come without challenges: a framework and methodology still need to be ironed out, but prior to this Varga believes that the first big industry challenge is to realise that we shouldn’t own people’s identity and give up ownership over that.

As we move into a world where consumers have an increasing amount of access and control in managing their data, we move from open banking to open finance, which can incorporate all sorts of data occurring over a person’s lifespan. Once the decentralised framework of identity sharing is agreed on, issues around security, compliance and tech standards can then also be agreed upon. “This isn’t a technical problem,” says Varga. “What we want is for people to use multiple identities, and give that control back to the individual to help them to understand who sees your data, who is accessing it, and who is sharing it. And even, ideally, here is the money that you can make from enabling or the benefit that you can get from enabling.”

Why UK fintechs should consider expanding into Latin America

For many UK companies Latin America is most likely not the first port of call for international expansion. Yet this booming sector has shaken up local markets and boosted competition and inclusion.[1] Whilst many FinTechs in Europe and North America have focused on decentralising protocols and Web 3. FinTechs in Latin America (LATAM) have focused on three basic areas: digital payments, fintech as a service such as broadening banking options for the unbanked and access to credit.[2] Furthermore, the GSMA asserts that in 2023 80% of people in LATAM have a smartphone with 65% having access to mobile internet[3] and The World Bank data states that 68% of the population in Latin America and The Caribbean (442 million) is between 15-64 years old, growing from 62% in 2000.[4]  This significant and young segment of the population can be characterised as having an openness to changing tech and with a proficiency for using apps.  Together these factors make the principal markets of Brazil, Mexico, Colombia, Argentina and Chile ripe for Scottish FinTech development and growth.

At the Department for Business and Trade (DBT), complementing the work of Scottish Development International (SDI), we are keen to highlight to FinTech Scotland members the landscape and possibilities in three markets: Brazil, Mexico and Argentina.

 

Brazil

In Brazil, the Fintech industry experienced rapid growth in recent years, driven by a large unbanked population, a complex traditional banking system and a strong entrepreneurial spirit. Payment solutions played a significant role in the early stages of the Brazilian FinTech landscape. Companies like PagSeguro offered digital payment alternatives, enabling small business and individuals to accept payments efficiently. Brazilian FinTechs expended their offerings to include digital banking, lending platforms and investment solutions. Nubank, one of Brazil’s most successful FinTechs revolutionised the banking industry with its mobile-centric approach and user-friendly experience. The company is now the fourth largest bank in Brazil with 85million customers.[5]

The Brazilian government has taken steps to foster FinTech growth. Initiatives like PIX, an instant payment system, has created a more favourable environment for FinTech innovation and competition. The Central Bank of Brazil has also introduced regulations to facilitate FinTech operations while maintaining consumer protection and financial stability.

Open Banking/Finance in Brazil:

The successful adoption of Open Banking in UK led to other jurisdictions around the world to examine its potential and possibilities for localisation. In Brazil, the Central Bank opened a public consultation in 2019 to hear proposals from associations, financial institutions and other entities on the regulation of Brazilian Open Banking.  After receiving more than 500 suggestions, in 2020, the Central Bank published Joint Resolution No. 1. In 2021, the implementation of Open Banking in Brazil, now called Open Finance for its broader approach, began in four phases. They are:

  • Phase 1: sharing public data from participating institutions;
  • Phase 2: sharing of information by customers, such as transactional and registration data;
  • Phase 3: sharing services, such as offering credit and initiating payments;
  • Phase 4: sharing other data, such as insurance, pensions, and investments.

Currently, there are already possibilities to initiate payments through PIX, since Phase 3 started in October 2021. The challenge for 2023 is Phase 4. Specialists expect that Brazil can overtake the UK in its implementation, as the largest Latin American country it has a much bigger scope for data than the British counterpart. The approach of Open Finance, instead of the original Open Banking that started in the UK, brings more possibilities such as credit card data and other services that can place Brazil as a world leader for this technology.

Brazil’s political and regulatory context:

Since starting his presidency in January 2023; Lula has made climate a major focus and understands that serious action on climate can increase Brazil’s influence on the world stage and bring international investment. This is well aligned with some of the UK’s regulators priorities, such as the LSEG initiative to fund innovative projects related to carbon, and the FCA starting a sandbox related to Green Finance. It is also worth mentioning that FCA is yet to decide about carbon assets, but the Brazilian FCA equivalent (CVM- Comissão de Valores Mobilíarios) has already regulated for the trade of carbon tokens when used in a security market. Altogether, this makes Brazil a sophisticated and receptive market for Scottish FinTechs.

 

Mexico

The second largest country in LATAM with one of the world’s largest populations and a high urban density. According to the IDB[6], 21% of LATAM FinTechs are based in Mexico, and unlike Brazil where most FinTechs are concentrated in São Paulo, Mexico has the benefit of three main tech hubs- Mexico City; Guadalajara and Monterrey. These hubs offer a closer proximity to the North American market, as well as a base for a huge domestic market, a talented, well educated, young (and often cheaper) workforce than its northern neighbour or other LATAM countries. The same IDB report counts 27 digital banks in Mexico, demonstrating appetite for FinTechs- primarily with a consumer audience (often with payment or remittances requirements). Furthermore, Mexico is one of the largest LATAM markets of under and unbanked populations such as women or those in rural areas. Initiatives like Jefa: a Mexican start-up aiming to empower women by creating banking solutions for women by women have great potential. If Scottish companies can contribute to closing these financial gaps they stand an advantage within the regulatory environment as well as competitively.

Mexican FinTech Law and a Sandbox Model

Back in 2018, the Mexican Congress was one of the first LATAM countries to enact legislation to regulate FinTechs (Ley para Regular las Instituciones de Tecnología Financiera). This law is known informally as the “Fintech Law”. To summarise, the Fintech Law regulates: crowdfunding; e-wallets; cryptocurrencies; Open Banking. However, five years in tech terms is an age and the Law requires some updates. In particular, regulations regarding cybersecurity and Open Banking are expected to be published in the mid-term. Interestingly, the current legislation allows for a regulatory sandbox.

Chambers and Partners in their online guide deftly describes the sandbox model as,

“The Fintech Law provides for an authorisation process under a “sandbox model” for companies seeking to engage in new and innovative technological activities or otherwise rendering services that differ from the ones that are already regulated. In particular, the Fintech Law defines an “innovative model” as a model which uses tools or technological means to provide financial services and which has different modalities to those of others in the existing market. In this context, companies ”“ or other financial or regulated entities ”“ may request temporary authorisation to carry out, through an innovative model, an activity otherwise requiring fully fledged authorisation under the FinTech Law. This works as an exemption that allows companies to test out new models and alternatives to provide financial services in a controlled environment.”[7]

Two sandbox challenges have previously taken place, both of which The British Embassy in Mexico City has supported and sponsored. DBT in Mexico works closely with the Mexican regulator to facilitate dialogue and to represent UK interest – including supporting UK companies to secure licences and to better understand policy changes and how these will affect them. Mexico’s regulatory environment as well as the country’s demographic and geographic position make it an excellent market to consider for novel and experimental products and services.

Argentina

Argentina on the surface appears to be closed market: notoriously protectionist and with sensational headlines of over 100% inflation in recent times. This seems like a hostile environment for disruptive tech yet in reality this is where solutions are needed and the basis of why FinTech has been one of the main sectors of economic growth. According to a recent Argentinian press article 60% of the money circulating in the formal economy uses a FinTech account as the origin or destination of the financial transaction. [8] The same article states that credit awarded by FinTech platforms grew 62% in 2022 with a total number of 4.5million of approved credit transactions illustrating the proclivity and demand for this service.

Globally, Argentina is one of the leaders in Crypto Assets in their usage and in the number of accounts.  As the country has a restrictive FX system, people and companies use cryptocurrencies as an alternative means to acquire foreign currency and transfer it abroad.

Furthermore, Argentina has a strong history of talent and innovation. It is the home of LATAM’s first unicorn MercadoLibre, followed by ten other companies: Globant, Despegar, OLX, Uala, Tiendanube, Bitfarms, AuthO, Vercel, Mural and Satellogic. According to the Argentinian FinTech Association https://camarafintech.org/ [in Spanish only] the industry has created more than 30,000 jobs domestically (up to 2023) and the Association prides itself on facilitating a robust trading environment of which DBT Argentina is a key contributor. Working closely with 240 of 330 FinTechs established locally as well as the country’s main regulators: Central Bank (BCRA), National Stock Exchange (CNV) and Financial Information Entity (UIF).

Take your next step

These three different and dynamic markets provide opportunities for ambitious and aligned Scottish FinTechs. Hopefully these snapshots have whetted your appetite for learning more and enabled you to appreciate the vast opportunity in LATAM. Local DBT support can help better understand local nuances, keep updated on regulation changes as well as making vital introductions to regional associations and partners. Reach out to the DBT Latin America and The Caribbean, International Market Team: exportsupport.latac@fcdo.gov.uk to help support your company’s next step into LATAM.

 

[1] The Rise and Impact of Fintech in Latin America, IMF, Published March 2023. Accessed 21/08/2023 https://www.imf.org/en/Publications/fintech-notes/Issues/2023/03/28/The-Rise-and-Impact-of-Fintech-in-Latin-America-531055

[2] Latin America FinTechs: We Have Lift Off. Findexable. Published May 2022. Accessed 21/08/23. https://findexable.com/2022-latin-america-fintech-rankings-report/

[3] GSMA The Mobile Economy Latin America 2022. Published 29 November 2022. Accessed 21/08/23 https://www.gsma.com/latinamerica/resources/the-mobile-economy-latin-america-2021-2/

[4] https://data.worldbank.org/indicator/SP.POP.1564.TO.ZS?end=2022&locations=ZJ&start=1960&view=chart accessed 21/08/2023

[5] https://blog.nubank.com.br/resultados-nubank-2o-trimestre-2023/ Published August 2023. Accessed 21/08/2023

[6] FinTech in Latin America and The Caribbean: A Consolidated Ecosystem for Recovery, IDB & Finnovista, Published July 2022. Accessed 18/07/23

[7] Fintech 2023: Mexico. Chambers and Partners. Published March 2023 https://practiceguides.chambers.com/practice-guides/fintech-2023/mexico/trends-and-developments Accessed 21/08/23

[8] https://www.ambito.com/finanzas/oficial-el-60-las-transferencias-son-realizadas-traves-una-cuenta-fintech-n5783377 ámbito. Published July 2023.  Accessed 21/08/2023

Photo by Pixabay: https://www.pexels.com/photo/map-atlas-south-america-52502/

The Evolution from Open Banking to Open Finance

Bryn Coulthard is the Chief Product and Technology Officer at Smart Data Foundry, coming originally from a background in banking technology and product. The goal of the Smart Data Foundry is to safely unlock the power of financial data to provide huge benefits to society and inspire innovation by delivering economic, social and environmental benefits for everyone.​

As the UK’s journey progresses from Open Banking to Open Finance, Coulthard stands by the need for the development and evolution of standards. Whilst the UK mandated that providers deliver against API standards, Europe’s PSD2 approach decreed that banks needed to provide APIs but did not prescribe what these should look like. Today, as a result, we can see the level of adoption of Open Banking in the UK is much higher as opposed to Europe, due to the EU’s large array of differing standards. Such a myriad of standards means both fintechs and aggregators have to now build and develop complicated solutions to handle these multiple APIs. 

With ever-increasing complexity in the global Open Finance standards landscape, Smart Data Foundry maintains a Standards Library to help financial institutions and innovators quickly and easily assess technical standards adopted by a geography or financial system. “We look at Open Banking and Open Finance standards across the globe, and we maintain and update those standards as they evolve,” explains Coulthard. 

Coulthard is firmly of the view that standards need to be enhanced to be much more prescriptive about how APIs perform in terms of performance and availability. While in the past the UK was certainly a leader in this space, we’re now starting to see other countries learning from and building upon what’s been achieved in the UK. For example, Australia is more advanced in driving wider value through their core Consumer Data Right standards, Brazil has begun to really embrace Open Finance, and some Middle Eastern countries are beginning to push some quite strong Open Banking standards. “What we’re seeing internationally is that people have gone beyond the UK’s position and are now looking at ways to build on what we did and bring things to the next level. We need to learn from that as well,” he emphasises.

Coulthard strongly believes that Open Finance provides an opportunity to help people through their journey by demystifying finance so that people will make better informed decisions. It can help people retire, build new debt management, provide SMEs with better access to finance, or gig economy workers with savings or pensions programmes. “Open Banking has been around for the past six years, and it has been a real success. I just think it took time to get going,” he says. He warns against people getting too excited, however, about Open Banking or Open Finance as they are simply a means to an end. People should actually get excited about the value that increases the type of propositions and offerings.”



Opening Data Responsibly

Kent Mackenzie leads Deloitte’s Risk Analytics practice and has spent over 12 years in a range of financial services roles. With a passion for FinTech, data and advanced analytics, Kent has worked with local, national and international clients to develop tech and data solutions to manage financial crime, regulatory compliance, credit risk, and collections & recoveries.

 

“Data, quite frankly, should be considered as the lifeblood of any form of innovation and technological development,” says Mackenzie. “It’s very pertinent in our industry, financial services, that all products and advice for consumers require a hefty analysis of data; either on a personal level based on likes, preferences, hopes, dreams and desires, or with an overlay on those products of the broader population’s needs.”

 

In Mackenzie’s mind, having open access to data is what really helps innovation advance quickly, specifically in financial services, because it helps provide specific information on the types of products and services that can be offered. “If we can democratise data in this space, we can open up financial services to a variety of communities that perhaps haven’t in the past had the privilege of a financial product or service,” he explains. “It can help us to educate those that perhaps need a bit more help in understanding financial products.”

 

Before we get to this point, however, we need to rectify the opposing forces between the desire and ambition from organisations, regulators and innovators, to democratise data and create an open playing field, versus an anxiety around data privacy, respect of data and regulatory access to data. Mackenzie maintains that while we recognise the need to provide access, we need to do so respectfully and within the confines of respecting privacy, data integrity and bias. Over the past five years, he believes regulators within the UK have been doing a great job of opening up safe sandboxes, and credits the open data movements that have created anonymised data that is meaningful and can be accessed safely. He underscores that all this needs to be done in a non-competitive manner. “There’s a higher calling here to create these types of safe spaces to play,” says Mackenzie.

 

He believes the next incarnation of open data is eventually about providing a complete life-view of how one’s finances may be structured and how people could be guided and remain financially literate along their journey. This chain of events will prompt major innovations within the traditional financial services sphere. For example, real estate businesses can provide a number of add-on services around things such as affordability, insurance and tax standing.

 

The most important guiding principle of open finance, Mackenzie maintains, is the huge opportunity to level the playing field. “Fundamentally, financial services are a basic human right, and there are some staggering facts whereby large parts of the population do not have access to that basic human right,” he emphasises. “Also, I think that the ability to blend finance into our everyday lives is really exciting. It will create a really good opportunity to have financial services writ large.”



Encompass Wins Top Honors at Sibos 2023 Discover Perfect Pitch Competition

Encompass Corporation, the leading provider of dynamic Know Your Customer (KYC) process automation solutions was the winner of the Established Trendsetter category at the Discover Perfect Pitch competition held as part of Sibos 2023. This prestigious recognition serves as a testament to Encompass’ relentless commitment to revolutionising the landscape of financial services through innovative technology-driven solutions.

 

A testament of leadership

Competing in a highly competitive category, Encompass Corporation secured the title after its North America’s President, Alex Ford, delivered a live pitch to a panel of industry experts. The stage was set in Toronto, Canada, where Alex Ford outlined Encompass’ game-changing KYC solution and answered questions from the judges. The judging panel comprised senior leaders from banks, venture capitalists, and trailblazers in product innovation.

 

Discover Perfect Pitch: A Platform for Fintech Innovation

Discover Perfect Pitch, now in its fourth year, provides Fintech companies from across the globe with a unique opportunity to shine on the world stage. Participants are divided into three entry streams: Ambitious Adventurers, Community Pioneers, and Established Trendsetters. Sponsored by MaRS, Plug and Play, and RBC, this competition is renowned for celebrating the cream of the crop in the financial technology sector.

 

Encompass: A Trailblazer

As an “established trendsetter,” Encompass was commended for its trailblazing impact and success by the event organisers. This recognition reflects Encompass’ dedication to bringing about transformative change in the financial industry through innovation and technology.

 

Sibos: The Epicenter of Financial Services

Sibos provided the backdrop for this remarkable achievement. Held in Toronto this year, Sibos brings together industry leaders, innovators, and disruptors who gather to discuss the latest trends and advancements in financial services.

Wayne Johnson, CEO, and Co-founder at Encompass Corporation, shared his excitement about the prestigious win:

“It is fantastic to win this accolade, connected to a competition with a strong pedigree, and be crowned the winner of a category full of organisations leading the way in providing critical innovation to the businesses we serve. This recognition underlines the power and potential of the Encompass platform and is testament to our ever-increasing impact. We are proud this has been recognised by experts who truly understand and respect the value of the work we do.

“Encompass plays a key role in the fight against financial crime, with this award evidencing the importance of our commitment to improving the landscape and enabling banks and financial institutions to realise the benefits of trusting in technology-led processes.” 

Inicio AI selected to be part of Morgan Stanley’s 2023 global cohort of the Inclusive Ventures Lab

Fintech is a force for good with inclusivity at its core. In that respect Scottish fintech Inicio AI is leading the charge on many fronts.

First, their innovative proposition brings more financial inclusion for people who are facing financial hardship. By leveraging the power of AI and chat and a revolutionary chat interface, they can help people come out of debt and manage their finances in a better way.

Secondly, their CEO, Rachel Curtis is a real role model for female entrepreneurs, demonstrating every day that when it comes to fintech success, gender doesn’t matter. In an industry still very male dominated, diversity is paramount to bringing diversity in innovation with new thinking and new approaches.

For all those reasons, Inicio AI has recently caught the attention of global financial giant Morgan Stanley. Inicio AI’s journey is a testament to the transformative power of technology and diversity in the world of finance.

The Inclusive Ventures Lab: Nurturing Innovation

One of Morgan Stanley’s core values is Commit to Diversity and Inclusion and they recently unveiled the latest global cohort of their Inclusive Ventures Lab, a programme aimed at supporting underrepresented founders of technology and technology-enabled start-ups. What makes this year’s cohort stand out is not just its size, but the calibre of companies selected.

This year, 23 companies from North America, Europe, the Middle East, and Africa were chosen, effectively doubling the size of previous cohorts. These start-ups represent a diverse range of disruptive technologies, spanning industries like fintech, healthcare, sustainable solutions, customer service, supply chain management, recruiting, and cybersecurity. All those companies are at the post-seed to Series A funding stage and ready to make a significant impact in their respective domains.

FinTech Scotland worked with Morgan Stanley to help identify Scottish fintechs who would be a good fit for the programme. Inicio was one of them and was the winner of the Scottish pitching event organised by Morgan Stanley at the University of Edinburgh earlier this year.

A Major Investment and Much More

What sets the Inclusive Ventures Lab apart is the substantial support it provides to the selected start-ups. Each company in the cohort receives a substantial $250,000 investment (£250,000 in the UK) from Morgan Stanley. However, this financial backing is not everything companies will get. They also gain access to a wealth of mentorship opportunities and invaluable business-growth resources through Morgan Stanley’s extensive ecosystem of both internal and external partners.

 

Meeting Inicio AI

Rachel Curtis, the CEO of Inicio AI, will be attending a panel at the Fintech Summit on Thursday, September 21st which will be chaired by Nicola Anderson, CEO at FinTech Scotland. This event marks the opening of the Scotland FinTech Festival, a platform showcasing the brightest minds and ground-breaking ideas in the fintech industry.