FinTech Innovation continues to grow, putting more spring in our step!
We all hope we’re starting to emerge from lockdown and see green shoots helping us get closer to what we refer to as ‘back to normal’. Those green shoots are hopefully giving us some cause for optimism coupled with the change in seasons and the firm feeling that spring is in the air.
That turns our attention to the opportunity for growth and potential change, new horizons and hope for the future. Growth is firmly on our mind at FinTech Scotland and in the last few months we have welcomed 22 new FinTech SME’s into the FinTech Scotland’s community. The new additions include start ups, established tech businesses applying their capabilities to fintech, as well as international businesses building a home in Scotland.
The FinTech Scotland Cluster continues to build and create the environment to help business develop, grow and scale, all enabled by the continued collaboration across industry, public and academic sectors. We will be working in continued collaboration as we consider the support needed to help FinTech SME’s to scale.
Supporting UK FinTech’s scale was one of the recommendations from the Kalifa Review that was endorsed by the UK Chancellor during UK FinTech week in April. The Chancellor outlined that the Financial Conduct Authority (FCA) will take forward the concept of a ‘scale box’. FinTech Scotland will support the work to develop this idea further, working collaboratively to share experiences and needs for those businesses aiming to scale.
In addition Scotland is advancing it’s plans for a series of Tech Scalers following the Mark Logan review. Another conscious effort to provide support to scale tech businesses that aligns with our focus for FinTech SME’s in Scotland.
Both fit well with our ambition for Scotland to be a global fintech hub that enables business development and growth, and has put an even more determined spring in our step.
Reflecting on an extraordinary year, looking to the future
For all the right reasons we’ve paused to reflect this week on the extraordinary year we’ve all had were the COVID-19 pandemic has touched all of us in some way, and we know for many it’s been extremely difficult. This past year has transformed nearly all aspects of life for many of us. And it’s been a year where technology and digital have been vital components for how we remain connected, work, learn and maintain access to the vital services we need.
Fintech Innovation has played an important role in helping us develop some of the new norms’ we first started talking about at the beginning of this pandemic. A year on and the fintech Community in Scotland has grown and evolved. It has also developed the propositions and services that have helped people and businesses maintain the access to vital financial services.
There’s a growing understanding of the fintech potential to make a difference through new technologies and access to data as well as determination in fintech businesses to build solutions that help future progress.
Scottish fintech innovations are looking to the future. Zumo’s hard work and smart money wallet and platform is transforming how we think about the future of crypto currency and money, with financial inclusion at its heart. Nudelaunched its app this week guiding students and newly employed to raise a deposit more quickly for their first home. Qpal is working to help those financially stretched or financially vulnerable and VistalWorks is working to protect people from fraud, keeping online shoppers safe from harm.
Scotland has an established and growing reputation for fintech for good, a point recently recognised in the recent UK Fintech Strategic Review, also known as the #KalifaReview. The Kalifa Review provided an opportunity to take stock of fintech across the UK and learn about the strengths and opportunities across all the regions. It positively identified the value of a Cluster model in helping economic growth and recognised Scotland’s fintech Cluster as a well-established environment for future fintech expansion.
The energy across Scotland’s fintech cluster offers the kind of practical support and determined optimism for more development and an ambition that sees us embrace more inspiring and often extraordinary opportunities as we look at the potential for cross sector innovation. If we needed one, the Kalifa Review has given us even more impetus to harness the fintech opportunity for economic growth and social change.
We have another catalyst in the Scottish Technology Ecosystem Review, led by Mark Logan, the recommendations here set out a clear programme for collaborative action. It’s a call to action for us all and offers a future vision of how technology can help catalyse the post-pandemic recovery. This week’s announcement from Scottish Government confirmed its commitment to utilise the potential and support the broader opportunity to strengthen Scotland as a tech ecosystem.
If we needed an accelerant the COVID-19 pandemic has given us a year where we’ve experienced the power of digital and the role for technology. We’re learning from the experiences of the past and turn our attention to the hopes for the future. The Kalifa Review and the Scottish Technology Ecosystem Review have a number of common themes, apart from the obvious technology connection both call for action through collaboration to help us recover and embrace our full potential for an extraordinary future. Collaboration sits at the heart of what we do at FinTech Scotland and if you’re keen to hear more please get in touch.
An update from Nicola Anderson on 2021
Happy new year and welcome 2021. With the continued lockdown and restrictions 2021 continues to throw a variety of challenges at us all, from all of us at FinTech Scotland we hope you’re all safe and well in what continues to be difficult times.
Fintech Scotland, new norms, new fintechs
2020 ”“ Establishing New Norms
We’re starting to wind down and think about finishing up for a break over the festive period at FinTech Scotland and like so many of you and other organisations out there we’ve been reflecting on what a year!
2020 has felt like a year where we’ve lost what was normal. Like so many, we’ve been working from home since March ”“ our last day in the office was the 12th of March, forever etched in my memory! Since then, we’ve been getting used to a new norm’, new ways of working and phrases like you’re on mute’ have made it into our everyday working vocabulary.
Life moved online with technology and digital connectivity vital for new norms that were being established at work and school, for learning, shopping, social interaction and connection with family and friends!
We’ve been able to count our blessings in so many ways and continue to be privileged, inspired and energised by the FinTech Scotland Cluster.
Fintech driving New Norms’
The purpose and commitment to enable greater financial inclusion is a strength right across the fintech community in Scotland. The financial impact of COVID-19 on businesses and people has presented even more need to drive this agenda and Scotland’s fintech SME’s are providing a range of different products and services to help, enable and empower people.
Amiqus has progressed a collaborative initiative to ensure those facing homelessness and a loss of address can maintain access to vital services. @Proxy address, a new normal perhaps, is a solution that aims to overcome issues of financial exclusion because proof of identify to access products is closely tied to a permanent address. It’s an innovative approach that’s enabling new insights on old issues and focused on purposeful outcomes.
Empowering people by making personal finance more insightful and transparent, while using technology to see all your accounts in one place, is fast becoming a new norm and driven by fintech’s such as Money Dashboard. The team there were recently successful in the NESTA Rapid Recovery Challenge to help people financially hit by COVID-19. The award recognised both Money Dashboard’s innovation to help people manage money and its ability to quickly scale to support more people and a growing need.
New ways are also driving the team at Nude, who are working to enable aspiring first time buyers to build a deposit for their first home. The innovation aims to help people build that deposit quicker and is working to support new savings norms to empower people through data, behavioural insights and investments.
The team at Sonik Pocket have been innovating to help children with money. They’ve been focused on the potential new norm that generation Alpha will have less experience with physical cash and are building a product to help teach them about the value of money in a digital way. The inspiring team come from a teaching background and want to see children included and engaged with money and finances.
Float, working with SME’s, is integrating a range of activities to give businesses new tools to manage cashflow, accounts, and other business finance needs. Driving a new norm that helps business owners forecast accurate cashflow using real time information to get a visual view of ins and outs, pinch points and supporting confident business decisions.
There are many more fintech’s working and collaborating with industry partners, regulators, consumer organisations and universities to build the next phase of New Norms where technology in financial services supports inclusive outcomes for businesses and people.
New Fintech SME’s
The FinTech Scotland community of fintech SME’s has grown throughout 2020 and it’s a pleasure to welcome a host of new enterprises who are all aspiring to build and support other new norms and ways of working. Focused on cyber security Lupovis helps identify and divert cyber hackers away from crucial operating systems to keep businesses digitally safe, an increasingly vital need as we embrace new ways of digital working. Love Your Employees is focused on employee health and financial wellbeing, enabling employers to support colleagues through changing financial, emotional and other health needs.
In addition, an established norm continues to see international fintech’s join the FinTech Scotland community. Montoux, Access FinTech, UNest, all international fintech’s, have started to establish and build business in Scotland. All attracted to Scotland because of the strength of talent and data driven innovation expertise available here, and all working in different markets. Montoux, a New Zealand business is focused on the life and health insurance industry. AccessFintech from New York is using its innovation to help financial operating and risk models evolve, and UNest, a Californian business is focused on enabling people to save for university and education costs.
New Connections
The positive outcome of the new working from home norm has been the ability to broaden our reach and speak to more innovative fintech communities across the world. This opportunity to welcome global innovations and to learn from shared experiences continues to energise us. Mickael, our French Scot has been building new alliances with fintech hubs around the world. The FinTech Scotland festival reach worldwide audiences across the 70 virtual events held in September and we’re hoping to build on this experience for next year.
FinTech Scotland visited seven different countries virtually in 2020 and virtual events have brought about a new meaning to airmiles as we visited’ India, Australia, Hong Kong, Singapore, Europe and the US without leaving home. The ability to connect and learn from these experiences is wonderful as is the opportunity to profile Scotland’s fintech community at these international events.
New Year Ahead
Team FinTech Scotland are all hopeful for a healthier 2021 for all. We’re also looking forward to welcoming more fintech entrepreneurs into the FinTech Scotland community, through continued homegrown talent and through attracting international enterprises. We know Scotland will continue to inspire us through innovation, collaboration and inclusion, that there will be opportunities to continue to establish many more positive new norms and we’re ready to welcome all of that too.
Inclusion, fintech and future talent
Inclusion drives fintech innovation
This has been an action-packed time for everyone involved in the FinTech Scotland Cluster. With COVID-19 continuing to have an impact on our lives both at work and at home the energy across the cluster continues to inspire us.
In particular there has been an even stronger focus on inclusion. Since I’ve known it, this topic has always been front of mind for all involved in the FinTech Scotland Cluster. The work over the recent weeks has continued to demonstrate the drive to build an inclusive environment that enables diversity to win, innovative environments to advance future opportunities for all and build business success.
Inclusion driving future talent
We’re continuing to learn about the full range of organisations across Scotland that are working in practical ways to build skills, experience and communities to help people from different backgrounds explore opportunities in FinTech and Tech. It’s always a pleasure to learn about the practical approaches being taken to support and enable inclusion.
Code your Future is strengthening its focus in Scotland. It works with people who have had limited access to education, offering practical tech training to anyone that’s experience problems in getting meaningful work. There are ten graduates on course to graduate in November, who will be looking for opportunities. Previous graduates are working at BBC Scotland and STV, and code your future has plans to support another class of 30 students next year.
We’ve also been working directly with the team Inlcusion Scotland over the past few weeks as we look to expand the FinTech Scotland team through an internship. Inclusion Scotland work to ensure the full inclusion of disabled people into all aspects of Scottish society can be achieved. All of us a FinTech Scotland very much looking forward to adding to the team.
Inclusion drives business development
It’s been great to see the hard work from the team Lloyds Banking Group pay off so successfully as they launched the Launch innovation lab. The innovation themes of digital services and ESG are another example of the conscious focus being given to the topic of inclusion. Congratulations to Inbest and Legado who are both participating in the programme.
Obashi also shared an exciting development this week as it joins the World Economic Forum’s innovators community. An inclusive first for this forum, for Obashi and for Scotland. Obashi’s work is another great example of inclusion driving business development, moving from the oil industry to share its experiences of dataflow frameworks to bring clarity to new sector.
Inclusion drives financial inclusion
Over the last few weeks we have continued to see the efforts of many across the FinTech Scotland Cluster continue their unwavering focus on financial inclusion.
Amiqus continues its work with proxy address and launched a new trial to test the proposition. It works to provide those in danger of losing their home and subsequently their address with a proxy address and the innovation has the potential to ensure people continue to get access to vital services including access to the benefits they need.
FinTech focus on financial inclusion has also been supporting the UK’s Money and Pension Service (MAPS) who has recently launched a UK Financial Wellbeing Strategy. Thank you to, Nude Visible Capital Soar Directid FastPAYE and Money Dashboard for sharing your views. We know there will be more on this over 2021 and that COVID-19 has brought the topic of financial inclusion into sharper view.
Pinsent Masons recent research on Creating a Culture of Support in Financial Services has focused on the topic of Money and Mental health. It draws on a range of perspectives from a wide and diverse group of industry participants and explores a range of initiatives being built to offer inclusive support for those that want it.
And on a final related note, this week has been Talk Money week, another initiative to encourage people to engage in money and to get us all talking about it. Experience shows that money continues to be a taboo subject and research has highlighted that often people find the subject to daunting and complex. FinTech’s such as Sonik pocket and Moneymatix are working to help children engage with money and financial decisions at an early age. A bit like those why’ questions our children are so good at asking, innovations like this might go some way to helping us all talk about money.
Hoping you all stay safe and well.
Nicola
COVID19 – Scottish Fintechs fight financial vulnerabilities
The past few weeks have been unprecedented, and as we continue to hear the developing views of what’s being described as the new norms’ it’s likely we’re going to continue to experience more turbulent and unchartered times ahead.
The impact of COVID-19 is being felt far and wide and is presenting so many challenges for everyone as we all work together on the immediate priority of staying safe and healthy. But for many people there is an increasing additional worry about money and finances as they grapple with the consequences of an unexpected income hit, closing a business or loosing their job. Many are facing extremely difficult circumstances, possibly exacerbating previous problems or exposing others to real financial concerns for the first time.
Since I’ve known it, the spirit in the FinTech Scotland community has always been about inclusion and better outcomes for people and business. In the last few weeks we’ve seen many of the fintech SME’s turn their attention to the impact being felt across society as businesses, and fundamentally people, look for help to access money, finance and help with basic essentials. It’s what these fintech businesses excel at and the results continue to inspire and impress.
Scottish fintech’s are using their data analytic capabilities and technologies to develop a range of propositions that address increasingly difficult issues. Alongside members of the FinTech Scotland consumer panel they are exploring newly developing priority issues to help people get access to services that help meet some basics fundamental needs.
These developing examples of access, access, access’ include:
InBest’s work with community leaders and the impartial debt adviser sector to help people understand if they may be entitled to social security benefits like universal credit within minutes. It’s using AI, Open Banking and data analytics to help pinpoint potential ways for advisers to help financially vulnerable people to maximise their income.
Soar’s is working hard across the with credit union sector, building on its experience of working with this important community service and helping them move to an online and digital platform. This is enabling more credit union customers get access to vital savings or credit from the community lenders that know and understand the local circumstances.
Amiqus continues to use its expertise to help people verify their identity in a digital environment to help them gain access to vital services and benefits. This team use their data and technology capabilities to help employers, banks, government and other vital services clarify an individuals identity in a virtual world.
Direct ID, a fintech data and tech expert is working to help give lenders, employers, landlords and others a means to adapt physical parts of their processes that depended on premises or branches being opened, to virtual and online systems.
History tells us that it’s the moments of crisis, or at times of emergency, that great leadership and innovation spark progress and change. COVID-19 has raised a number of issues that people need immediate help with. We must hope there will not be another crisis like this again, but must not loose the opportunity to address the experiences and needs we’re seeing as a result of this pandemic.
It’s time to rise to challenge, working to enable greater financial inclusion and access in unprecedented times feels like an opportunity not to miss. I’m privileged to work in fintech and with the Scottish community who are keen to progress this issue. If you’re interested in collaboration or hearing more please get in touch.
Financial wellbeing and the impact in the workplace
Photo by energepic.com from Pexels
Financial wellbeing ”“ the theme of Talk Money Talk Pensions Week 2019 ”“ is about feeling secure and in control of your money as well as being able to manage day-to-day while working towards a healthy financial future. We think it’s important to not only consider how individuals can build their own financial resilience wellbeing but also how employers can support their staff in developing lasting financial capability strategies.
A recent report from Natwest (https://www.moneyadvicescotland.org.uk/Handlers/Download.ashx?IDMF=f4148ec3-ec0e-468b-ae07-7f615fc34548) recommends that employers should, at a minimum, include financial capability training and support as a standard part of their employee induction process, and a growing body of evidence shows that there are clear benefits of investing in this for all employees at all stages of their career. The importance of financial education at work and the benefits it has for both employees and employers is why we developed Money Works ”“ a programme that exists to promote financial wellbeing in the workplace and provide vital financial inclusion skills for employees and apprentices across Scotland.
Research has found that levels of financial capability and wellbeing very greatly from person to person. An individual’s salary, age, or employment history does not necessarily correlate to their confidence or ability to manage their earnings or their state of financial wellbeing. It therefore makes sense to offer financial wellbeing support to all employees.
The arguments for providing financial wellbeing support in the workplace are strong; firstly, the impact of poor financial wellbeing on productivity is significant. Anxiety about finances leads to worse mental, physical, and social wellbeing which can affect attendance and performance at work. The Chartered Institute of Personnel and Development found that money worries were the biggest source of stress for UK employees.
According to research from Barclays:
-Almost half of employees worry about their finances
-1 in 5 lose sleep worrying about their finances
-1 in 5 said that worrying about their finances affects their work
-Almost 80% of employees are not satisfied with the efforts of their employer when it comes to managing their finances
This evidence shows how great an impact an individual’s financial wellbeing has on their overall wellbeing, and how intrinsically linked money worries and work are. Both employers and employees agree that if employees had access to help and guidance, they would have better control over their money and feel better prepared for future planning. If this support is available in the workplace, employers can help ensure their staff are better prepared to respond to financial unpredictability, in turn alleviating some of the pressure points that lead to absence and stress.
One of the aims of Money Works is to provide a reliable, flexible source of financial guidance. Participation in our financial wellbeing in the workplace sessions benefits both employees and employers. Employees gain vital financial resilience skills and get access to resources that research shows is needed and wanted. Employers benefit from a more motivated and productive workforce, as well as highlighting them as an employer that is committed to investing in employees’ overall wellbeing.
Our Financial Capability team designs custom workshops and works with employers to meet the needs of their staff, and workshops are delivered in the workplace.
Possible topics include:
-Planning for retirement
-Day-to-day financial management
-In-work benefits
-Savings (including emergency funds, ISAs, saving for a deposit)
-Insurance (including life insurance)
-Managing credit card debt
-Understanding taxes and payslips
These topics are based on research of what employees would benefit from knowing more about. For example, 22 million working-age adults don’t feel that they know enough about pensions to make decisions about saving for retirement, so we offer sessions on this.
If you’d like to learn more about Money Works, contact financialcapability@moneyadvicescotland.org.uk or complete this form https://www.moneyadvicescotland.org.uk/forms/money-works-enquiry
Cryptoassets businesses and Money Laundering Regulations
From January 2020 the FCA will be the UK supervisor for cryptoasset businesses in respect of Anti-Money Laundering and Counter Terrorist Financing, under amended Money Laundering Regulations (MLRs).
Cryptoassets are developing change connected to the financial services sector.
Both the concept, and the underpinning distributed ledger technology are attracting significant attention and the UK Government established a Cryptoassets Taskforce in 2018 as part of its FinTech Sector Strategy.
The Taskforce published its final report in October 2018, providing an overview of its perspective on the subject, including the underlying technology, the associated risks, potential benefits and a way forward with respect to regulation in the UK.
In reaching conclusions the Taskforce outlined the need for action to mitigate the risks for consumer harm, prevent the use of cryptoasset for illicit activity and guard against threats to financial stability that could emerge in the future.
It’s report sets out three broad types of cryptoassets and typical uses, which together help establish a framework for considering the impact, potential risks and need for regulation.
In setting out its role the FCA has specified a range of Cryptoasset activities that are captured under the new regime and businesses conducting these activities will be required to comply with the MLRs.
The businesses include existing financial institutions that offer the option to convert cryptoassets to fiat (government issued currency), or accept cryptoassets as collateral against a loan or purchase.
The regime will also apply to new businesses and developing business models such as peer to peer providers, digital wallet providers offering a crypto service such as exchange or custodian services, Cryptoasset ATM’s, and issuers of cryptoassets.
Fintech innovators are taking advantage of the growing cryptoasset trend. Some are aiming to make crypto work seamlessly with traditional currencies by developing technology capability that will enable cryptoassets such as Bitcoin to convert to fiat money. It presents new opportunities and challenges for many and is another developing example of the potential directional change digital will bring to financial services.
All impacted businesses will be expected to comply with the MLRs in relation to cryptoasset activities by 10 January 2020. The expectations include the ability to demonstrate that each business has thought about the respective nature, scale and complexity of its activities and the associated risks. Businesses also need to have the appropriate controls in place to mitigate risks and will be expected to keep these under review and regularly assessed to ensure they remain fit for purpose and relevant.
In setting out its responsibilities and the approach it will take to this work the FCA has signposted firms to a number of existing resources to help build an understanding of its expectations when it comes to managing financial crime risks.
These include the FCA’s Financial Crime Guide: to countering financial crime risks, the Joint Money Laundering Steering Group (JMLSG) website, and recommendations from The Financial Action Task Force (FATF) an inter-governmental and global body. Further detail on the FCA’s approach can be found here.
FCA’s Innovate’s Sandbox open for applications
Photo by Prateek Katyal from Pexels
The FCA’s Innovate’s Sandbox is currently open for applications until the 31st of December 2019!
As well as looking for applications from innovative businesses wanting to make positive changes in the financial services sector, this year the FCA has highlighted areas where it would like to see innovation. It’s particularly interested in receiving applications from firms with propositions that:
- make finance work for everyone ”“ by addressing issues around access, exclusion and vulnerability
- support the UK in the move to a greener economy ”“ by responding to the challenges posed by climate change
- use technology to overcome regulatory challenges ”“ by helping regulated firms comply with their obligations
It’s also highlighted 2 specific technology areas where the FCA would like to see more innovation and testing and applications are welcome from:
- federated learning and travelling algorithms
- complex scenario modelling and simulation
For more information on the process, eligibility criteria and lessons from previous Sandbox cohorts please use this link.
It would be great to see more applications coming from the vibrant innovative community in Scotland. Please get in touch if you’d like more information.
Good Luck!
FinTech Scotland launches its Consumer Panel
FinTech Scotland has launched a Consumer Panel to support inclusive fintech business development. It will connect consumer and citizen advocate groups into the fintech ecosystem with the emphasis on citizen financial inclusion, problem solving and innovation.
The panel will provide ease of access to a citizen and consumer voice for fintech innovators, and build an inclusive network across consumer groups, innovation and technology. The objective is for open, practical and diverse engagement, to bring citizens and consumers directly into fintech product design.
Recent UK research showed 24% of UK adults have little or no confidence in managing their money, with 18-24-year-olds rating themselves as the least confident.
Scottish entrepreneurs are achieving true change. They are introducing easier and better ways to deal with money as well as new products and services that adapt to the changing needs of today’s society. Many are presenting updates during FinTech Scotland’s Festival in September.
The Consumer Panel offers a practical way to connect fintech entrepreneurs and their growing ability to find new and innovative solutions, with real and everyday financial issues impacting customers/consumers.
Founding members come from a range of Consumer Advocate organisations, Third and Public sector, as well as Academia. Those participating include, Money Advice Scotland, Scottish Government, University of Strathclyde and University of Edinburgh, The Big Issue, The Money and Pensions Service, Step Change, Age Scotland, Fresh Start Edinburgh, Passion4Fusion and Mental Health and Money Advice.
Stephen Ingledew FinTech Scotland’s CEO said “This is an important aspect to the work of FinTech Scotland. Fintech provides a major opportunity to improve the way people can engage with their money and finances. The consumer panel aims to bring people directly into the conversation and increase inclusion within fintech and the financial services industry more broadly. It will give greater access to customer insights enhancing the focus for good customer outcomes which is our definition of what the fintech movement is.”
Speaking for Money Advice Scotland, CEO Yvonne MacDermid welcomes this initiative. “Working with fintech propositions will help the debt advice sector connect with more people in a range of different ways and enable consumers to gain confidence in using digital applications”
Kate Forbes MSP fully endorsed this initiative saying “The FinTech consumer panel will help drive inclusion across our society and economy as we make new technological and digital developments. This is a hugely positive and practical step that will ensure that our people are fully involved in the digitalisation of our technology and financial services”.