€9m Investment by Ingka into Scottish fintech DirectID
DirectID, one of the leading fintech in Scotland, that specialises in credit risk assessment, risk analytics and predictive modelling, has announced that it has received a minority investment of €9m from Ingka Investments, the investment division of Ingka Group.
DirectID’s main objective is to promote financial inclusion worldwide through its global credit risk score, by providing advanced data to optimise credit and risk decisions in an increasing number of countries. The company provides risk managers with a real-time dataset that can drive efficiency, improve decisions and lifetime value across the credit lifecycle. DirectID’s insights enable decision makers to assess risk better, regardless of age, location, and past credit performance.
James Varga, CEOand Founder of DirectID, said:
“We’re proud to join Ingka Investments’ portfolio of market-leading firms. We are excited to be shaping a new global standard in credit scoring that enhances people’s lives by enabling access to products they need in an affordable way. Our coverage, advanced insights and predictive models provide a unique opportunity to achieve this by creating the world’s first real-time, inclusive, credit score based on open finance data.”
The funding received will help expedite the launch of DirectID’s most advanced predictive models for credit and risk, built from open banking data. Additionally, the company plans to expand its credit risk offering into new markets and accelerate the development of models for each stage of the credit lifecycle, from originations through portfolio management to collections.
Peter van der Poel, Managing Director of Ingka Investments, said:
“We are pleased to have made this investment in DirectID and are confident of their continued growth in the open banking market. They have developed an innovative solution with the potential to complement and disrupt the traditional credit and risk market and help drive financial inclusion for more people. Open Banking-enabled credit and risk insights is an area we believe can add value to Ingka’s financial services proposition in the future.”
This investment is just the latest in a series of investments made by Ingka Investments, which aims to strengthen Ingka Group’s core retail business by investing in innovative companies in areas such as digitalisation, customer fulfilment, fintech and sustainability. These investments support the ongoing transformation of Ingka Group to become more affordable, accessible, and sustainable.
Important changes for fintechs as R&D tax relief regime changes
Blog written by Saifur Rahman, Senior Technical Consultant at Leyton.
The UK’s Research and Development (R&D) tax relief regime is undergoing significant changes starting April 1, 2023. These changes include the amount of relief that can be claimed, the types of activities that qualify, and how businesses can claim relief. The changes aim to keep the UK competitive in cutting-edge research, ensure that the reliefs are effective, and use taxpayer money efficiently.
R&D Expenditure Categories: The R&D expenditure categories will be extended to include the costs of datasets and cloud computing. This is particularly relevant for the growing fintech sector, as the use of big data and cloud computing is essential for the development of new financial technologies, processes and workflows. Whether you are running a trading platform ingesting financial data from the likes of Bloomberg or developing large scale data algorithms to understand market conformity ”“ the use of cloud computing and pure datasets will be vital in the R&D project and thus have the ability to account for eligible R&D tax expenses. However, it should be noted that such costs cannot be included in R&D claims on an all-embracing basis ”“ for example, where such costs relate directly to R&D activities, they can be included, but not where they relate to a “qualifying indirect activity” (e.g. where you are including a small proportion of non-technical personnel time attributable to qualifying R&D projects). Additionally, exemptions state that the costs of the data and usage cannot be utilised beyond the R&D project or sold on for commercial purposes.
Pure Mathematics: R&D in pure mathematics will also qualify for relief and can form part of the qualifying R&D activities of the claimants from accounting periods beginning on or after 1 April 2023. This is relevant for fintech companies that use mathematical models and algorithm development in their R&D activities. However, the term “pure mathematics” is not yet defined in legislation, further guidance will be provided on this.
Refocusing Relief to UK Activities: One of the most fundamental changes in the Autumn 2021 Budget was to refocus the R&D reliefs provided to activities performed in the UK: for accounting periods beginning on or after 1 April 2023, subcontracted R&D work and the cost of externally provided workers (EPWs) will be limited to work undertaken in the UK. This may present challenges for fintech companies that outsource certain R&D activities to other countries. However, there will be specific exemptions where work outside the UK is permitted for geographical, environmental, social, or regulatory/legal requirements. Examples of such exemptions include deep ocean research and clinical trials, and, by inference, could include medical-tech trials in specific patient groups, international telecoms testing, or technology designed for extreme environments. HMRC will be providing further guidance on the exemptions before April 2023.
Overseas Branch: There is still some uncertainty for companies with overseas branches: currently there is nothing in the draft legislation relating to work carried out by staff of an overseas branch of a UK company ”“ so it is not clear if such costs will qualify for R&D relief in future.
Conclusion: In summary, the changes to the UK’s R&D tax relief regime will have a significant impact on the fintech sector, particularly in terms of the costs that qualify for relief and the focus on UK-based activities. Fintech companies should review their R&D activities and expenses to ensure compliance with the new regulations. We recommend that fintech companies monitor the situation and seek professional advice to ensure they are able to claim the reliefs to which they are entitled.
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New government initiative to promote women in STEM
The UK Government is launching a new initiative to encourage women to consider careers in science, technology, engineering and mathematics (STEM).
Currently, only 29% of the STEM workforce is made up women. This new initiative will benefit from £150,000 of Government funding and will be used by Women Returners and STEM Returners to target women who have taken career breaks and promote core skills in an attempt to plug the STEM skills gap.
Joanna Kori, Head of People for fintech firm Encompass Corporation, commented:
“I am glad to see the Government promoting and providing tangible support to women looking to get into, or return to, STEM careers through investment and skills training. STEM careers are hugely rewarding, yet, as recent figures show, too few women are involved in the sector, and that needs to change. Women are poised to play a crucial role in resolving the skills gap, and it is vital that organisations provide the opportunities and training to empower women and encourage them to pursue a career in STEM. At Encompass, we work hard in this area, providing the balance of both autonomy and support to allow our talented female employees to thrive and be at the centre of the company’s growth.”
Nicola Pickering, VP of Customer Success & Delivery at Encompass Corporation, said:
“The opportunities and avenues available in STEM are vast and, with initiatives like this, will only increase. It is encouraging to see how far we have come in schools, in terms of expanding opportunities, and instilling in girls to have no limits in what they pursue. There is so much possibility to achieve in the tech industry and, with the evolution of flexible working, inclusion for women is greater than ever before, meaning they can fulfil exciting career ambitions while maintaining the positive work-life balance that many look for.”
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docStribute partners with Penrith Building Society
Fintech startup docStribute just announced a partnership with Penrith Building Society, making their best-in-class DLT solutions available to the building society’s members.
Thanks to docStribute, the company will be able to reduce carbon emissions by 98%. This will be achieved by making important and sensitive documents immediately accessible digitally while increasing document security through a three factor verification check each time a document is opened. docStribute creates secure immutable hyperlinks through dSend (www.docstribute.com/dsend) to users, reducing the time their staff spend on preparing paper documentation. ,
This implementation will simplify the onboarding experience for mortgages, rapidly improving the speed with which Penrith can advance funds to their members.
docStribute utilises a DLT application that utilises a decentralised public network known as hashgraph, a secure, shared database that everyone can read from and write to, and a faster, more secure alternative to blockchain.
docStribute CEO Chris Ansara said:
“We are excited to work with Penrith Building Society. We share a desire to reduce the use of paper and reduce emissions in the financial sector. DLT is an alternative to paper communication and is certainly more environmentally friendly – Penrith are industry-leading in deploying our solutions. When using our technology, a 3-factor verification check is completed each time a document is accessed, so Penrith members are safe in the knowledge that documents and contracts are secure.”
Tim Bowen, CEO at Penrith Building Society said:
“At Penrith Building Society, we are passionate about protecting the environment. We have been partnered with Greener Every Day to help offset our new mortgage customers’ carbon footprint, and this new partnership with docStribute will help us further act on our environmental values by reducing our paper usage and therefore our carbon footprint. We also look forward to conducting our business communications in a more secure and efficient way through docStribute’s quality DLT services, particularly its future digital signature solutions, which will enable us to simplify and streamline members’ onboarding experience, offering choice for our members,”
This announcement follows docStribute becoming available on Mia-Platform Marketplace, as well as docStribute’s deals with global technology behemoth Salesforce to make its Document Distribution and future Digital Signature solutions available to its 150,000+ customers and the UK Government’s Crown Commercial Service (CCS) to be listed as a G-Cloud 13 supplier, making docStribute technology available to over 52,000 public sector and third sector organisations.
Boost for Scottish fintech cluster as Morgan Stanley enters collaboration with FinTech Scotland
FinTech Scotland, the cluster management body, has announced a new strategic partnership with Morgan Stanley, further strengthening the growth of the financial technology innovation and excellence across Scotland and accelerating the fast-growing sector’s global connectivity.
Morgan Stanley joins FinTech Scotland’s existing strategic partners including financial services firms, academia, technology solution providers and public sector organisations, to further enhance the development of Scotland’s fintech cluster through the support of strategic initiatives and the harnessing cross-regional collaboration.
For Morgan Stanley, a significant technology participant in Scotland, partnering with FinTech Scotland opens up new engagement opportunities with cutting-edge technology providers, a key part of Morgan Stanley’s fintech innovation strategy.
The collaboration will also support the firm’s Multicultural Innovation Lab and accelerator programme, that promotes financial inclusion and provides access to capital and expertise for early-stage technology and technology-enabled start-ups led by entrepreneurs from diverse backgrounds.
This partnership demonstrates Morgan Stanley’s continued commitment to Glasgow and broadens its support of the Scottish technology ecosystem. The firm has a workforce in excess of 2,000 in Glasgow and recently announced further investment in local talent, providing career opportunities to over 200 young people as part of its largest graduate recruitment programme to date.
The investment bank will get involved in the collaborations that continue to progress the FinTech Research and Innovation Roadmap, driving innovation in Financial Regulation, Climate, Open Finance and Payment & Transactions.
Commenting on this new partnership, Khalid Rafiq, Glasgow Head of Technology at Morgan Stanley said:
“We are thrilled to deepen our ties with the Scottish fintech community and to help foster the growing start-up ecosystem. Playing an active role within the Fintech Scotland cluster not only ensures we are fully supporting our local community, it gives us the chance to share our expertise and deepens our commitment to foster technology talent and diversity so as to drive innovation and business value in the buoyant Scottish marketplace.”
Nicola Anderson, Chief Executive at FinTech Scotland said:
“We’re looking forward to working with Morgan Stanley, building even more global connectivity as we continue to build, grow, and advance the FinTech Scotland Cluster. Plans for the year ahead will see more fintech innovation in capital markets and further support to enable greater diversity in fintech innovation. Morgan Stanley’s strategic engagement will enable further fintech innovation and opportunities in Glasgow which continues to see fintech growth, building Scotland’s national reputation for fintech innovation.”
Smart Data Foundry’s inaugural board announced
Smart Data Foundry just announced its inaugural board in order to accelerate its mission to solve societal issues though the use of financial data.
Member of the board are:
- Zachery Anderson, Chief Data Officer, NatWest Group
- Professor Kim Graham, Provost, University of Edinburgh
- Stephen Ingledew OBE, Chair, FinTech Scotland
- Fiona Duncan, Independent Strategic Advisor, the Promise
- Professor Chris Speed, Director, Edinburgh Futures Institute
They join Chair Dame Julia Unwin and Chief Executive Officer Frank Gauld.
Founded in 2020, the not-for-profit organisation, has delivered a number of groundbreaking data projects in collaboration with financial institutions including research into the impact of Covid-19 and the cost-of-living crisis on the over-50s.
Dame Julia Unwin commented:
“Our mission to unlock the power of data has struck a chord with leading figures in academia and Financial Services so much so they have been motivated to join us and bring about change. We have demonstrated that we can work collaboratively to create clarity through data which can inform policies and decision-making. We want to inspire financial innovation and with this team, I am confident this ambition can be realised.”
Stephen Ingledew OBE, Chair, FinTech Scotland adds
“Scotland has one of the fastest growing Fintech clusters in the UK, if not the world. Essential to financial innovation is the ability to access and share data, and the groundbreaking work that Smart Data Foundry is leading to create synthetic data unlocks the huge opportunities to inspire financial innovation that will benefit so many consumers and businesses.”
Zachery Anderson Chief Data Officer, NatWest Group said:
“NatWest Group were the first UK bank to partner with Smart Data Foundry and safely share data. Data helps us make better decisions and power research into areas that complement the wider NatWest purpose to champion potential, helping people, families and businesses to thrive.”
Frank Gauld says:
“This marks an important milestone in our history. As a young and growing business, to have the ability to attract such a talented board tells me we’re on the right track. 2022 was a year characterised by delivery for Smart Data Foundry.
“Our ground-breaking work with the FCA to generate and supply synthetic data to support their work to tackle the growing problem of Approved Push Payment (APP) Fraud is a great example of how we’re inspiring innovation in Financial Services. And we continued to support UK Government with a regularly updated COVID Economic Dashboard, creating an enduring record of how consumers saved, spent and earned before, during and after a pandemic. This level of insight is critical for policymakers to make decisions based on large-scale empirical data, no longer having to depend on survey data.”
Encompass’ new white paper unveils key regtech trends
Scotland-based fintech Encompass just published a landmark whitepaper authored by Dr. Henry Balani, Global Head of Industry and Regulatory Affairs at Encompass,
The document shows regulatory pressure concentrated on areas such as Ultimate Beneficial Ownership (UBO) and also an increase in fines against firms for non-compliance, especially crypto exchanges, brokers, asset managers and securities firms, and in the UK and Asia.
Interestingly the white paper also looks at the impact of Russia’s invasion of Ukraine, and the volatile and complex systems of sanctions this has created. These international issues are being exacerbated by internal factors, such as outdated technologies exposing firms to greater risk of non-compliance leading to failure to effectively identify suspicious customers. Internal inefficiencies are also impacting the speed at which regulated firms are reacting to change.
The findings really show how opting for KYC automation can help fight financial crime as the sophistication of perpetrators increase.
Looking at 2023, the white paper mentions likely increases in sanctions regimes and money laundering scandals which should engender new regulations with KYC becoming even more important.
Dr. Henry Balani, Global Head of Industry and Regulatory Affairs at Encompass, commented:
“It is likely that we will continue to see investigative and enforcement activity in all jurisdictions focus on the quality of systems and controls, as well as the true application of a risk-based approach to managing financial crime compliance.
“The ability for firms to demonstrate they have a robust KYC framework, with efficient and effective controls – and a well-defined and comprehensive approach to customer risk assessment – is critical to standing up to regulatory scrutiny.”
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Tech jobs amongst Scotland’s top 20 salaries increases in 2022
Every year, Hays publishes its Salary & Recruiting Trends guide. It includes over 10,000 salaries across 16 industry areas in all UK regions, including Scotland.
The guide shows that tech jobs still occupy high positions in the top 20, with cyber security analysts and software developers in third and fourth places respectively, with an increase of over 24%.
According to Hays Scotland director, Keith Mason, STEM skills (Science, Technology, Engineering, Maths) are still highly sought after with engineering projects in Scotland likely to be a significant economic driver going forward.
A new entry at number five, events managers can now enjoy a salary of around £37,000, which is a 23% increase in 2022.
“Conferences and corporate events are huge drivers for the hospitality industry,” says Mason.
“This is a sign of organisations wishing to re-establish connections with customers post-Covid. “A good events manager will act as an effective sales person for an organisation, helping them to both boost sales and increase brand visibility in a very competitive sector.”
IT and cyber security, sales, and diversity, equality and inclusion advisors also feature highly.
The overall salary increase in Scotland in 2022 was 5.7%, compared to 5.4% across the UK.
The full list of top 20 salary increases for 2022 is:
| Job | Industry | Salary (average 2022) | % Salary increase since 2021 | ||||||||
| 1. | Fabricator/Welder | Engineering Trade (Manufacturing) | £32,000 | 28% | |||||||
| 2. | Head of Tax/Director | Taxation (In-house) | £125,000 | 25% | |||||||
| 3. | Cyber Security Analyst | Technology (Cyber) | £56,000 | 24.4% | |||||||
| 4. | Product Manager | Technology (Software Development) | £62,000 | 24% | |||||||
| 5. | Events Manager | Marketing (Events) | £37,500 | 23% | |||||||
| 6. | Talent/Resourcing Advisor | HR (Recruitment & Resourcing) | £40,000 | 21.2% | |||||||
| 7. | Marketing Analyst/CRM Analyst | Marketing (Insight) | £35,000 | 20.7% | |||||||
| 8. | Head of Business Intelligence | Technology (Leadership) | £90,000 | 20% | |||||||
| 9. | Salesforce Solution Architect | Technology (CRM) | £105,000 | 19.3% | |||||||
| 10. | Import/Export Administrator | Business Support | £25,000 | 19% | |||||||
| 11. | Financial Planning & Analysis Manager | Accountancy & Finance | £72,500 | 18.9% | |||||||
| 12. | Head of IT Security | Technology (Leadership) | £95,000 | 18.8% | |||||||
| 13. | Engineering Operative | Engineering Trade (Manufacturing) | £26,000 | 18.2% | |||||||
| 14. | Manufacturing Manager | Engineering & Manufacturing (Defence) | £65,000 | 18.2% | |||||||
| 15. | Machine Learning Scientist | Technology (Data & Advanced Analytics) | £65,000 | 18.2% | |||||||
|
16. |
Digital Manager |
Marketing (Online & Digital) |
£60,000 |
17.6% |
| 17. | Automation Engineer | Engineering & Manufacturing (Defence) | £48,000 | 17.1% | |||||||
| 18. | Diversity, Equality & Inclusion Advisor | HR (DE&I) | £35,000 | 16.7% | |||||||
| 19. | Salesforce Project Manager | Technology (CRM) | £58,000 | 16% | |||||||
| 20. | Information Security Manager | Technology (Cyber) | £75,000 | 15.4% |
https://www.hays.co.uk/scotland
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Codat recognised in Open Finance Global Rankings
Fintech Codat, part of the FinTech Scotland community, has been recognised in the Open Finance Global Rankings.
The rankings is released every year by Open Future World to highlight the organisations, countries and individuals who are leading progress in open finance around the world.
Codat, the fintech that helps companies build B2B solutions for SMEs using Open Banking, appeared in the top 20 of this year’s rankings. This is a real achievement when taking into account that Open Future World look at over 1,000 organisations from almost 80 countries.
Marie Walker, Open Future World co-founder commented:
“After a year that has seen plenty of challenges, the global rankings are a timely reminder of just how much the open finance movement is achieving ”“ and how much more there is to come,”
Rankings are calculated based on appearances in Open Future World’s widely-read Daily Edit of news, opinions, launches and raises.
New scheme to improve identity checks when buying and selling property
Etive Technologies (Etive) is working with the Home Builders Federation (HBF) to support homebuilders in complying with government regulation and make identity and anti-money laundering checks easier, faster, and more secure.
Throughout the home buying and selling process consumers must provide the same information to prove their identity and confirm details about themselves numerous times. This leads to a frustrating user experience and duplicated effort and costs across the industry, with organisations paying to carry out the same checks on the same consumers.
Etive has been working with the Home Builders Federation to develop a verification scheme to address the current challenges associated with the verification process, and support compliance with the Digital Identity and Attributes Trust Framework developed by the Department for Digital, Culture, Media and Sport (DCMS).
The MyIdentity® scheme enables consumers to carry out digital identity and anti-money laundering checks and share them with organisations as and when they need to. This means checks can be carried out at the beginning of the buying/selling process, reducing customer friction and duplication of effort.
As part of this work, Etive is developing additional identity verification standards that go beyond the framework’s rules, in a bid to better meet consumer and industry needs. It has been working with a cohort of representatives from Barratt Developments PLC, Bellway PLC, Berkeley Group, Miller Homes Ltd, Persimmon PLC, Telford Homes Ltd and the Vistry Group PLC to explore these additional standards and is now seeking views from the wider industry.
A Department for Levelling UP, Housing and Communities (DLUHC) spokesperson says: “As per our commitment in the Levelling Up White Paper, essential checks to verify identity should be as streamlined as possible so home buyers and sellers do not have to go through the process repeatedly, with all the delays and extra costs this can incur.
“We are pleased to see the sector is building on the identity trust framework to make the verification process more straightforward and less frustrating for consumers.’”
A HBF spokesperson says: “Homebuilders are committed to continually improving the experience of customers and this scheme is a further demonstration of this.
“As well as simplifying the identity verification process, the scheme supports homebuilders to comply with government requirements and reduce duplication of effort so our members can focus on building much needed homes.”
The MyIdentity.org.uk® scheme needs to ensure that that it can represent the views of all new home builders. If you would like to contribute and help influence the scheme requirements fill out the online survey by the 30th January 2023.