Innovation relief is at hand for UK Fintechs
As Coronavirus dominates the agenda, with the Chancellor announcing £330 billion in relief measures to deal with its impact, it’s positive to see the UK Government also focusing on the longer term economy by helping develop the nation’s burgeoning Fintech sector.
In his first Budget earlier this month, Rishi Sunak focused a great deal of time and money on innovation-related measures. His plans to significantly increase public R&D investment to £22 billion per year by 2024-25 are a welcome development that should have a significant and positive impact on Fintech companies.
While it’s impossible to ignore the current implications of the global Covid-19 pandemic, it is encouraging to see the UK Government recognising a sector that will be one of the leading lights in driving economic growth in the longer term.
Across the UK, more than £7.6bn was raised by UK-based Fintechs between 2014 and 2018. Investment within the UK sector more than trebled from £685.3m in 2014 to almost £2.4bn in 2018. Meanwhile, as reported earlier this year by FinTech Scotland, the number of fintech SMEs based in Scotland has grown by more than 60 per cent, from 72 to 119 over the past year.
The additional investment set out in last week’s Budget adds to the package of innovation incentives and other forms of financial support available to aspirational Fintech businesses. The UK Government’s R&D (research and development) tax relief scheme offers innovative companies ”“ and there are many within the Fintech sector – up to 33p for every pound spent on qualifying R&D (dependant on the company status and its financial position). In a drive to maintain the country’s position as a global leader in science and technology, the scheme offers those investing in product or process improvements significant tax breaks provided they meet the required criteria.
Not all innovation-related projects carried out by Fintechs will, however, qualify for R&D tax relief. Companies must invest in clever and innovative projects designed to build and perfect their product if they wish to secure this relief. These can include projects focused on improving underlying software technology that supports innovative financial services operations including payments and transactions, mobile banking, peer-to-peer lending and crowdfunding, and retail banking. Developments in big data and projects seeking to make advances in text analytics and language processing, aimed at finding better means of using technology to read documents, are also likely to secure a rebate.
Making a claim for those areas of Fintech innovation can deliver significant financial rewards, which can be especially critical for businesses in their early development stages. It’s therefore important to gain an understanding of the scheme and ensure accuracy in the application process.
In addition to tax incentives which can benefit Fintechs, there are also other means of financial support available including targeted loans packages. Lombard’s Software Asset Funding product provides 3 – 5 year loans which can support companies which have invested in developing their own software for either internal operational use or for sale to third parties. This asset is then valued and used as collateral but it remains the property of the borrower over the period of the loan. There are also no restrictions on how companies use the loan. While Lombard is the only bank currently offering such a facility, it’s anticipated others will develop similar products as the number of companies that actually have fixed assets they can secure borrowing against continues to decline.
Fintech is currently well-serviced in terms of private and equity investment. But while there are currently no sector-specific grants available, companies may be eligible for Innovate UK Smart grants which are open to any technology business. These are available game-changing and disruptive’ innovations where an applicant can provide evidence of it creating an economic impact and leading to a considerable increase in market share.
As the UK Scotland’s Fintech sector continues to develop during this time of international crisis, Government incentives along with other forms of financial support will be increasingly essential in fuelling further investment and growth. The Chancellor’s latest pledge to provide more Government support in this area is therefore hugely welcome. Going forward, Fintech companies require a strong understanding of how to successfully secure these Government incentives and get access to other finance-raising opportunities if they are to reach their full potential.
Paul Barton is an innovation funding consultant at ABGI UK
COVID-19 – An update from FinTech Scotland
- Ongoing update by the Scottish Government on business support available. For question call 0300 303 0660
- ScotlandIS coronavirus hub with a number of resources to help tech businesses responding to COVID-19
- Deloitte are also providing useful information and webinars on their hub
- For legal assistance, Pinsent Masons are publishing content daily and are also running webinars
In the next few weeks we’ll be organising virtual drop-in sessions for the Scottish fintech firms.
AutoRek wins contract for IFRS 17 Reconciliations
Scottish fintech AutoRek has announced that they have been chosen as the preferred reconciliation tool for a major international underwriter. The Glasgow based fintech firm will help its new client to comply with IFRS 17 standards.
IFRS 17 is very complex and one the biggest, if not the biggest, changes to financial accounting in insurance since Solvency II. AutoRek had helped many of its customers with Solvency II and is now working with them on IFRS 17 infrastructure.
By performing all reconciliations, Autorek will ensure that data quality and completeness are following the highest standards as defined in the IFRS 17.
One of the key reasons AutoRek was selected was the flexibility the solution offers in relation to the ever-changing future requirements.
Autorek will enable its new client to achieve:
- Efficiency ”“ Significant time saving due to the reduction of manual processes.
- Transparency ”“ Clearly defined process and controls framework which maintains the integrity of reconciliations.
- Data Quality Assurance ”“ Each time data is loaded it is validated for its accuracy and completeness to ensure integrity.
- Audibility ”“ The system maintains a full audit trail at a transactional level ensuring accountability.
“This represents a significant win for AutoRek and we are looking forward to continuing to develop our IFRS 17 offering as we work towards the go live date in January 2023”.
Piers Williams, Head of Insurance at AutoRek
Scottish Fintech Giftround doing its bit to help
Scottish Fintech, GiftRound has taken quick actions to assist the most vulnerable amid Coronavirus pandemic.
By changing its fee structure, it will help those in need. The company will be adding a small fee of £1 to every contribution made into a group gifting collection. Every £1 will be given in full to a UK charity working to help people in communities who’ve been affected by the COVID-19.
“Individuals, families, small businesses and large corporations are all going to feel the fall-out of this unprecedented pandemic. We need to pull together as a community and support one another in every way we can. We believe the future of GiftRound lies in the gift that gives again’. We need to be supporting the organisations that are working on the frontline with the most vulnerable in our communities.”
Craig Forsythe, Founder of GiftRound
GiftRound’s vision is to change the way we group collect for gifts in the future.
Money Dashboard recognised once more at the British Banking Awards
Scottish fintech Money Dashboard, was named Best Personal Finance App at the 2020 British Banking Awards. Money Dashboard also won this award in 2017 and 2018. The British Bank Award is a celebration of new innovative services which benefit UK consumers.
The company now has over 500,000 registered users who use the platform on a regular basis to manage their finances.
The solution allow people to see all their accounts in one place and now connects with products such as Revolut, Monzo, Starling and Wealthify – all of whom also took home awards on the night.
“We’re delighted to have been recognised by our customers as the UK’s best personal finance app for a third time. This is such an exciting time for independent fintechs like Money Dashboard. Millions of customers are now embracing new fintech products and are therefore benefiting from cheaper, faster and better services. We play a crucial role in bringing all those services together on a personalised dashboard for our customers.”
Steve Tigar, Money Dashboard CEO
Money Dashboard is preparing for a major product launch in the coming months and people can register their interest now.
Modulr, new principal issuing member of Visa
Scottish fintech Modulr just announced it has become a principal issuing member of Visa. As such they have access to the industry-leading global payments network and have the opportunity to enhance their proposition with new features (optimised pricing, faster and easier ways to launch Visa products).
Modulr removes the need for an intermediary bank. They can issue Visa products directly, which, in terms, allow for greater control over delivery, payment infrastructure and scheme compliance issues.
Modulr will use the partnership to accelerate its impressive growth in Europe. The fintech will launch card capabilities in both the consumer and business spaces soon, as well as additional issuing currencies.
“Gaining direct access to key financial infrastructure, such as the Visa network, means that we gain more control and are able to deliver faster, simpler and increasingly friction-free full payment capability to our clients. By opening up access to non-banks such as ourselves, it also helps to provide a more level playing field for competition in the sector.
We look forward to extending the functionality of Modulr’s core platform with a leading card scheme, enabling us not only to build a more reliable service, but to pioneer payments innovations even faster.”
Myles Stephenson, CEO of Modulr
“We are thrilled to announce our partnership with Modulr, an exciting payments platform that enables digital businesses to offer innovative, user friendly, payment solutions. We look forward to working with Modulr as it looks to expand its portfolio and grow across key sectors in Europe such as travel. We look forward to seeing how our partnership will enable even more businesses across the UK and Europe to benefit from Visa products, driven by powerful payment solutions built by Modulr.”
Jill Docherty, Head of Business Development, UK & Ireland at Visa
In 2019, Modulr became one of only a few non-banks to gain direct access to Bacs and Faster Payments and recently won Best Initiative from an SME at the Card & Payments Awards 2020.
Scottish fintech iDelta launches Open Banking Insights app
Edinburgh-based fintech iDelta announced the launch of its Open Banking Insight app to traditional banks combat the rapid rise of online challengers.
Last year, the implementation of Open Banking required the UK’s 300 banks and 45 building societies to release customer bank transaction data to authorised third parties with customer approval. Customers can therefore access their bank accounts using new solutions that make it easier to see several accounts in one place.
Scottish fintech iDelta developed a new app that provides retail banks with data driven insights on all aspects of business and infrastructure performance.
The iDelta Open Banking app allows incumbents to gain visibility on whether or not they are satisfying their customers needs. Indeed, with iDelta they can analyse and understand the interactions their customers are having with other providers.
“Open Banking is intended to increase competition in the marketplace, and in a competitive environment you get innovation. While challenger banks and other financial third parties are revolutionising the marketplace, there is still huge opportunity here for the incumbent banks to drive forward innovation, using insights gleaned from existing customer data to develop customer-focused products”.
“Our app gives the market a low-cost, highly efficient and extensible way of providing a business with a central view of their customer banking channel. Banks that choose to fully use the data they are generating, with the app we have built, will position themselves at the forefront of this new channel of business.”
Stuart Robertson, director at iDelta
The app uses an abstraction layer to deal with the fact that every bank will have different technology stacks. This allows its dashboards and reports to work with each bank’s systems with minimal customisation.
Further International Exposure for Scotland’s Fintech Sector
Scotland’s reputation as a global fintech base has been enhanced after hosting a visiting delegation of sector leaders from Japan.
The Scottish Government’s Trade and Investment Minister Ivan McKee formerly welcomed the fintech representatives, who visited Scotland for a two-day programme organised by Scottish Development International (SDI).
The visit was part of the Department for International Trade’s inaugural JP-UK Tech Rocketship Awards for entrepreneurs in Japan.
Engagements for the delegation, which consisted of five fintech companies based in Japan, included a visit to the Bayes Centre, the University of Edinburgh’s innovation hub for Data Science and Artificial Intelligence, a tour of IT company Fujitsu’s office in Edinburgh and an overview of the Scottish fintech sector by FinTech Scotland during a tour of RBS’s Gogarburn HQ.
Speaking after the visit, Mr McKee said: “Scotland is globally recognised as an attractive and welcoming place for companies operating within financial services.
“This SDI programme allowed us to show our visitors from Japan the collaborative approach Scotland operates within the fintech sector, where our public institutions, academia and the private sector work together to support innovation and encourage business growth.
“This visit will further increase Scotland’s profile in the Far East and is another step towards our goal of being ranked among the world’s top five fintech cluster nations.”
The visit was the latest boost for Scotland’s international fintech profile. At the end of January, the Scottish fintech sector became the first in the UK, and only the third in Europe, to receive formal accreditation as a cluster of excellence.
The European Secretariat for Cluster Analysis, which benchmarks economic clusters across Europe, looked at 36 indicators before making the award.
The Scottish cluster was founded as an independent industry organisation by the financial services sector, universities, the Scottish Government and Scottish Enterprise, and is overseen by FinTech Scotland.
Stephen Ingledew, CEO of FinTech Scotland, said: “The visit to Scotland by the fintech entrepreneurs from Japan was another example of the global collaboration with fintech centres around the world.
“Working with the SDI team, the fintech trade visit from Japan provided the opportunity to share why Scotland has been recognised as a fintech cluster centre of excellence, one of only three in Europe.”
Mr Ingledew added that FinTech Scotland had recently signed a collaboration agreement with both the Fintech Association of Japan and Fintech Tokyo, which will strengthen connections to develop innovation opportunities.
Takeshi Kito, Vice Chairman of the Fintech Association of Japan and CEO of Crowd Realty said: “I am very excited on agreeing the partnership and signing the MoU with Fintech Scotland.
“We look forward to working with the Fintech ecosystem of Scotland based in the second largest financial centre in the UK, which holds a number of large asset management firms.”
As part of its second anniversary celebrations last month, FinTech Scotland announced that the number of fintech SMEs based in the country had grown by more than 60% over the past year.
It is estimated that there are now 119 fintech SMEs operating in Scotland, coming from as far afield as Australia, the United States and Europe.
Visiting Japanese companies were:
Keychain http://keychain.io
Moneytree https://moneytree.jp
Credify 　 https://credify.one
Soramitsu https://soramitsu.co.jp/
Crowd realty　https://www.crowd-realty.com/en/
Money Dashboard and Wealthify to team up
Money Dashboard, the Scottish fintech that helps people manage their finances has just announced an integration with robo-investor Wealthify. This integration will let users view their investment accounts alongside the other current, credit and savings accounts they hold.
The Money Dashboard app lets people aggregate their various accounts and understand their spending habits to help them save and budget. Wealthify are the first investment integration rolled out by the app.
Wealthify provides an an online investment service. People can easily start investing with as little as £1. The investments are made via investment products such as ISAs, General Investment Accounts, and Junior ISAs and soon-to-be-launched Self Invested Personal Pensions.
This announcement follows Money Dashboard’s recent collaborations with leading challenger banks including Monzo, Starling Bank and Revolut.
“Our mission is to help people from all walks of life master their money, so we’re delighted to be rolling out integrations with innovative FinTechs such as Wealthify and making it simple for users to track their investments as well as their day-to-day spending and saving. Having complete visibility over one’s finances in real-time makes it much easier for people to understand their overall financial situation and to progress to where they want to be. This integration is one of a number of exciting new connections we’ll be making with providers across the financial landscape in the coming months”.
Steve Tigar, Money Dashboard CEO
“At Wealthify, we aim to make investing as simple, accessible and transparent as possible. Our integration with Money Dashboard is a fantastic fit for both brands, allowing our customers even greater visibility and control of their money. We are thrilled to be the first digital wealth management platform to partner with Money Dashboard ”“ our values are closely aligned and we have great respect for what they are doing.”
Richard Theo, Wealthify CEO
Fintech business leader named 2020 AccelerateHER Awards Rising Star
Monika Ohashi, CIO of Edinburgh-based fintech business PolyDigi Tech has been named as the Rising Star for this year’s AccelerateHER Awards, an accolade which recognises a female company founder with the best early stage business idea.
Monika co-founded PolyDigi in 2012. The company has already gained recognition from Bank of China’s Hong Kong division for its SIM card authentication-focused patent.
As the Rising Star she will benefit from a package of in-kind support from AccelerateHER’s network of professional partners. She will also have the opportunity to further showcase her business at the awards finals in March where 12 aspirational female company founders have been shortlisted.
This year’s programme called for applications from businesswomen whose companies fit into one of four specific categories: CleanTech and Climate; Disruptive Innovation; MedTech and Science; and FinTech and Cyber Security. Three companies from each sector made it onto the 2020 shortlist.
The three finalists from the CleanTech and Climate category were Jacqueline Morrison of Cedeco Contractors, developers of an offshore wind turbine installation solution; Aslihan Penley of Nomad Engineers, a green wave energy business; and Elaine Galston of Tubular Sciences, creators of a low carbon pipeline connection system.
Shortlisted under the Disruptive Innovation category were Fiona Gillies of content creation market disruptors SMASH; Chantal Epp of performance sports music licensing solution ClicknClear; and Tersha Willis of Terrible Merch, an app-supported music merchandising business.
Among the MedTech and Science category winners was Diane Harbison of health data platform Decipher Analytics. The other category finalists were Claudia Freigang of Hearing Diagnostics, developers of hearing screening technology; and Lise Pape of mobility equipment supplier Walk the Path.
The FinTech and Cyber Security category finalists were Sheila Hogan of Biscuit Tin Planning, developers of a digitally secure data storage vault; Dr Tayyaba Nafees of CyberShell Solutions, developers of a cost effective cyber security system; and Kiran Bhagotra of ProtectBox, a cybersecurity comparison web service.
The short-listed companies were announced following pitches by 24 semi-finalists to the AccelerateHER Awards judging panel. Four winners, one from each category, will be revealed at the finals event on 26 March at Barclay’s Eagle Lab within Edinburgh’s Codebase. Each winner will secure a free slot on a market-building trade mission to Europe or North America to showcase their business to industry contacts and global investors.
“I’m delighted to announce Monika Ohashi as the Rising Star for this year’s AccelerateHER Awards. While PolyDigi may not be quite at the right stage to benefit from winning a place on our market building missions just yet, we join others in seeing its huge future potential. This latest accolade for Monkia will help in their growth journey.“I would also like to congratulate our 2020 finalists. We’re delighted to have received so many great submissions from technology, life sciences and environmentally-focused companies. It is encouraging to see so many innovative businesses being developed across four core sectors which are firmly on the radar of the global investment community.”
Jackie Waring, CEO of Investing Women