COVID-19 ”“ New update from FinTech Scotland 28/04
As we enter the 6th week of lockdown, FinTech Scotland CEO, Stephen Ingledew, is giving us a two minute update on examples of what’s happening in the Scottish fintech cluster and beyond.
We’ve been delighted to see how Scottish fintechs have adapted to the situation and many are using their innovations to address the economic and social impact of COVID-19 on people, businesses and the economy including
Inbest, Castlight, Wallet Services, BePayd, DirectID, Amiqus, Sustainably, Modulr, Giftround, Float, Xpand Access, Soar are all rising to the challenge.
Nicola Anderson published a great blog highlighting some of the fintech innovation initiatives.
We’ve been working with colleagues from eight other European fintech hubs to draft a proposal to submit to the EU commission highlighting measures that could be taken at the European level to help the fintech sector through such difficult times and contribute to the overall effort with their innovative solutions.
In the video Stephen also gives a shout out to our friends at French fintech firm Worldline who organised a virtual running event to support the NHS front line teams.
We hope you and your families are safe and we’ll be back soon for more updates. Please keep in touch in the meantime
FinTech Scotland Team
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.
Scottish fintech Soar secures major funding boost
Scottish fintech Soar, together with Nivo (a Barclays spin out), has secured £200,000 from the Affordable Credit Challenge. This challenge was created to help with the development of innovative solutions to make credit more accessible and affordable, particularly for those who are financially vulnerable.
This is a very important problem to tackle as a recent piece of research shows that 82% of people think more needs to be done to create alternatives to high-cost lenders and 75% believe not-for-profit, community lenders need more support to succeed.
This boost will allow the fintech to work on a mobile app and its automated loan application processes available 24/7.
“We’re excited to have won this prestigious challenge. It’s testament to the hard work of our team and the close collaboration with our partners at Capital and Nivo. Our aim is also to ensure the technology developed for Capital can be rolled out across the UK to positively affect the lives of millions of people.”
Soar’s founder and CEO, Andrew Duncan
The scheme is run by Nesta Challenges in partnership with HM Treasury and three finalists from across the UK were each awarded £200,000.
“The UK’s world-leading fintech sector has a huge role to play in helping the most vulnerable access alternatives to high cost credit. That’s why we set up the Affordable Credit Challenge, bringing together fintechs and community lenders to develop new, pioneering solutions to this challenge. The three winners have done amazing work and I look forward to seeing how they help more people to access affordable credit products.”
John Glen, Economic Secretary to the Treasury
“There is a huge need for affordable credit, and we know that technology can help credit unions and others to both reach people who need it and provide the kind of service that mainstream financial institutions offer. The panel was really impressed by all the finalists – and we’re looking forward to seeing the results of these exciting partnerships.”
Joanna Elson, CEO of Money Advice Trust and Chair of the Affordable Credit Challenge judging panel
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.