Fortnightly FinTech Fuse ”“ Here Comes the FinTech Summer!!

Yes, the FinTech Summer’ has certainly arrived but there has been no letup in the continuing momentum across the country when it comes to a plethora of innovation and collaboration initiatives.

Whilst each of the Fintech Scotland team has managed to grab a few days from the heat of fintech activity for a bit of summer sunshine to recharge batteries, the pace of activities has not waned

Summer of Innovation

Just before my summer vacation it was brilliant to catch up with Andy Smith and Jason Forsyth of Iceflo, the terrific fintech enterprise from Melrose. 

The Iceflo team are now embarking on the next stage of their innovation journey and I’m looking forward to our trip soon down to the Scottish Borders to see the rest of the team.

Another wonderful fintech firm to reach a major milestone is the Sustainably and it was fantastic to see the inspiring Loral and Eishel Quinn announce their official launch at the start of July.

We used part of the Fintech Scotland board meeting to hear valuable insights from three awesome and market leading innovative firms from the community who are moving with amazing momentum.

Jude Cook and Andrew Pickett from Sharein, Callum Murray and Laura Bosworth from Amiqus and Colin Hewitt from Float all gave very engaging presentations, highlighting how Fintech Scotland can help firms who are scaling up.

This week it was great to meet up with entrepreneurs Ed Broussard and Craig Mackay of Mudano, a very exciting fintech data innovation enterprise which is growing at pace from its home in Edinburgh. 

It’s fabulous to have the magnificent Mudano team part of the fintech community and looking forward to working with them on a number of collaboration initiatives

Similarly, excited to meet up with Eddie Curran and David of the very new fintech firm Open Banking Reporting (OBR) and hear about their exciting innovative proposition.

Also, great to see how OBR are part of the Addleshaw Goddard Elevate cohort, the prestigious growth programme along with the Amiqus team.

On Tuesday, I had the opportunity to meet up with Paul Coffey to hear about the innovative Birnham Wood and the plans Colin Green and Paul have to set up the exciting proposition from Australia in Glasgow

Great also to hear about how they are developing the enterprise in collaboration with the innovative David Lanc and Cyborn to develop the opportunity from Scotland.

Fantastic to have the innovative Andrew Duncan of Soar and John McHugh from Gigly from the fintech community at the Glasgow Economic Leadership meeting at the end of June. 

This was a brilliant example of the power of collaboration across the range of financial services participants in ensuring that Glasgow is rightly recognized as a fast growing fintech hub.

Super leadership of the evening by Mark Napier of JP Morgan and looking forward to progressing the various collaboration initiatives.

Summer of Collaboration

Collaboration with the fintech community continues to be a hot subject in these summer months and one example of this is the new fintech accelerator programme we are working with University of Edinburgh and Sopra Steria on.

Great to meet up with Kerry Nicolaides from Sopra who is leading on this as they make terrific progress in moving to the initial launch with some valuable customer focused themes.

Mingaile Vaisnoraite from Sopra and I had the opportunity to share some of the details with Stephen Pearson and Scott Brunton from CYBG plc recently and how this collaborative fintech development could focus on the vulnerable customer considerations.

Thank you Stephen, for connecting me with Andy Fishburn and Alice Mulrooney of the Virgin Start Up team, we are very much looking forward to participating in the Glasgow fintech start up event in August along with the fabulous team from Castlight Financial

Over the summer weeks it has also been great to develop the collaboration with the inspiring Sam Bedford who leads the brilliant innovation team at CYBG. We very much looking forward to progressing our partnership with CYBG in engaging with the fintech community.

I’ve really enjoyed meeting up with the engaging Kristen Bennie of RBS over the summer weeks to explore how we further develop the collaboration with RBS in the months ahead. Also thank you Malcom Buchanan for RBS support of FinTech Scotland.

Many thanks also to Andrew Whyte and Maggie Craig of the FCA for the recent terrific catch up on FinTech Scotland’s ongoing collaboration with the regulator in supporting fintech developments.

As a forward thinking regulator, the FCA is a hugely important stakeholder as reflected by their valuable secondment of the brilliant Nicola Anderson to Fintech Scotland.

The early part of the summer has also seen meetings with a range of financial institutions to explore the further collaboration with the fintech community. 

For example, great to catch up with Geoff Aberdein of Aberdeen Standard and Julian Ide of Martin Currie in Edinburgh then in Glasgow, Robert Keenan of Morgan Stanley to talk through connecting into the fintech developments.

Last week, Nicola and I very much enjoyed meeting David Durlacher, Duncan Jamieson, Ella Riesco and Calum Brewster of Julius Baer to consider mutual opportunities to work more closely in developing strategic fintech collaboration in wealth management.

Whilst we were in London, we had the chance to meet up with the inspiring Liz Brandt to hear about the fantastic strategic data innovation and collaboration work at Ctrl-Shift Ltd. 

This was hugely exciting, and we are looking forward to seeing Liz in Scotland and taking this forward in the near future as it will be enormous value with fintech innovation and new enterprise.

Summer of Strategy

The strategic conversations have been very prominent over the Summer and I am very excited about the developing relationships which will support the fintech community growth

For example, valuable meetings with the team at BT, Michael Woodman, Dan Thomas, Craig Muirhead and Emma Cadzow. 

Very much looking forward to the mutual strategic opportunities of working with the BT team in Scotland and globally across financial services to progress fintech opportunities.

Super strategic discussions also with John Innes of Leonardo as well as John Fraser and Madhan Murugesan of Cognizant, we very much valued their engagement and interest in working with FinTech Scotland.

Then I was more than happy to interrupt my summer holiday road trip south to catch up with Gary Kildare of IBM to talk through a very exciting strategic people skills initiative which it would be great to bring to Scotland. More to come on this soon, I hope.

On fintech skills and wider people opportunities, I am also hugely excited by the work with Eleanor Shaw, Martin Hughes and team at the University of Strathclyde as we develop the strategic fintech cluster in Glasgow. 

This will certainly reinforce Scotland position on the global fintech map, watch this space!

Summer of Global Opportunities

The progress of the fintech community across Scotland is certainly getting global recognition and numerous international opportunities have emerged over the summer weeks

It was great to see leading European fintech commentator Martin Best give an overview recently on how Scottish fintech is thriving and brilliant examples of LendingCrowd, Money Dashboard and Modulr.

I was able to share these developments with Andrew Davis and colleague Stephanie Poon of Hong Kong Invest to develop the mutual opportunities. Thanks Andrew for a lovely catch up mixing fintech talk with all things running and music!

Great to be working with Gillian Docherty, Steph Wright and the DataLab team on the opportunities for fintech firms in a visit to Singapore and with Lorraine Mallon of SDI on the trade mission to USA in the Autumn

This alongside the fintech trade opportunities coming up with Ireland, France, India amongst others further demonstrates the growing interest in Scotland’s fintech developments.

Brilliant leadership by Graham Hatton a number of the inward opportunities, for example, the meeting with the team from Samsung Life a few weeks ago.

Closer to home it was great to have the inaugural meeting of the FinTech National Network in Manchester a few weeks ago with the teams from Fintech North and Innovate Finance as well as Tom Helm from the DIT.

It was brilliant to welcome Philip Creed for Fintech Northern Ireland as well as Gavin Powell from FinTech Wales who I’d meet up with a few weeks previously on a visit to Edinburgh.

Very much looking forward to building on a productive session and developing the collaboration across the fintech hubs further.

Many thanks to Julian Wells and the CYBG team for excellent hosting of the meeting and Peter Cunane and for arranging everything behind the scenes and Ali Griffths for the follow up..  

Very much looking forward to hosting the next Network meeting in Glasgow in October as part of the fintech conference being organized with the fabulous Whitecap Consulting team.

Before then we hope to see many of our friends from the UK and the rest of the world come along to the Fintech Festival in Scotland over three weeks in September. 

There will be many meet ups and events taking place including the two day showcase FinTech Summit organized by the super team at DIGIT led by the super Ray Bugg, Duncan Macrae and Pete Swift who we met up with recently.

More to come on the exciting range of activities taking place during the festival, including a fintech running race’ and a fintech wine tasting’ event, thanks to Sara Ronald of Nile on this who I caught up with recently!

Of course, events are happening all the time across Scotland. For example, I was delighted to present at the recent Faculty and Institute of Actuaries knowledge event, thanks Barry Shannon and team for making me so welcome.

Then delighted to get along the Tech Nation meet up Bayes Centre last week and listen to the engaging Hazel Gibbons as well as inspiring Leah Hutcheon of Appointed, all perfectly chaired by the awesome Steve Ewing. 

Great to see so many of the movers and shakers of the Scottish innovation world at this event and very much looking forward to working with Hazel in the new Tech Nation role in Scotland.

Summer of Running

I just love running during the summer, even with the sweltering heat although my performances have been a bit up and down!

The Kirkintilloch10km and Edinburgh Parkrun both gave me my best times at these distances for two years but then the Cumbria marathon last Sunday was six minutes slower than planned!

I put this down to the strong coastal breeze and getting carried away in the sunshine early on!

Anyway, training quickly resumed for the next marathon which is Loch Ness in October and early preparation will be races in Livingston, Ceres, Irvine and Kirkaldy during August!

Then not forgetting the fintech 2 mile race as part of the Festival in September in Edinburgh, combining my two joys, running and fintech. I hope to see lots of you join in for it!! Until next time

7 Key trends in the P2P lending industry to prepare for

Photo by Maciej Pienczewski on Unsplash

Author: Vit Arnautov, Chief Product Officer, TurnKey Lender

According to Statista, by 2025 the P2P lending market is going to be worth 1 trillion dollars while just in 2015 it stood shy at 64 billion. The industry develops astonishingly fast and it’s not just hype (unlike Bitcoin in 2017). I believe the reasons for lenders and borrowers to switch to P2P are logical and pragmatic, which is exactly why the market will keep growing. As a Chief Product Officer at TurnKey Lender, a company that creates intelligent lending automation solutions, I have to stay alert to any new trends and developments and I’ll be happy to share what I foresee for the P2P lending industry in the near future.

1. More small to midsize lenders will enter the game

For many, the rise of the P2P model opened the doors into the world of financial services. Nowadays, it costs less than ever to get into the lending niche. No need for enormous investments and staff. Even the regulations aren’t as complex as the ones conventional banks go through.

This means that the old-school financial institutions now have a swarm of smaller and hungrier online competitors. But despite being small, the new P2P lenders often provide better service due to recent advances in lending technology and fully automated lending processes.

2. Banks don’t intend to give up

Large institutions have a harder time adjusting to the realities of the digital world and it takes them a ton of time to change their gears. But the boards of directors do see market trends and understand the need to go P2P. Slowly but surely banks worldwide start to introduce P2P functionality.

One of the pioneers in this regard was the N26 direct bank which struck a partnership with auxmoney, a German marketplace lender. Another example would be Monzo with their new peer-to-peer functionality. As of now, it’s mostly digital banks who are willing to start offering peer-to-peer lending. But the old-school banks also have to adjust as they go through their own digitalization. And it’s not just a theory. A prime example would be the Royal Bank of Scotland. All the way back in 2015 the company started to formally refer clients to Funding Circle and Assetz Capital for p2p loans. We can also look at two community banks, Titan Bank and Congressional Bank, who are buying loans through the Lending Club platform.

Traditional institutions often choose to develop their own solutions instead of using and customizing the existing and tested products that are already on the market. This route takes more time, the systems often turn out slow, clumsy, and not user-friendly. This means that only the banks with a more agile approach will adapt to the market to compete against the light-on-their-feet competitors.

Keep in mind, that for many people big banks still bring a sense of security and reliability. So in the nearest future small and midsize lenders will need to work a little harder and to market a little more aggressively to prove to the customers that they are every bit as good or even better.  But P2P lenders are already doing really well and the big players in the field show that the success if very real to attain. Here are some growth stats of some of the leaders in the field:

• Lending Club – In Q4 of 2017 the company had issued $33.6bn in loans, while in Q4 of 2018 they were already at $44.5bn.
• RateSetter – The company announced that their 2017 to 2018 revenue growth reached 47%.
• Funding Circle – As of September 2018, Funding Circle has issued £6.3bn in loans. To reflect upon its growth the company has gone through an IPO.

3. Financial inclusion for underbanked areas

Take the two previous points into consideration and you’ll see that the market wins when a ton of smaller lenders compete with big banks. The loan prices go down and the businesses do their best to reach the previously underbanked areas and demographics. Global financial inclusion is the overarching goal of all the responsible members of the lending community and this competition serves this purpose perfectly.

The lending software providers create better solutions to process more of the right loans safer and faster and the lenders try to tap into new markets and demographics. For example, the AI-powered models used by Upstart (a p2p lending startup by ex-Googlers) result in 75% fewer defaults and 175% more approvals than those of traditional banks. The smart approval processes allow serving the people who were previously underserved in addition to providing a more flexible and fast online experience.

4. More markets and jurisdictions

The more governments see that P2P lending works, the more of them make it legal and start to work with it as they work with other financial instruments. Just last April the Central Bank of Brazil authorized P2P lending across the whole country and new governments join in all the time. For example, in Malaysia authorities introduced a P2P scheme for first time home buyers and in the US peer-to-peer lending is recognized and regulated by the SEC just as well as other financial instruments.

Some countries even go the route of Australia where financial startups can work without a license for a year which is called creating a FinTech sandbox.  Jurisdictions that used similar mechanisms to stimulate the growth of the FinTech sector include UK, Switzerland, and Singapore.

5. Regulations

Don’t expect P2P lending to be the new “Wild West” where lenders can do whatever they want without any consequences. Governments have learned the lessons uncontrolled ICOs taught them.

In addition, authorities have seen China’s bitter experience of letting P2P function without sufficient control. There it led both to drastic growth and to dramatic fall of the industry. So in 2019 more governments won’t only allow and encourage P2P lending, but will also come up with specific ways to control the niche.

FinTech is still very young and governments often have troubles figuring out how to work with it and regulate it. But it’s safe to say that in 2019 the authorities will be far more focused on P2P lending. No one is really arguing that P2P lending is a good thing which should be allowed and encouraged. But at the same time, there are many influential voices who call for proper regulation, which is not necessarily a bad thing. As long as the rules are written to realistically reflect the state of the market and technology, any regulation should only do good in protecting both lenders and borrowers. Some examples that already apply come from the UK, with the ongoing updates from the Financial Conduct Authority to regulatory framework related to the P2P lending market.  Also, in Canada, peer-to-peer lending is regulated under the same laws as securities. And in China, the government’s reaction to the meltdown of the industry was to tightly regulate the niche and weed out any wrongdoers before letting it grow any further.

6. The go-to choice for younger audiences

In Europe, over half of the P2P market is comprised of people aged 22-37. That’s no news that young people don’t want to deal with stuffy corporate organizations and choose the more user-friendly and up-to-date options when they can.

In addition to that young people often simply can’t get a loan on decent conditions from conventional lenders. Mostly since they simply don’t have the financial background baby boomers have. So the trend of young borrowers preferring the P2P lenders will continue.  

7. Fiat currencies prevail in 2019

For a while there it looked like every FinTech project needed to hold an ICO. P2P lending was no exception. But the trend is down for the best.

Either the public wasn’t ready for such a drastic shift of the paradigm or the technology and concept weren’t solid enough. Anyhow, it looks like we’re over ICOs for the time being. Even though projects may still effectively use blockchain as data storing and operating technology, there will be fewer crypto coins and more dollars and cents.

Final thoughts

It’s a great time to be in the P2P lending business. Not only are there still 3 billion unbanked people around the globe with no credit bureau score, but the technology we have makes it possible to get in the game without the huge investments. Now more than ever, all it takes is an entrepreneurial spirit and an idea.

Fortnightly FinTech Fuse ”“ Action Packed Fintech Community!

This has certainly been another action packed few weeks with the fintech community as the financial innovation continues at pace across Scotland.

What makes meeting with the amazing fintech community of firms so exciting is the diversity of action orientated entrepreneurs across the country.

This was very much the case on Wednesday evening with our community FinTech Scotland Fusion evening in Edinburgh.

Action Packed Entrepreneurs

Awesome spotlight sessions from fintech entrepreneurs Daniel of Listing Ledger, Tynah from Money Matix, Adam from Sage City, Dave from The ID Co and Bhairav from Avrium to a very engaged audience.

Once again it was a wonderful buzzing atmosphere of fintech talk, all magnificently overseen by our very good friend and seasoned entrepreneur Aleks Tomczyk.

Big thank you to Kirsty Irvine and Ewan Fleming of Johnston Carmichael for their great hosting of the evening and being such fabulous supporters of the fintech community.

It was a more formal format but just as action packed for the two Fintech Practitioners meetings we held in Glasgow and Edinburgh in the last fortnight.

A great range of conversations on key topics from funding to commercialisation to people development with a spectrum firms from across the fintech community.

Some really key actions from these meetings for FinTech Scotland which we will follow through with the FinTech Network Integrator team at Vivolution and Scottish Enterprise.

Thank you to our strategic partners Anneli at Dentsu Aegis and Yvonne at Pinsent Mason for hosting these valuable meetings with the fintech community.

Prior to this, we had the opportunity to share some of the fintech developments with Government Minister Kate Forbes at Scottish Parliament, who takes a keen interest in the fintech innovation.

The meeting gave us the opportunity to mark the fact that the Scottish fintech community is now over one hundred innovative firms in Scotland.

Fantastic to have some of the newer fintech firms Xpand Access, CU Apps, Womens Coin, Money Matix, Zortrex join us for fabulous session at Parliament along with the fast growing team from Amiqus.

Later that week I really enjoyed catching up with James Gumble to hear about the terrific innovation development by the Xpand Access team, playing a huge role in demonstrating the value of innovation and collaboration.

Another wonderful example of this is from the team at Soar who have recently won the Scottish Edge award, big congratulations to entrepreneurial Andrew Duncan and colleagues.

Similarly, with my catch up on Tuesday with the terrific Rab Campbell of Wallet Services as we plotted how to extend the entrepreneurial action across a range of collaboration initiatives. Thanks for the much need almond biscuit Rab!!

Action Packed Collaboration

The action packed collaboration was very much alive with the fintech community and a diverse range of participants at the European Innovation and Technology event at University of Edinburgh this week.

Brilliant action sessions as always from exciting entrepreneurs Loral from Sustainably and Phil Gillespie.

This was alongside hearing from the engaging Kate of Sainsbury Bank, David from Lloyds Bank and Anurag of Baillie Gifford on their approach to fintech collaboration.

Also joined by Damien from University of Edinburgh to share insights on the crucial role of academia as part of team Scotland in developing fintech.

Great to work with our European colleagues Fergie Miller in delivering the event to a full house and super enthusiastic audience.

This European collaboration also came alive when we hosted a fintech day with fifty executives from the large French bank, Banque Populaire a week or so ago expertly organised by Mickael.

Terrific sessions in sharing their innovations from James of The ID Co, Chris from Nexves, Jim of Renovite and Laura from Amiqus.

Many thanks also to Mark Curran of CYBG for joining us as well to share the fast moving open banking developments with our French friends.

Earlier this week, we were delighted to work with Kevin and the SDI team and Erin Ellis and the World Congress Team in hosting a trade mission of seven fintech firms from Toronto.

Wonderful to hear from the exciting Canadian entrepreneurs and their interest in working in Scotland and becoming part of our vibrant community

It was great to bring them together with some of the Scottish community such as entrepreneurs Bryan Eldridge of Qwallets and Nick Jones of Blockstar at an engaging session with Simon and the IBM team.

This was followed by a super reception at Bute House, home of the First Minister, hosted by Minister Jamie Hepburn.

Global collaboration opportunities are stretching far and wide. It was brilliant to meet up with the inspiring Radoslaw Szmit and Kamil Kwecka of CShark Ventures to discuss the mutual opportunities in Scotland building on their great expertise from Europe.

Thank you also to Kent Mackenzie for inviting me to share the fintech collaboration opportunities with the Deloitte Global Digital Council members recently, great to have the engagement and support.

The global interest in Scotland is certainly growing and it was great to meet with Martin Rueda from fast expanding London fintech firm Iwoca recently and share how the Scottish community is developing.

This was also the discussion with Avere Hill of Singapore fintech firm Cynopsis as well as Andrus Alber, the founder of Bankish from Estonia, both of whom we look forward to seeing in Scotland very soon

Similarly, when meeting up with Consul General Andrew Jackson from the UAE Embassy this week to discuss the potential international trade opportunities for Scottish firms building on the success of firms such as Qpal and IceFlo in this region

Thank you to Hamira Khan and Grace Glass for setting up.

The global opportunity was one of the key themes for the event at Scottish Parliament earlier this week on the plans for the exciting new Scottish Stock Exchange

Always inspiring to hear from Tomas Carruthers who is leading the initiative and also meet up with team making Project Heather come alive such as Edwin Hamilton, Michelle Thomson and Martha Walsh.

The event was also valuable in catching up with some key friends from across the broader ecosystem in Scotland including David Clarke of SIFI and Frazer Lang of SABE as well as media guru Terry Murden of Daily Business

Action Packed People Events

Events with action packed people has certainly been a major theme this last fortnight.

For example, thank you to Nicola Anderson who expertly took the platform recently for FinTech Scotland at the recent SFE event on cyber security

Another example was the impressive Digital Scotland conference in Glasgow a few weeks ago and it was a privilege to be invited to participate on the stage with so many brilliant speakers.

I really enjoyed our afternoon session with the awesome Cat Leaver of Brand Scotland and fabulous Melinda Matthews of CodeClan along with the wise heads of Gerry McCusker and Donald McLaughlin.

Thank you to expert leadership chairing by Alisdair Gunn and super engagement by Hamish Miller, Will Peakin and the super Future Scot team

This carried on to the weekend when I was asked to contribute to the Executive Women Leadership Programme at University of Edinburgh with the fabulous Maeve Gillies and Jacqui Gale on Saturday.

Thank you to the wonderful Judy Wagner and Susan Murphy for the opportunity to join many great leaders such as Sam Bedford, Clare Carswell and Ailsa Sutherland amongst many others.

On the subject of people inspiration, it was terrific to meet up with the brilliant Dr Susie Mitchel and Laura Bell who are leading on the CanDo Innovation Summit plans for Glasgow later this year.

We are delighted to be involved with the Future of FinTech session which will showcase a number of people from across Scotland leading on financial innovation.

This is something I shared with the brilliant chair of FinTech Scotland, David Fergusson this week as we talked about the plans for the coming months and longer. I always value the insight feedback from these sessions with David.

Last week I had the pleasure of sharing the progress of the fintech innovation being driven by a diversity of people in Scotland with Executive Chair Ian Campbell and Bob Martin of Innovate UK.

The engagement with senior figures from across financial services is so important to FinTech Scotland taking forward its plans and it was excellent as always to have a catch up with Philip Grant and of Lloyds and Colin Halpin of HSBC this week.

Action Packed Innovation

On Wednesday I very much enjoyed meeting up with the brilliant Kristen Bennie to hear about the action pack innovation with fintech community across RBS.

We are delighted we will be working more closely with Kristen and the team on this in connecting with the innovative activity across Scotland and wider.

Another example of driving this action packed innovation is the plans with Sopra Steria and University of Edinburgh to develop a new fintech accelerator programme.

Very much value the great ongoing strategic support of Craig Wilson and Rob McElry from Sopra Steria on this

This last couple of weeks has seen a number of strategic meetings with organisations looking to support and engage with the breadth of fintech innovation across Scotland.

For example, we very much enjoyed the conversation with Alex Foster, Michael Woodman, Daniel Thomas at BT on the mutual innovation opportunities.

Thank you, Craig Muirhead, for arranging and we are looking forward to progressing your relationship with the fintech community

Similarly, great to catch up this week with Kevin Spence and Gary Fegan to consider potential strategic innovation actions we can work on together with Fujitsu.

Action Packed Running

Action packed running has also been a theme over this last couple of weeks after the Edinburgh marathon.

This has included a challenging trail race in Denny near Falkirk on a Thursday evening as well as a fabulous 10km race at Kirkintilloch on a perfect summer evening this week.

Both of which have helped me up my pace along with my fastest Parkrun race of the year last Saturday!!

All of which I am hoping will produce a faster marathon time in July when this race comes along in a few weeks time.

In the meantime, it is the Glasgow 10km race on Sunday through the glorious city which is always so special and a father’s days treat for me! People certainly do make Glasgow. Until Next time!

Keeping up with digital lending in 2019-2020

Photo by Philip Veater on Unsplash

Blog written by Vit Arnautov  – Chief Product Officer at TurnKey Lender

Customers become more and more demanding. Especially as millennials become a bigger fraction of the financial products’ users, businesses should be prepared to work for their loyalty. The onboarding process for getting a new vendor of anything gets so easy that lenders can’t stay still. There are market trends no one can ignore and here are the ones lenders worldwide should take into account.

AI and machine learning

For lending niche, artificial intelligence and machine learning aren’t just hype words anymore. Neural networks are the real deal and lending businesses globally already use them to make credit decisions faster and more accurately. Adobe has carried out a research in which makes it clear that over 20% of financial services companies are already using artificial intelligence to streamline their business processes with 41% planning to use it in the nearest future.

One might think that both AI and machine learning sound like the most expensive technological solutions you can get for your lending business because of their complexity. But software vendors are often the first to adjust to the trends and there already are ready-made LAAS (lending as a service) platforms that utilize custom-tailored algorithms and AI for decision automation and almost instant credit scoring.

Blockchain

It’s a real pity, that this tech got so deeply connected just with cryptocurrencies in many people’s heads. But FinTech industries never perceived blockchain so one-sidedly. For them, it really does grant a more secure way to store and operate data. So businesses will keep on developing new ways to use this tech. The truth is that the vast majority of digital lending is still reliant on old-school relational databases. Putting that same data on distributed ledgers of blockchain will often mean much stronger security. At the same time, this can increase operational costs for bigger businesses.

There’s no doubt that in 2019 blockchain will be implemented in many more financial services and products. But it doesn’t mean that everyone should use it because this really isn’t always the right choice. So before you choose blockchain for your company, consult with experts on whether it’s the right way for you. Overall, now that the crazy bitcoin hype is gone, I think we’ll be seeing a lot more seasoned and rational use of blockchain. Which will, in turn, bring way better results.

Alternative lending to keep growing

During the rise of the sharing economy, it’s only logical that alternative, or peer-to-peer, lending will be gaining more traction.

Image source: Morgan Stanley

Even though some bigger banks worldwide try to adjust and reach the underserved demographics, alternative lending firms still tend to do it better. Often, because they adjust to the market quicker and many clients don’t have a credit score that would let them get a loan from a big bank. At the same time, we have investors who are actively looking for attractive yield-generating ways to make their money work. So the trend looks up for P2P lending in the years to come. But the Achilles’ heel of the smaller alternative lending companies continues to be regulatory compliance. Which brings me to my next point.

Regulations

The continuous rise of regtech

Just as the digital lending niche grows, the number of regulations does too with new notices from regulating bodies published every day. Regulations are scary even for the big players, even though they often have whole dedicated departments working on compliance. In 2019 the trend will continue with governments taking a closer look at the FinTech in general and lending in particular. The problem is that small and midsize businesses often don’t have the budgets to have a compliance staff. And all of this would be quite depressing for the people eager to enter the lending market if it wasn’t for the developments in the RegTech sphere.

RegTech, as a separate branch of FinTech, will be of special interest to lenders in 2019 since these solutions will be the ones to both save the businesses operational costs and protect them from the enormous fines that may hit at any moment.

New regulatory sandboxes

At the same time, there’s hope for more regulatory sandboxes to arise in 2019. For example, Norway wants to open up to FinTech innovation by means of a sandbox, about which I’m sure local entrepreneurs can’t be happy enough. As more tier-1 legislations test this approach to innovative tech, more join in. So in 2019, we can keep our fingers crossed and wait for a regulatory sandbox snowball effect freeing FinTech entrepreneurs of the need to think about compliance at least for a little while.

PSD2 directive in full effect

Europe is a huge lending market. And in 2019 the long-anticipated PSD2 directive is supposed to take full effect. For those out of context, PSD2 is a directive that works across the EU and it’s aimed at increasing financial competition for conventional banks through lowering entry barriers into the field. At the same time, it will dictate the usage of reliable identification systems and strengthened data protection. The main point though is that now customers will be able to use services of third-party financial services company through their bank, through an obligatory open API.

Focus on millennials

Even though baby boomers still hold the largest capitals, millennials are quickly becoming a bigger demographic in terms of using the financial services. In addition, they are more likely to switch to a new lender or choose a digital P2P lender as their first one for that matter. So companies in 2019 will keep their focus on younger audiences by means of creating better products, interfaces, and offers.

Striving for financial inclusion

The trend of trying to serve the unbanked or underbanked regions and demographics will continue. While that’s an important mission on its own, it’s also dictated by the fact that customer acquisition cost in developed countries is getting higher and the competition stronger. At the same time, there are billions of people without proper access to financial instruments. So in the years to come it’s reasonable to expect businesses actively working to reach new locations and demographics with lending products.

Digital only lending companies

Even with today’s state of technology, it seems very unnecessary to go to a brick-and-mortar branch to get a loan. The future of lending is without a doubt digital and there is plenty of companies proving it on their example. In 2019 the trend will continue with businesses creating personalized flows and experiences for online borrowers.

Final thoughts

In terms of technology, it’s now easier than ever to get into the lending business. Barriers are low, good lending solutions have all the needed functionality out of the box. And this is a big reason why overall, the competition in the lending field will continue to grow. New businesses join the race all the time and win users over by offering better interfaces, faster processing, more personal support and of course better interest rates. As a result, users are getting more demanding. On a high-level everything that’s going on is great everyone involved: for the industry, for the borrower, and for the lenders.

Fortnightly FinTech Fuse ”“ Exhilarating FinTech Energy!

The fintech energy across Scotland is just so exhilarating in so many ways!

It is an energy that is driving the rapid growth of the fintech community and this has been wonderful to experience again at first hand over this last few weeks.

Innovative Energy

For example, innovative energy has been very much in evident at a variety of meetings such as with Stephen Henry of the exciting Asura Financial as well as with Laura Bosworth and Mel Alexander from the awesome Amiqus team.

Then there were the engaging discussions with Chris Herd of Nexves and Kevin Hollister and Keith Harrison of Guiide at the Scottish FinTech meet up. Big thanks again to Scottish Fintech stalwarts Sergei Miller Pomphrey and Bobby King for being at forefront of community energy.

Last week it was a fascinating catch up with Garry Williams of Phoebus to talk about his innovative future plans and potential for expansion in Edinburgh.

Earlier in the week it was another wonderful meet up, this time with the very special Fife Fintech community to catch up with old and new friends.

Thank you to Iain Shirlaw for the celebratory cake and organizing a valuable discussion in the Adam Smith Theatre in Kirkcaldy.

I get a lot of my energy in seeing the fintech community come together, such as at the University of Edinburgh Futures Institute meeting on Wednesday evening.

Wonderful to see energetic entrepreneurs Helene Rodger of MoneyMatix, Christian Burgin of Visible Capital, George Kelsey and, very new to the community, Nanik Ramchandani of Trade Phi.

It was a great mixer’ event organized by Gbenga GB’ Ibikunle from the University of Edinburgh to share the developments of the fintech cluster being led by the University of Edinburgh

On top of all this engagement there have been some magnificent news from a range of innovative enterprises.

Modulr raising £14m capital to grow, LendingCrowd raising nearly £20m to support SME growth, Money Dashboard hugely successful crowd funding of £2m in 24 hours and then Soar receiving a major financial injection to take their innovation to the next level. Wow!!

These examples of the vibrant fintech community in Scotland is something I find myself sharing with global innovators and entrepreneurs on almost a daily basis on phone calls and in meetings.

For example, it was great to catch up recently with Ambreen and Sophie from Monese to hear about their exciting journey and the potential of being in Scotland.

Then it is spectacular to see all this come alive on line and in print through the Scotsman Fintech supplement this week.

Huge thanks to the brilliant David Lee for leading on such a comprehensive supplement and to the Scotsman team for bringing Scotland’s fintech progress alive.

Collaborative Energy

The innovation across the fintech community really comes alive when combined with the collaborative energy from a range of participants.

This is a theme I shared at the awesome Fintech North conference in Leeds on Thursday.

Building on the success of the Manchester conference, this was another wonderful occasion and it was a privilege to be part of the event with a really buzzing atmosphere.

It was an opportunity to meet a diverse range of people from the Leeds community including David Hoghton-Carter, Glynn Robinson, chairman of BJSS, Daniel de Wolf of Flybits and Andy Thompson (again) of Sandstone. All I hope to see in Scotland soon.

As well as people from the broader fintech ecosystem, David Beer of Fintech Alliance and Peter Cunnane and Clare Black of Innovate Finance. Clare led on terrific session on Fintech and diversity in the afternoon sessions.

Over lunch it was great to catch up with the engaging founder Kyle MacDonald and non exec director Mark Spink of Scottish fintech Financial Cloud to talk through collaboration opportunities in Glasgow especially in the credit union sector.

Also, terrific to meet up with international guests Muhamed Farooque of Excelledia and Kyoungrok Lee and Min Sungjun from Samsung Life, all of whom I look forward to welcoming to Scotland next month.

Thank you once again to inspiring FinTech North leaders Julian Wells and Chris Sier as well as the fabulous Fintech North and Whitecap Consulting and White Label Crowdfunding teams. Magical

Very much looking forward to hosting the FinTech National Network meeting in Edinburgh in June and the collaboration conference in the Autumn in Glasgow.

One area of collaboration I highlighted to people was between fintech and the public sector. For example, the work to develop a new payments platform with the Scottish Government is a hugely exciting collaboration opportunity for fintechs.

It is a real pleasure to be working with inspiring leaders Trish Quinn and Hugh Wallace along with the impressive team Clare, Martin, Alex and Carron at the Scottish Government.

Very much looking forward to the buzzing energy at the collaboration event in June to share more with the fintech community and wider stakeholders.

On the subject of large scale collaborative energy, fantastic to see the news about Lloyds Bank major tech job expansion in Edinburgh.

Last week I was delighted to be invited to the Lloyds Bank pre AGM dinner to talk with Chair Norman Blackwell and give examples of Lloyds Bank energetic support of the fintech community in Scotland.

The collaboration energy was very much part of the discussion with the CYBG Innovation Team a week ago as well.

Great to have such an engaged and imaginative audience looking to develop even closer working relationship with the fintech community.

Many thanks to the inspiring Sam Bedford, Gary McLellan and Jack Mckenna, looking forward to progressing the opportunities.

Also very much encouraged by the meetings with the Barclays team, Ben Davey and old colleague Steven Roberts, especially with the exciting build of the new Barclays campus in Glasgow.

Thanks also to Colin Carmichael and the Sopra Team for a terrific working session with Mark Daisley and the BNP Paribas team

I am very encouraged by the large financial services institutions who are looking to work with us to bring the fintech community in to a closer working relationship to support innovation.

Many thanks to Ali Law of Royal London and David Skinn of Aviva for valuable conversations over the last week or so.

A completely different area where the collaboration energy is beginning to be so powerful is our fabulous engagement with the Money Advice Scotland team

It was very much a huge privilege for me to present at their annual conference in Dunblane on Friday as a double act with my colleague Nicola Anderson.

Infact, it was really quite emotional, as the work of the front line money advisers is something I have recognised as hugely valuable since my childhood.

Just magical to be there with real experts who are focused in supporting people when faced with the most difficult of financial circumstances.

Very much appreciate Yvonne McDermid and David Hilferty giving me us the opportunity to share the role of fintech in supporting their work.

Expert Energy

This expert energy is crucial to the thriving fintech ecosystem and the universities play a crucial role.

This also was a key theme at the Fintech North conference, and it was great to be on the stage to discuss this with Chelsea Hardy, Andrew Maeer, Iain Clacher, George Lodorfos and expertly chaired by Eve Roodhouse of Leeds Council. Very much a shared agenda of inclusive growth.

I am thoroughly enjoying working with the brilliant expert team at University of Strathclyde, Daniel Broby, Devraj Basu, Martin Hughes and James Bowden in developing the plans for the fintech cluster in Glasgow.

Their expertise in bringing together the academic intellect with entrepreneurial new enterprises in the magnificent Technology and Innovation Centre in Glasgow is certainly fueling fintech energy and enterprise.

Bringing together the consortium of stakeholder expertise across the central belt in Scotland is a huge strength in developing the Global Open Finance Centre of Excellence.

My meetings this last few weeks with a cross section of key players such as Simon Pink and Mairi Cairney of IBM, Anneli Ritari-Stewart and Richard Gill of Dentsu Aegis as well the brilliant team at Edinburgh Chamber of Commerce, Liz Mcareavey and Alex Haramis very much reinforce this.

Broadening the potential range of experts contributing and supporting fintech is key and it was valuable to discuss this with Graham Burns, John and Nia from FWB Park Brown team. Very much looking forward to working with the Aberdeen community on this

Earlier this week I delighted to have the opportunity to share progress on the Global Centre of Excellence with Government Minister Ivan McKee.

Damien McGarrigle and Kevin Collins are doing an excellent job on leading the initiative along with the awesome Gavin Littlejohn driving the amazing global engagement.

The open banking and finance opportunity was highlighted recently by Caroline Stevenson of Womble Bond Dickinson in a great article in the Scotsman.

I had the opportunity to learn about Caroline expert work as part of a six mile running meeting’ around Arthurs Seat one very early morning this week.

What could be better than combining my two passions of running and fintech!

Running Energy

I am going to need all the running energy I can muster this weekend with the Edinburgh marathon on Sunday!

Being only six weeks back from an eight week injury lay off, I know I will need to take it steady over the 26.2 miles, so the pressure is off in many ways when it comes to how fast I go.

This will be the first of three marathon this year and I’ve been helped back to running fitness with a couple really enjoyable races in Coatbridge and Balerno over the last couple of weeks.

The latter made all the more enjoyable on a lovely Monday evening by running most of route with Carron Macnab of Scottish Government when we ended up talking as much about fintech as running!!

Maybe talking fintech is the secret for the marathon this weekend but who will I find to chat with!! Until next time.

Scotsman fintech event: what has fintech ever done for us?

Fintech has made a huge impact on the financial services sector and the wider economy of Scotland ”“ but what did it ever do for us?

That’s the subject of a quick-fire panel discussion at Strathclyde Business School in Glasgow on Wednesday, 5 June, with experts from across the fintech field, including Nicola Anderson of Fintech Scotland, Professor Eleanor Shaw of the University of Strathclyde and Louise Smith, Head of Intelligent Automation at RBS.

The panel is completed by young entrepreneur Daniel Sloan of BankPal, Chris Brown of Deloitte and Callum Sinclair of Burness Paull.

If you are a member of the fintech community, or interested in the sector in any way, we would love to see you there for the rapid-fire discussion around seven key topics, each representing a letter of fintech:

FINANCIAL INCLUSION

Last year’s discussion asked if fintech could be an agent of positive social change. How are we doing in terms of financial inclusion and does fintech in Scotland still have that social purpose?

INNOVATION

How is the sector coming together in a collaborative way to deliver genuine innovation, through initiatives like the Glasgow City Innovation District? Are we seeing any tangible outputs?

NEXT GENERATION ENTREPRENEURS

How is Scotland doing at creating a generation of fintech entrepreneurs who can provide the economic powerhouses of tomorrow?

TRUST AND TRANSPARENCY

What are Scottish fintech businesses doing to build customer trust ”“ and are they being fully transparent about their use of data? Can Scotland use trust and transparency as its fintech USP?

EMPLOYMENT

Last year, Fintech Scotland’s company map had 40 businesses on it. This has now doubled to 80-plus. Scotland is also attracting fintech jobs in large financial institutions. Is fintech starting to drive significant employment growth?

CONSUMER DATA

As consumers become more aware of the importance of their data to large tech companies, how can fintech help them to realise value from that data?

HOME-BUYING JOURNEY

How can fintech have a positive impact on the way we buy and sell homes? Does it have the power to bring together the whole home-buying journey in a simpler, more seamless way? And can this approach be rolled over into other aspects of our lives, such as travel and tourism?

To book your free place to this event click here: https://www.scotsmanconferences.com/