The Art of Problem-Solving: Insights from a New Type of Innovation Call
“Fall in love with the problem you’re trying to solve”, that’s Kent Mackenzie’s mantra when it comes to innovation challenges. As leader of Deloitte’s Digital Compliance business, Kent has spent the past 12 years observing innovation calls of all different types, whether they are directly pointed towards a particular financial services organisation, regtech provider or academia. While many of these have come up with some quite good solutions, Kent observes that they can major quite heavily from one perspective.
What intrigues Kent at the moment, however, is an exciting new type of innovation call that is being issued from FinTech Scotland and leading financial services firms, in conjunction with Deloitte. Spearheaded by the newly established Financial Regulation Innovation Lab, the first in a series of industry-led innovation calls will focus on ‘Simplifying Compliance through the Application of AI and Emerging Technologies’.
With a passion for FinTech, data and advanced analytics, Kent has worked with local, national and international clients to develop tech and data solutions to manage financial crime, regulatory compliance, credit risk, and collections & recoveries. We thought he would be the ideal person to answer our questions and provide us with more detail about the inaugural innovation call”¦
Q: How can industry-wide innovation calls in general, such as the one led by the Financial Regulation Innovation Lab, contribute to accelerating positive change in financial services?
A: I think for me, the breadth and ambition of this series of innovation calls is what will stand out quite markedly. The wonder of these innovation challenges is the involvement of a very broad community of participants, from large financial institutions and fintech providers, to academia and regulators. What I’m looking forward to the most is having the richness that comes through from that breadth of community, because not only will we be able to understand the problem through a number of different lenses, but we can then go on to solve that problem with a number of different answers and potential solutions.
Q: How does the Lab’s unique environment for collaboration support financial services firms in innovating to meet their regulatory obligations. And what makes this initiative groundbreaking in that context?
A: I think there are a number of different components. Firstly, the Lab will provide us the opportunity to really focus on a particular use case. There have been some innovation calls in the past in which fintechs and regtechs have missed the point of the question and end up coming up with solutions that don’t solve the original problem. What is innovative about the Lab is that it allows us to bring in a range of perspectives from the people that are feeling the impact of this particular problem.
Secondly, this breadth of participants will be able to forensically examine every single element of a potential solution: from the established, to the groundbreaking, to the “way-out-there” considerations – these are all valid when you come to solve a complicated and gnarly problem like this. Lastly, once the Lab has gained an intimate understanding of how it is going to solve the problem, we can focus on the perspective from regulators, academics and end-users who will all try to ensure the solution will actually work in the context of the real world. I truly expect the Lab to be a real petri dish of experience, in the way that it will forensically deconstruct a problem, build up a solution, and then challenge from a number of different angles to ensure it is market-ready.
Q: The Lab’s inaugural innovation call is focusing on ‘Simplifying Compliance through the Application of AI and Emerging Technologies’. How will simplifying compliance processes accelerate positive change, and why is this particularly important now?
A: Ultimately, financial services companies are trying to do a number of things: to achieve better outcomes for consumers; to access people who might have previously been financially excluded with products and services; and to provide the best rates and offerings to clients. But in order to achieve all these things, a deep understanding of the underpinning regulations of these offerings is compulsory.
The current challenge for organisations is the time it takes between understanding the regulation, and then bringing products and services to market. The use of technology, however, can rapidly accelerate this understanding so that new products and services can be created with much more expedience. In addition, a beneficial byproduct of using technology is that it also promotes transparency on how a product has been shaped around a particular regulation decision, the communication of which is crucial to consumers, compliance departments and regulators.
Q: From Deloitte’s perspective, how does the innovation challenge contribute to building confidence in the adoption of AI and other technologies within the financial services sector, particularly in meeting global regulatory requirements?
A: When adopting AI, particularly in meeting global regulatory requirements, there can at times be a “black box” type feeling. Typically, the extraction and translation of regulatory obligations can be a highly nuanced affair due to the different risk appetites of organisations and the final definition of what constitutes an obligation. Because of this nuance, I don’t expect AI can solve the entirety of absolute extraction of appropriate obligations. But I do expect us to solve a lot of the problem in the right way, and in doing so then build confidence around how AI can play in this space. As we explore all the angles, facets, challenges and concerns, by unpacking and then restacking them, this will give us confidence that actually AI is capable of doing either all of this job, some of this job, or parts of this job.
Q: How do you see these Innovation Calls contributing to maintaining and growing Scotland and the UK’s position as a global leader in financial services regulatory innovation?
A: The net effect of these innovation calls across all of these groups is positive. For Deloitte itself, it will accelerate and advance our understanding of how our clients are thinking about this. For fintechs, it will also advance the intimate understanding and knowledge of the problem that their tech is trying to solve so they can better shape their offerings and propositions. Both large financial services organisations and consumers alike will have their eyes opened to the art of the possible, either in today’s world or the future. And for academia, it will ping their synapses on every level to further examine possible points of contention or unresolved issues. So for each of the stakeholders involved in these calls, it’s going to give them oxygen for their own individual pursuit.
I am also really intrigued about the role of the regulator during these innovation calls. I am quite looking forward to having the contribution from the regulator – in the room with a ringside seat – on where they stand on quite how far technology could and should take us.
Essentially, I think this new type of innovation call stands to help each of the stakeholders fall in love with the problem, construct solutions, and examine how they can be applied as live use cases.
Fintechs and other teams of innovators are invited to join the Financial Regulation Innovation Lab’s innovation call challenge, ‘Simplifying Compliance through the Application of AI and Emerging Technologies’. Applications are closing 3rd March. To find out more click here.
Regulating the Future: Building Trust and Managing Risks in AI for FinTech
Written by Dharini Mohan, MSc Financial Technology (FinTech) student at UWE Bristol. She is also a part-time Service Associate at Hargreaves Lansdown.
Artificial Intelligence (AI) has emerged as a transformative force in the FinTech sector, promising to revolutionise processes, enhance customer experiences, and drive innovation. However, as AI adoption accelerates, concerns surrounding regulation, trust, and risk management have become increasingly prominent.
Following the Rise & Shine event organised by Fintech Fringe, sponsored by Rise (created by Barclays) earlier this month in London, the critical importance of regulating AI in FinTech, building trust among stakeholders, and effectively managing risks were thoroughly discussed among the panellists to ensure sustainable growth and innovation in AI for FinTech. Here are some noteworthy insights and strategies that were shared.
Know Your AI (KYAI), Know Your Risk
While Know Your Customer (KYC) practices have long been a cornerstone of risk management for financial institutions, the emergence of AI introduces a new dimension to this imperative. Understanding the nuances of customer profiles is crucial for accurate risk assessment, but it’s equally essential to grasp the capabilities and limitations of AI systems to effectively manage associated risks. The challenge lies in the inherent complexity and unpredictability of AI algorithms, which can introduce unforeseen risks into operations across different sectors, whether financial or intangible. Without a comprehensive understanding of AI technologies and their potential implications, organisations risk being blindsided by vulnerabilities and shortcomings in their AI systems. Therefore, embracing the concept of KYAI is essential for navigating the complexities of AI-driven services and mitigating associated risks effectively.
Never Put Customer-Facing Operations to AI
Customers often seek personalised, empathetic interactions when addressing their queries or concerns ”“ qualities that are inherently human and difficult for AI systems to authentically replicate. The recent case involving Air Canada proves the potential repercussions of relying on AI for customer-facing operations. In this instance, Air Canada’s chatbot provided incorrect information to a traveller, leading to a dispute over liability for the misinformation provided. The airline argued that its chatbot was a “separate legal entity” responsible for its own actions, but the tribunal ruled in favour of the passenger, emphasising that Air Canada ultimately bears responsibility for the accuracy of information provided through its channels, whether human or AI-driven. This scenario demonstrates the significance of maintaining human oversight and accountability in customer interactions within AI technologies.
Plot Twist: Humans Can Make AI Better
It’s about finding the right balance ”“ a little bit of this, a little bit of that. Humans are the ones who input the data, so any decision that AI provides would align with the data it possesses and serve the data’s purpose. Human-based controls are crucial, and it’s up to the organisation to determine how they wish to establish regulations and understand their responsibilities based on their clients’ needs. The integration of Human-in-the-Loop (HITL) is brilliant as it allows humans to be involved in both the training and testing stages of building an algorithm, enabling real-time data control and contributing to the development of a dynamic risk profile. Having more controls on how the model handles data inputs, where the data is sourced, and how it’s divided for training and testing is essential to measure deviations effectively.
It is (Mathematically) Impossible to Eliminate All Discrimination and Bias
Given the impossibility of eliminating all discrimination and bias, organisations must carefully choose the biases inherent in their AI systems. Questions arise regarding the origins of Generative AI, particularly ChatGPT by OpenAI, with concerns raised over its development in a research lab in San Francisco. The training data, sourced from non-diversified datasets, presents a significant challenge, reflecting a limited cultural context and accentuating the necessity for a challenger model to address these gaps. For instance, you may not find sufficient information for certain countries, and that may potentially portray discrimination, but that is just the data the model was trained on. Despite undergoing rigorous training, AI is not infallible and is prone to errors. This highlights the prominence of continuous refinement and validation processes. Additionally, the intrinsic need for human oversight persists, as diversity never takes care of itself within AI systems. Synthetic datasets offer a solution to address the shortfall in training data, incorporating real-world data to provide comprehensive coverage and mitigate biases.
Key Strategies to Mitigate Risks: 1) Identifying 2) Classifying 3) Mapping Out
In navigating AI risks effectively, truly articulating an organisation’s specific risks serves as the foundational step in risk management, complemented by due diligence and a comprehensive understanding of AI deployment. It’s essential to consider whether to develop an in-house AI stack or outsource it, as well as implementation of post-deployment controls for ongoing training and maintenance of AI systems. Risk classification is key, alongside crucial actions such as fortifying cybersecurity measures, protecting data privacy, and monitoring third-party involvement, all while addressing opacity risks and setting risk-based priorities. FinTech ventures must carefully consider their product element alongside regulatory compliance. With the EU AI Act mandating the establishment of a risk management system for high-risk AI systems, it surely helps organisations stay up-to-date and compliant.
Conclusion
As AI continues to reshape the FinTech landscape, the importance of regulating AI, fostering trust, and managing risks cannot be emphasised enough. Regulatory frameworks must evolve to keep pace with technological advancements, ensuring responsible and ethical deployment of AI. It’s essential to acknowledge that AI literacy is just as vital as financial literacy, enabling the FinTech industry to fully leverage AI’s potential while navigating its inherent complexities and uncertainties.
Risk management is not merely a matter of ticking boxes; it requires continuous vigilance and adaptability.
Navigating 2024: Priorities from FinTech Scotland’s CEO, Nicola Anderson
As we step into the early months of 2024, I’m reflecting on the achievements and progress across the FinTech Scotland Cluster over the past six years, and am also focused on the year ahead to build on the work so far and enable more opportunities for fintech innovation.
The FinTech Scotland Cluster is a vibrant and diverse ecosystem that’s driven by contributions from a diverse range of committed participants focused on shaping the future of financial services. It goes without saying that technology is a critical focus, but we also find that there is a purposeful intent to the commitments to support the needs of a successful economy, one that’s becoming more and more digital.
It’s the commitment from all involved in the Cluster that has resulted in a number of significant achievements over the years, including:
- Continued growth in fintech SMEs and fintech jobs,
- Greater collaboration between larger organisations and smaller fintechs,
- Development of new innovative products, services and partnerships that all ultimately deliver good customer outcomes, and
- A deepening focus on fintech R&D driven by the research excellence from the universities in Scotland and by collaboration on industry priorities in the FinTech Research and Innovation Roadmap (R&I Roadmap).
So, despite the challenging economic environment, I am optimistic about our opportunities for growth and innovation. In particular, I am looking forward to deepening our approach of collaborate to innovate’, and the limitless potential this powerful combination offers. We see it working already, resulting in changes for customers, businesses, our economy and the environment, supporting future needs and the development of fintech-enabled financial services in Scotland and across the UK.
A new year brings an opportunity to assess our priorities for the year ahead. We’re focused on propelling our fintech cluster forward, deepening connections across the UK and the world, as well as accelerating fintech SME growth.
Innovation and Priorities in 2024:
Fintech Growth
The FinTech Scotland community of fintech SMEs continues to grow, with 227 businesses currently developing and delivering fintech products and services that meet business and citizen needs. Accelerating their success and enabling them to grow and scale requires a collective focus on investment, access to current market opportunities (which includes collaboration with financial institutions), and supporting their ambitions to export.
We’re spurred on by January triumphs already.
Snugg, a thriving fintech, kicked off the year by announcing success on both funding and collaboration that will help them expand and scale throughout 2024.
Broadridge Financial Solutions, a growing and global fintech, announced success in international markets working with Denmark’s Danske Bank, exporting services and continuing its global growth.
Encompass Corporation has also started the year off by continuing its global expansion and growth through acquisitions.
We will continue to focus on investment, growth and international opportunities for the fintech SMEs throughout 2024.
Impactful collaboration
Working with the big and small
We saw growing success throughout 2023 in the fintech programmes delivered in association with Lloyds Banking Group, TSB and Phoenix Group. Within our approach of collaborate to innovate’, more partnerships emerged, and fintech enterprises benefited from hearing about priority needs directly from the market.
There is more to come in 2024. Collaborate to innovate’, through practical innovation programmes, will enable more potential for commercial opportunities and support new ways for market adoption of new and emerging technologies. We’re commencing the year with an innovation call on using AI and emerging technologies to help simplify compliance.
The role we see for R&D
In 2023, we launched the Financial Regulation Innovation Lab, with an agenda focused on how technology can simplify and support compliance, and help regulation develop. The Lab also creates an independent environment to enable industry collaboration on current and emerging challenges within financial services. It’s a privilege to work with all involved, including UK regulators, large financial institutions and fintechs, as well as the University of Strathclyde and the University of Glasgow.
The Lab is kicking off 2024 with a collaborative research and innovation programme focused on AI and emerging technologies, and looking at their application in ESG regulations, Consumer Duty requirements and addressing Financial Crime. You’ll hear more about the progress throughout the upcoming year, and if you’d like to learn more now please let me know.
Financial inclusion continues as a pressing issue. The cost of living crisis has brought it into further focus and the FCA’s Financial Lives survey persists in demonstrating a need for change. Throughout 2024, we will work with Financial Inclusion for Scotland, the FCA and Scottish Financial Enterprise, and explore how technology and a heightened period of focus can help move the dial on this critical problem.
We’ve initiated this already, working in collaboration with the FCA on a Financial Inclusion TechSprint (more details can be found here). The Sprint is focused on helping to find ways to enable those excluded from basic financial services to get access. There’s a firm belief that technology can help, and that collaboration and a willingness to find solutions is key. The Sprint will run from March until the end of May, and conclude with an event in Glasgow. I’m starting 2024 hopeful we can drive change on this difficult agenda. The invitation to get involved is open to all.
Working on priority environmental issues
With the climate agenda critical to so many aspects of business and society, it’s no surprise that fintech enterprises are working to find solutions and services that will help – indeed, the number of Scottish fintechs focused on climate doubled in 2023. In addition, we saw accelerated learning across the cluster through our work with Space Scotland, increasing our knowledge and understanding of geospatial data.
There is more to come through 2024 on the priority of climate finance. We’ll build on the lessons and experiences from Space Scotland, exploring application of geospatial data in insurance risks, investments, emerging regulatory requirements and ESG development.
Inclusive Cluster leadership
We will continue to work across the UK to advance fintech innovation. The FinTech Scotland team will continue to progress collaborative opportunities across the nation, working with the Centre for Finance, Innovation and Technology (CFIT), the Fintech National Network, Innovate Finance and The City of London Corporation. We will work, learn and collaborate across the regions to accelerate the whole of the UK’s fintech potential.
We invite you to collaborate with us
We know purposeful collaboration is key – collaboration across the industry, across sectors, and amongst other fintech clusters – to help us drive and lead the future of the digital economy.
My call to action for 2024 is: Collaborate with us, and innovate.
AI in Scotland’s Workplaces: Navigating the Shift
A Surge in AI Adoption
Scotland is witnessing a significant shift towards embracing Artificial Intelligence (AI) in the workplace. Recent research by Hays reveals a notable increase in AI utilisation: from 26% to 32% in just six months. This uptrend is not just among organisations but also individual workers, with 19% now incorporating AI tools into their roles.
Employer Expectations and Future Outlook
Interestingly, 59% of employers anticipate allowing AI usage in the workplace but plan to monitor it closely. On the other hand, a smaller fraction, about 20%, expect to ban AI usage. This divergence in approach reflects the evolving landscape of AI in the professional sphere.
The Scottish State of Play
The research, encompassing feedback from nearly 15,000 employers and professionals, including 886 from Scotland, underscores a growing trend of AI adoption. Despite this, a significant majority of Scottish professionals (80%) have not integrated AI into their current roles.
Justin Black, Business Director at Hays, highlights mixed attitudes towards AI in the workplace. While a modest 21% view AI’s impact on their jobs positively, a declining number, now at 6%, see it negatively. Interestingly, some Scottish organisations have already prohibited AI usage.
Challenges and Opportunities
Black points out several hurdles in AI adoption, including GDPR concerns and skepticism about AI reliability. Additionally, the rapid surge in AI demand has outpaced the growth in relevant skills, leading to notable skill shortages. However, there’s a silver lining: the extreme skills shortage in AI among employers has decreased from 48% to 36% in the last six months.
The Skills Gap and Employer Role
The study also reveals a decrease in professionals who believe they lack the right skills for AI, dropping from 29% to 26%. However, Black emphasises that employers still need to do more in supporting staff upskilling for effective AI usage. This includes clear communication about AI’s role and monitoring in the workplace.
For more insights, visit Hays Technology.
Alternative to public markets, trade on a private market
IPO activity remains sluggish with high borrowing costs and broader macroeconomic headwinds seen as depressing investor and issuer appetites. However, there’s also a longer term shift being seen as companies and their corporate advisers show an increased tendency to move away from relying so heavily on traditional market structures – a trend which is now being accelerated thanks to a host of new and emerging financial technologies.
One great example of this innovation emerging on a home-grown basis is Glasgow-based InfinitX. Their software has already played a vital role in connecting JP Jenkins – the UK’s most established liquidity venue for unquoted companies – to any broker or other regulated financial institution. Prices can be displayed and orders placed using a standard trading terminal and whilst the assets remain unquoted, accessibility is dramatically improved for buyers and sellers alike.
And the wider industry is starting to take note, with InfinitX winning a slew of commendations in recent months, both in respect of its own technology and how they have bolstered the proposition offered by JP Jenkins.
Recently InfinitX was awarded Leading Innovators in Private Trading Technology 2023, UK by Innovation in Business. Innovation in Business’ Technology Innovator Awards 2023 provided a platform for companies like InfinitX to showcase their groundbreaking solutions, game-changing innovations, and positive impact on the business landscape.
This month in London InfinitX and JP Jenkins attended the FF-Awards with InfinitX awarded Finalists for Private Trading Technology 2023. Over 6,000 votes were cast with more than 18,000 total minutes of video entries viewed and we congratulate the team for making the top three finalists.
Finally InfinitX was acknowledged by Business Cloud as 2nd in UK’s Most Innovative Tech Creators 2023, This was a climb up from number 37 of 50 in 2022 to be second among some recognised leading financial service providers.
We also congratulate other Fintech Scotland members for inclusion in this list. Well done to DirectID, Modulr, Paysend and ShareIn.
Interested in working with JP Jenkins?
– To enquire about joining as an unquoted company contact Mason Doick at md@jpjenkins.com
– To join our ecosystem as a partner for events and services contact Melissa Gilmour melissa@infinitx.co.uk
– To learn more about InfinitX technology contact Mike McCudden, Mike@infinitX.co.uk
Blockchain’s potential in securing the UK fintech ecosystem
Today we’re looking at a dissertation by Gerald Lee, a student at the University of West England, which presents a compelling examination of blockchain technology’s transformative potential in securing the United Kingdom’s fintech ecosystem.
As the industry confronts a surge in cybersecurity threats, the research timely explores how blockchain can not only mitigate these risks but also fortify trust amongst consumers and stakeholders.
The dissertation adopts a robust mixed-methods framework, combining quantitative surveys of fintech firms across the UK with qualitative insights from industry experts, and illustrative case studies of entities pioneering blockchain integration. This triangulated approach provides a multifaceted view of the blockchain’s impact, capturing its empirical benefits and the practical challenges in adoption.
Key findings reveal that blockchain’s decentralised and immutable ledger could revolutionise cybersecurity measures within fintech, offering resilience against data breaches and fraud. Nevertheless, this research doesn’t shy away from the intricate barriers to blockchain’s widespread adoption, including regulatory uncertainties, integration complexities, and the delicate balance of transparency versus privacy concerns.
With a strategic blend of theory and empirical investigation, the dissertation underscores the urgent need for a coherent strategy among fintech firms, policymakers, and technology developers. The conclusion offers actionable recommendations, positioning strategic blockchain adoption as a cornerstone for a more secure and trustworthy UK fintech landscape.
This research stands as a significant contribution to both academic discourse and industry practice, highlighting the nuanced dynamics between emerging technologies and cybersecurity imperatives in the digital finance realm. Its implications extend beyond the UK, serving as a blueprint for global fintech markets aiming to leverage blockchain as a bulwark against the evolving cyber threatscape.
You can read the full dissertation here.
Photo by Leeloo Thefirst: https://www.pexels.com/photo/smartphone-pen-calendar-and-eyeglasses-on-flat-surface-7887800/
How to manage retirement during a cost of living crisis
Confused about your pension? You are not the only one. “People have an average 11 small pots, they don’t really know what that means for them in terms of what their retirement income is likely to be,” explained Laura Trott, UK’s Minister for Pensions at a recent evidence hearing by the Work and Pensions Committee examining DWP’s plans to introduce Pensions Dashboards.
And it’s not only UK citizens who don’t know what their retirement income is likely to be. The DWP admitted in the same evidence session that there have been underpayments to the tune of £1bn in state pension payouts due to missing information from people’s national insurance records.
Meanwhile, the cost of living in the UK is rising. The latest inflation figures show prices have gone up by 7.9% in June, with food prices increasing by 17.4%, resulting in 57% of households reporting to have struggled to pay for essentials. This state of affairs has dramatically diminished the capability of people to save for their retirement.
During these worrying times of rising prices, people have much more of a need to know what they are likely to have in retirement. Yet at the moment it’s very difficult to determine what that will look like. This is particularly relevant for younger generations. How millennials go about saving for a pension has radically changed from when their grandparents dealt with retirement. There is a concern that Generation Y (millennials) is not informed enough about saving for a pension, especially considering it is likely they will on average hold more than ten jobs before they retire.
A different pension approach is needed.
Introducing the (delayed) Pensions Dashboard
The UK Government is focused on the financial wellbeing of people by equipping them to be more financially informed and make the most of their money and pensions. This is why the UK Government has initiated the implementation of the Pensions Dashboard, enabling individuals to find and view their pensions all in one place, bringing more awareness to how much they will need to save in the long term for retirement.
Although the DWP recognises the importance of the Pensions Dashboard, it nevertheless announced a delay to implementation:
“The pensions dashboard will play a really important role in bringing that all together and also allowing people to see this alongside their state pension to get a full picture of what it’s going to look like for their retirement,” said pensions minister Laura Trott. “[Yet] it was the issue that we had around the connection process, which was needing more work in terms of the industry and there was insufficient testing in terms of the actual architecture itself. We needed more time to ensure that it was robust.”
The DWP is hoping to have the portal up and running “very soon” and the government body will start the process of writing later this year. This timing, however, has not come soon enough for Jonathan Hawkins, Principal Consultant and Pensions Expert at Bravura. Bravura has been collaborating closely with the Pension Dashboards Programme (PDP), regulators and its industry partners to make sure dashboards are delivered successfully for the good of the industry.
Bravura recently completed a collaboration with MoneyHub at this year’s PASA Annual Conference, at which a fully operational front- and back-end pensions dashboard was showcased for the very first time, demonstrating the tech works. Nonetheless, the pension solution provider is waiting for final guidance from the PDP to continue onboarding clients and build on the work the sizable amount of work the industry has already delivered.
“We are concerned that any further delays in connecting to the CDA will likely eat into the time pensions providers and schemes have to deliver, so it is important the programme comes back online sooner rather than later,” explained Hawkins. “Although June’s announcement played a useful role in tidying up the regulations and legislation around the PDP, we are roughly four months on from the programme reset and we’re still waiting on key guidance on connections and staging deadlines.
“When the guidance is received (which we hope to be over the next few months) there is, of course, a worry that guidance differs in gravity from legislation. It will ultimately be up to the industry to lead by example and to the regulators to ensure appropriate measures are in place to meet the updated timelines.”
In the meantime prices are likely to continue to rise, which puts people more at risk of not putting enough aside for retirement. The Pensions Dashboard is expected to help many, especially the younger generation, in planning for their retirement income in the future. Once it’s ready.
Photo by Breakingpic: https://www.pexels.com/photo/gold-colored-coins-near-calculator-3305/
“The Future is Unwritten”: Stephen Ingledew OBE on the Promise of FinTech
Stephen Ingledew OBE, Chair of FinTech Scotland, likens fintech to the new punk rock scene of the 1970s. “What punk rock did was allow anyone who wanted to form a band, play an instrument, and just get up there and be part of it. It allowed more women, for example, into music than any other genre,” he explained. “Fintech is similarly challenging the traditional ways in which innovation is done.”
We took the opportunity to interview Stephen Ingledew on the occasion of him being awarded an OBE for services to the UK fintech sector and asked him the following questions:
Congratulations on your OBE! Can you briefly describe your FinTech journey and the innovations that led to this recognition?
I suppose innovation has been in my blood for just under 40 years. I decided to come into the financial world to change it for the better because, for me, innovation is a means to improve the state of affairs for people, including financial wellness. From 2018, I was asked to set up and lead Fintech Scotland as a new organisation. This allowed me to use my experience of working in big companies, like Barclays, as well as small, innovative financial companies, and bring all these experts together to develop a cluster focused on genuine innovation using new technologies – which is precisely what Fintech is. And while fintech itself is not new, what has changed in the last 10 years or so is, firstly, an acceleration of the type of technology that can be applied, and secondly, the mindset of focusing on technology as a way of bringing about better outcomes for individuals, businesses and communities.
What makes fintech in Scotland stand out?
At FinTech Scotland, we are focused on the actual impact of the outcomes of innovation on consumers, whether that’s around issues like financial inclusion, financial crime or operational improvements for large financial firms. The FinTech Scotland cluster is about bringing people together who would not naturally do so, to drive better outcomes. Diversity is the key ingredient here. Scotland, albeit small, has a heritage of innovation, and brings together major players, bigger and smaller enterprises, and great universities. What’s crucial to our success is, rather than a narrow focus on Scotland, we see ourselves as part of the broader UK ecosystem. I happen to be one of the founders of the UK FinTech national network and believe strongly, therefore, in the value of working in collaboration with our other regional fintech groups, rather than in competition.
What emerging trends and technologies do you think will have the most significant impact on the financial sector, both in Scotland and beyond?
What’s most exciting is the way that the cluster approach allows us to cut through the financial world into horizontal sectors of other parts of the economy. So, for example, fintech can work with SpaceTech, HealthTech and ClimateTech. I have a little saying, that fintech is far too important to leave up to the financial services industry on its own. After 40 years in the industry, I can say that we’ve not always got things right. To improve on this we need more diverse minds around the table, for instance, consumer groups impacted by the innovation. We need to listen to the users themselves, not those who think they know what’s best.
Winning an OBE is a significant achievement. How do you plan to leverage this recognition to inspire and contribute to the fintech community in Scotland?
Hopefully it will encourage more people who wouldn’t normally have thought of fintech to actually reach out and get involved. Of course, I’m very humbled by the recognition, but it wouldn’t have happened if it wasn’t for the enablement of the three Teams’: the wonderful team at FinTech Scotland; the Scottish fintech cluster team (comprised of entrepreneurs, established industry players, academics, economic agencies like Scottish Enterprise, and investor and consumer groups); and the UK team including industry, regional fintech associations, Innovate UK, the FCA, the Centre for Finance Innovation and Technology (CFIT) and Innovate Finance amongst others. This is a great example of the whole being greater than the parts. By joining up with the UK as a whole we can recognise bigger ambitions and achieve more success for the Scottish cluster as a whole.
Can you share a memorable success story or milestone in your fintech career that you’re proud of and exemplifies your contributions to fintech?
FinTech Scotland winning the silver cluster excellent accreditation from the European Secretariat for Cluster Accreditation was an important recognition that we’re on the right track to what we are trying to achieve. Alongside that, we’re hosting the third annual UK FinTech Symposium this November, which engages the whole of the UK ecosystem, including UK government ministers, the FCA, the City of London, as well as all of the regional fintech groups, to share examples of best practice and how to build on that as a family
Personally, my motivation has come from meeting so many brilliant entrepreneurs who are inspired about improving some aspects of the financial world, whether that’s in terms of how people manage their money, through to payments mechanisms or handling new regulations. With the right mindset and the right technology, I believe things can be made better.
Joe Strummer, lead singer of the Clash, once said, “The future is unwritten”, because it is up to each one of us to break out and write our own future. Ultimately, there will always be room for improvement and, therefore, always room for innovation – and that will always be fintech, even if it is called punk rock.
Scotland FinTech Festival Wrap-Up: Unlocking answers through comprehensive understanding
Following the conclusion of this year’s successful Scotland Fintech Festival, we spoke to Nicola Anderson, CEO of FinTech Scotland, to find out what her key takeaways of the festival were, and how she sees it demonstrating the importance of the FinTech Research and Innovation Roadmap’ in guiding the industry’s priorities.
Nicola Anderson, CEO of FinTech Scotland, is of the firm view that fintech is supremely poised to solve some of the most pressing challenges we have in society today, from driving change on the climate agenda, to embracing the opportunity that fintech can provide for women and financial inclusion in general. “The breadth and quality of contributions across the full range of festival events has been amazing,” Anderson comments. “The purpose of the Scotland Fintech Festival has always been about definitively showing the vibrancy, connection, collaboration, and the inclusion that we see fintech presenting as an opportunity for the economy in Scotland and across the UK – and I think the festival has demonstrated that.”
Anderson is encouraged that the festival has promoted the interests of fintechs based in Scotland by helping reignite relationships and networks, allowing participants to hear different perspectives and views. “If you look at some of the speakers and across the events, they are from both UK-wide and global institutions. This shows how connected the Scottish fintech cluster continues to be across the world, and how interested people are in coming to hear what we have to say,” she points out. The festival aims to shine a light on fintech innovation and the opportunity that fintech presents for Scotland’s economy. This sentiment was further strengthened by the launch of a new £150 million Investment Fund for Scotland by the British Business Bank to help unlock additional funding to help smaller businesses to prosper and thrive.
“We’ve experienced purposeful action plans coming from the meetings and discussions across the Fintech Festival,” says Anderson. She provides a couple of examples, including the Scottish government’s drive behind an action plan that will enable fintech for exports. In addition, the focus of discussions on the impact of data and AI on the future of finance and climate. This demonstrates that the FinTech Research and Innovation Roadmap’ is the right vehicle to advance innovation in the financial services sector. It calls on the importance of data, AI and technologies to drive change and innovation.
Anderson also feels that the UK is starting to realise the benefits from some of the recommendations outlined in the Kalifa Review. This is shown through the relationships FinTech Scotland has created with the Centre for Finance, Innovation and Technology (CFIT) around work on finance data, as well as the team behind the UK FinTech Growth Fund involved and participating at the Festival showcasing investment opportunities. “It emphasises how important it is to connect the regions as per the Kalifa Review,” she notes.
What should the Scottish FinTech sector focus on next? “We have an opportunity to drive growth by focusing on those fintechs that are starting to scale,” she underlines. “We also need to focus on continuing to build relationships across the financial services ecosystem and cluster towards an inclusive environment that allows participation and collaboration between big and small entities, as well as connecting internal experts and inviting international perspectives to help us develop and grow.” In fact, there was great international representation across the festival involving delegations from China, as well as sessions focusing on the markets in the US.
“This year’s festival was a great success, and it underlines why I continue to be inspired to work at FinTech Scotland,” she concluded. “It’s about business growth, problem solving, collaboration, and innovation with purposeful intent. And most importantly, it’s about driving responsible change and outcomes that will serve society, and the future economy.”
Navigating the Future: The UK’s Competitive Edge in Fintech Regulation and Innovation
“The UK has a strong competitive advantage in areas like cybersecurity, privacy and, increasingly, artificial intelligence. A lot of work, however, remains to be done. This is not an automatic process by any means,” outlines Dr Devraj Basu, Senior Lecturer in Finance in the Accounting and Finance department at the Strathclyde Business School. Basu helped set up the RegTech Forum which brings together industry, academia and government to help understand the fast moving RegTech landscape and how Scotland and the UK can position themselves to become leading global players.
“While the UK has well established strengths, it needs to pull together all these very different areas by creating an ecosystem solution,” he continues. Basu feels that if the UK provides a proper regulatory framework in the context of technology it will provide a greater impetus in unlocking innovation. A stable regulatory framework is also needed to adapt to technological change to ensure it’s fit for consumers – AI being a prime example. But the UK needs to simultaneously join up with international best practice as well. “These elements require a deep understanding of all the issues, as well as an aspect of agility to bring together all the different stakeholders,” he says.
Regarding the appetite of UK regulators towards the development of overarching digital public infrastructures (such as the so-called India Stack’ built on Aadhaar, India’s digital ID system), Basu believes that the UK can learn from establishing digital identities, preferably through the creation of an overarching framework for privacy regulations. However, the parallels stop there. This is because the UK would, unlike India, have to tackle its legacy technology issues. Further, the UK’s Financial Conduct Authority (FCA) can only play a limited role in transforming legacy infrastructure because rather than dishing out prescriptive directions to industry, the FCA is a principles-based regulator which can only outline overarching maxims.
In terms of innovating financial regulation itself, Basu feels that the UK has done the right thing by introducing regulatory sandboxes. Moreover, he feels strongly that the FCA should start looking at the costs that regulations impose on businesses and how they can be minimised. This could be achieved by implementing a by design’ philosophy by providing either high-level roadmaps that minimise cost or interactive processes that lead to better regulation. “One way of being innovative is if the regulator could convince organisations that the adoption of new regulations would actually improve products or sales. One thing that’s come out of our RegTech Forum is this notion of the by design’ philosophy, which takes a proactive view on regulation, which in turn encourages innovation,” Basu explains. “Ideally a regulator should be a body that guides businesses through a process and helps them get better.”