FinTech Futures – Scotland’s Global Opportunity

As Insider reports analysis from FinTech Scotland has revealed a 27% increase in the number of fintech enterprises in Scotland, increasing from 26 firms in 2018 to 147 firms last year – and now 190 firms.

The global FinTech market is forecast to grow to $324 billion by 2026, and FinTech Scotland has developed a roadmap to position the nation at the heart of this sector. The Scottish Government has set up a new forum to foster great collaboration with the industry.

Our FinTech Futures guide will provide a supporting resource, documenting the technology and market innovations landscape gathered from analysis of worldwide trends and opportunities of this massive growth.

Digital Banking

At the heart of the opportunity is the ongoing digitization of banking, and the opportunity that presents for disruptive new models, both for existing players and also for new ‘challenger’ ventures.

It might seem that this is an already well established, sewn up market but as The Financial Brand writes banks are still finding digital transformation elusive. This isn’t hugely surprising when you consider their age, legacy and size – As digital guru Dion Hinchcliffe tweets large organizations can take up to ten years to realize the benefits of a large scale transformation.

In the Future of Mobile Banking Beyond Smartphones they also explore some of the types of innovations likely to hit the sector, like voice, the internet of things (IOT), augmented reality (AR) and, potentially, virtual reality.

Edinburgh-based Aveni, who raised £500k seed funding, is an example of a venture prosecuting these types of innovations, aiming to transform businesses’ interaction with clients by automating functions such as such as customer relations management (CRM), fact finding, risk monitoring and adviser prompts.

The Financial Brand article also describes “Embedded Finance”, the trend of leveraging API-based integrations to position finance at the center of a product ecosystem that expands beyond traditional deposits, loans and investments into payments, shopping, social engagement, etc.

Showcasing Scotland’s potential within this trend are deals like DirectID’s £3m financing. Their platform enables providers to embed underwriting decisions into their own apps, offering decision makers a more comprehensive view of applicants and customers across the credit lifecycle.

Blockchain

Of course the mega disruptor of the finance sector is the Blockchain and the cryptocurrency ecosystem it enables, and here Scotland is also setting out a strong position.

This includes the founders of Scotland’s first unicorn FanDuel now embarking on a Blockchain-based sports betting venture BetDEX, raising a whopping $21m seed financing, one of the largest funding rounds by a UK start-up.

Another venture tapping into this global scale trend is Zumo, doubling their user base as Bitcoin surged. In December they achieved the major milestone of becoming the first company in Scotland to secure Financial Conduct Authority (FCA) registration.

Modulr, who opened an Edinburgh office in 2018, just announced a partnering deal with sector giant Ripple, to make it easier for businesses to run real-time payments internationally powered by Ripple’s financial technology, RippleNet.

Wired magazine warns that the UK risks being left behind in key developments like a Central Bank Digital Currency, but as Matt Hancock stated in his parliamentary address there is no doubt there is the potential for the nation to be a world leader in the field, with Scotland at the centre of that success.