◆ Scott Reid finds industry leaders highlight the benefits of collaboration between start-ups and major financial institutions

Scotland is punching above its weight globally when it comes to developing the next generation of financial technology with the number of people employed in fintech growing by almost a quarter over the past two years. The country’s burgeoning fintech cluster now supports in excess of 10,500 people across 226 small and medium-sized enterprises (SMES), according to industry organisation Fintech Scotland. It comes as more and more of us switch to digital banking and use apps to manage a range of services such as savings, investments and pensions.

Fintech Scotland said the 24 per cent increase in headcount numbers since 2021 had been driven by a “growing maturity” across the sector and more international businesses choosing to settle in Scotland. The latest research also reveals that around two-fifths of “fintech enterprises” have reached scale-up stage, creating further employment opportunities.

Fintech Scotland, which this month celebrates its sixth anniversary, said there had been an increase in the number of smaller enterprises scaling through collaboration with large financial institutions. Fintech innovation labs are said to be playing a key role in the sector’s growth, “creating the environments that enable product development to thrive and support partnerships to develop”.

Those innovation labs have been launched with major financial institutions such as Lloyds Banking Group, TSB and pensions provider Phoenix Group. Examples of collaboration between fintech SMES and their larger peers include: Snugg and TSB, with their tie-up enabling the bank’s customers to improve their home energy efficiency; Behavioural Finance and Phoenix supporting better retirement outcomes for consumers; and Gocodegreen teaming up with Lloyds around “digital sustainability”.

Nicola Anderson, chief executive of Fintech Scotland, which was founded in January 2018 as a joint initiative involving the University of Edinburgh, Lloyds

Banking Group, HSBC and Scottish Enterprise, said Scotland’s thriving fintech SME community had made the country a major destination for companies worldwide. Fintechs tapping into Scotland as part of their development plans include Accessfintech, Clearwater Analytics, Two Hands and Mail Metrics.

Anderson said the cluster body had further plans in 2024 to support fintech SMES to scale, while maintaining a focus on investment, international connection and “impactful collaborative partnerships”.

She said: “As we mark Fintech Scotland’s sixth anniversary, we’re focused on building on the strong foundations that

Nicola Anderson, chief executive of Fintech Scotland, said the country was beginning to realise its fintech potential despite more people using digital banking apps

Authority and Scottish Enterprise.

In August 2022, Fintech Scotland was formally recognised for the development of the fintech cluster and accredited with the silver label for cluster management excellence by the European Secretariat for Cluster Analysis (ESCA).

Jane Martin, managing director of innovation and investment at Scottish Enterprise, said: “The 24 per cent increase in jobs in the fintech cluster reflects Scotland’s commitment to nurturing an environment where technological and financial innovation can thrive. The growth in employment is a clear indicator of our country’s attractiveness to global fintech companies, driven by our rich talent pool, academic excellence and wellestablished strengths of our financial services sector.”

There is always the temptation for politicians to intervene in situations where they think they can make a difference. Of course, if there was an obvious simple solution to a problem somebody with more knowledge and understanding of the problems would already have implemented it.

Thus, we had the introduction of the Cost of Living (Tenant protection) (Scotland) Act 2022 nearly 18 months ago which sought to cap rents for a limited period to ease the pressures of the cost-of-living crisis. What we find now from the latest Scottish Government statistics is that, in the last year alone, average rents have increased in all sized properties, ranging from the lowest rise of

11.7 per cent for one-bedroom to the highest figure of 14.3 per cent for twobedroom homes. Every type of property (from one to four bedroom to a room in a property) has had a double digit increase in rents since the Cost of Living legislation was introduced in October 2022, exceeding the annual average increases in rents over the previous 12 years by a factor of at least three.

There were plenty of warnings from all involved in the housing sector that this would happen, but these went unheeded. An unwillingness to believe that market forces are what dictates prices rather than government has led to enormous rent price rises which could have been avoided with greater understanding, negotiation and discussion with the sector and a plan that understood the principles of supply and demand.

With the Cost of Living Act legislation