Financial services sector is well placed to tackle impending post-Brexit woes

POST-BREXIT it has never been more difficult for businesses or advisers to predict the course of events or the best path to take. However, with its emerging tech hubs and highly experienced resource pool, the Scottish financial services sector is well placed to tackle these challenges, continue to create jobs and stimulate the economy into 2017 and beyond.

The dissatisfaction of the Scottish Government with the decision to leave the EU is well known, as is its desire to do all within its means for Scotland to confidence that Scotland will develop a key presence as a financial services technology hub, whether or not subsidiaries are required to gain access the single market. Technology and modern communications mean that there is no reason why the majority of work cannot still be carried out in Scotland.

The inherently cautious FS sector is now, finally, engaging with cloud-sourced products and services and so, achieving operational benefits including scalability. The sector has been buoyed by fairly positive FCA guidance issued during the summer on cloud outsourcing, but practical questions remain over compatibility with core regulatory requirements, particularly around control and access to data. From a commercial perspective we see this as a dynamic and evolving area for 2017.

Application programming interfaces (APIs) are making a significant impact. For financial services, this allows banks to streamline their processes. In turn, it facilitates what will, in our view, be the biggest topic and challenge of 2017 – Open Banking.

Government and EU initiatives have determined to open up access to data held by banks to stimulate competition and innovation in the sector. Already we are seeing some exciting ideas from Scottish businesses eager to be at the forefront of these developments.

Fintech disruptors are leading new competition, and major financial institutions will have to adapt to a market which is continually changing if they are to enjoy continued growth. Our experience is that banks recognise this, but as with all large, regulated institutions, face challenges of agility. Nevertheless, we are now seeing banks investing increasingly in new technology and beginning to partner more effectively with smaller fintech SMEs. If Scottish banks can continue to back promising fintech startups and innovate with their internal process, Scotland can realise its ambition to become a centre for fintech enterprise.

‘‘ The inherently cautious FS sector is now, finally, engaging with cloud-sourced products and services

Callum Sinclair is partner and head of technology at Burness Paull