Customers’ needs are central to fintech ambitions

Scotland’s fintech community is committed to delivering wider public benefit and can use this “social good” agenda to be a global force. That was one of the main conclusions of a panel discussion, How can fintech be a positive agent for social good? organised by The Scotsman at the University of Strathclyde.

Scotland wants to become a top five global hub in fintech, a combination of financial services and emerging technology.

Stephen Ingledew, chief executive of umbrella body Fintech Scotland, and the person who set the top five target, said: “Historically, financial services have excluded many of our citizens and it’s important that we take the opportunity presented by fintech to serve their financial needs.

“We also need to make the fintech community much more diverse to help serve a wider cross-section of society.

“I had a gut feeling when I took this job that there was a different approach in Scotland to what was happening in Europe.

“Fintech businesses here want to be commercial and sustainable, but are driven by a real sense of social purpose.

“It’s not just about reinventing financial services to be slightly better, it’s reaching out and being much more relevant to a more diverse society.”

“Fintech is part of Scotland’s future – an open, international, inclusive and diverse future.

“The desire to do social good and to embrace diversity can really differentiate Scotland and give us a competitive advantage in fintech.”

Louise Smith, head of transformation at RBS and one of Scotland’s fintech envoys, said: “Innovation in financial services is not new – what’s new is how fintech companies are starting to use this disruptive technology to reimagine the industry. Combine that with customer demand – Know Me, Keep Me Safe, Let Me Live Well – and we really have an opportunity to change things.

“We need to understand that it’s all about the customer. Look how consumers react when their data is misused.

“It’s not about doing things from a social purpose perspective [in itself ], it’s not a choice – we have to do it because it’s what the customer demands.

“This is a leadership and behavioural challenge, not a technological one. Get back to what the customer wants – nobody wants to talk about a mortgage, they just want a nice home.”

Smith said there were huge opportunities for fintech to have a positive global impact: “There are 3.5 billion people in the world who are unbanked or under-banked and we don’t have all the answers yet – but technology, customer demand and partnership working is driving change. It’s about doing the right thing.”

Smith expects more partnerships like the one between RBS and Freeagent, a cloud-based accounting software provider.

“We need to partner effectively. The new fintech businesses can provide the innovation and technology, the banks provide the customer base – and combining them can do something really interesting.”

Leading fintech academic, Dr Daniel Broby of Strathclyde University, used a stark example to show how fintech’s desire to make financial transactions faster, simpler, cheaper and more transparent could make a real difference to the developing world.

He said: “Europe remits €150 bn annually to Africa from migrant workers – money sent back to some of the world’s poorest countries.

“The average transaction cost is about 8 per cent, so we are taking about €12bn from some of the poorest people in the world because the banking system cannot securely transmit from A to B without a middle man taking a cut. That’s something we can solve.”

There was also discussion about how biometric recognition could help people who are not financially literate – or illiterate in the widest sense – to access financial services.

Andrew Berry, a director at Deloitte, said fintech had real potential to deliver a “hyper-personal” approach: “Banking has always been seen as a bit boring, but now you can open up an account with a selfie and it’s much sexier.”

Berry also highlighted the opportunity for bots to explain complex terms and conditions in a much simpler way and for artificial intelligence (AI) to identify signs of emerging financial distress in customer dealings with banks.

“A call centre cannot always interpret and understand what a customer is saying, but AI has a better chance of