The UK is again outperforming the world in funding and growth for the thriving Fintech sector. According to latest Innovate Finance data, UK fintech startups have reached a record level of $2.9 billion of funding in the first half of this year, with investment on track to eclipse last year’s record of $3.3bn. Though London makes up 78% of the deals, the remaining 22% is spread across the UK. Step forward Scotland – with an established position as a financial hub, it’s now looking to Fintech firms to help sustain growth in a digital-first era of open banking and stateless data.

FinTech Scotland – 100 warriors and counting

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In 2018 the Scottish GovernmentScottish Enterprise & the University of Edinburghcollaborated to form FinTech Scotland. This was a recognition that the country needed its own ecosystem from the existing deep roots in financial services. Joined by HSBCAvaloq and Lloyds, the organisation now boasts 100+ Fintech businesses based in Scotland as well as 15 Universities and many more tech spaces.

‘FinTech Scotland: We don’t want members – we want a community!’

Mickael Paris, Marketing Director – FinTech Scotland

Mickael Paris is a true Scotsman, in the sense that he’s actually from France and relocated to the country 15 years ago, gaining citizenship in the process.

‘We are creating a community for fintech firms, focusing on increasing collaboration with the established financial sector and developing the fintech cluster in Scotland. We’re not the biggest fintech hub but we’re definitely the most connected one. Scotland has a very strong heritage in the financial sector – innovation has always been at its core. Life Insurance, the cash machine, the PIN number, and so much more have all been invented in Scotland.’

Scottish Tech – solving the sticky problems

Modulr is an example of the new Scottish-based wave of tech scaleups, having received £14m in funding in 2019 to fuel aggressive growth. Modulr plays an unsexy but critical role in the ecosystem – ensuring its API integrates into any platform or system so businesses can instantly open as many accounts as needed to process services (such as payroll), with £10bn passing through their systems to date.

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Banks are struggling to keep up!

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‘Banks are struggling to keep up. This is why regulatory change with initiatives like Open Banking are critical in opening up the industry to increased innovation. This is creating an opportunity for digital banking alternatives, such as Modulr, to step in and transform payment services. Scotland is the UK’s second largest financial services cluster after London and 40% of our workforce is based in Edinburgh to capitalise on that talent.’

Edwin Abl, Chief Marketing Officer – Modulr

Growing Scottish Tech – It’s not Scotland vs London

Unlike the politicians who can be keen to score points, Scottish Tech businesses see London as an added collaboration opportunity rather than a competitor. FinTech Scotland receives support from organisations like Scottish Investment Bank (SIB) to offer co-investment opportunities to investors. This makes SIB one of the largest investors in the UK.

We recognise that as a nation we are very strong because we work together. It’s not a matter of them and us.

As Mickael is keen to point out, its the collaboration that helps fuel the growth.

‘We collaborate with organisations such as Innovate Finance and Fintech North. Should Scottish companies look at London for investment and finding clients? Absolutely. Companies like Modulr and Previse moved their operations to Edinburgh and Glasgow respectively whilst keeping their commercial office in London. We see this as a very good strategy and one we heavily support alongside our colleagues at Scottish Development International.’

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Scottish Tech Funding – from VC’s to Crowdsourcing

With its own government and a high degree of legal autonomy, the Scottish Government have shown support in tangible ways – Scottish Enterprise help fintech firms expand internationally. SIB – The Scottish Investment Bank is another avenue to get support, especially for SME’s. LendingCrowd is one such business that benefited from the bank investing with them.

The support we’ve had from SIB was key to creating this transformational partnership.

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‘In 2016, SIB provided £2.75 million of funding, to be lent via our platform to Scottish SMEs. In May, we brought together SIB and Dutch bank NIBC in a unique funding deal that will see them lend a combined £18.75 million across our platform. The support we’ve had from SIB was key to creating this transformational partnership. Since our launch in 2014, we’ve delivered more than £60 million across almost 700 loans, and our data shows that over 2.6 jobs were created for each loan paid out, helping to further boost local economies.’

Stuart Lunn, founder and CEO – LendingCrowd

Companies like Money Dashboard have chosen a different path – asking directly for funding from the people – raising the largest equity crowdfund of any fintech company in Scotland (securing £3.9m) in 2019, after smashing their target of £1.5M in 45minutes of launching. Money Dashboard is free app connecting 70+ financial institutions, allowing people to see all their accounts in one place. This allows their users to budget, plan and save for their goals and boasts 200,000 members across the UK.

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The Scottish fintech scene is booming!

‘The Scottish fintech scene is booming and testament to it being a great place to work is our ability to hire internationally based world class talent. Our recent appointment of a COO from a London-headquartered fintech is a strong signal that Edinburgh and Scotland more generally is a fintech hub to be reckoned with. Additionally our collaboration with GoCompare shows you don’t need to be London based to make waves in FinTech!’

Steve Tigar, CEO – Money Dashboard

For more information on being involved in the FinTech Scotland scene and helping to grow its ecosystem contact the team – and as Mickael himself recommends:

‘Many cities and towns in Scotland are constantly voted best places to live, to innovate or start a business you have to say that Scotland is more than just a great place to work it is the best place to work in my view.’