Everything adds up for Edinburgh’s Fintech boom

According to recent figures published by Innovate Finance, global investment in financial technology (Fintech) ventures has rocketed from $930m in 2008 to $12.5bn in 2015, with recognised tech clusters such as Edinburgh supporting London’s global dominance.

Fintech is, to coin a phrase, white hot right now. It is not only empowering new start-ups with the ability to launch disruptive technologies into parts of the banking business, it is also helping banks to meet their own customer’s expectations of ever more accessible services.

It’s the very nature of heavily regulated industries, such as a banking sector governed by legal compliance requirements and unprecedented cyber security, that they require highly specialised skillsets to remain on the right side of the fence. The result? Digital innovation strangled through compromise and rapidly escalating costs.

Perhaps it’s no wonder that disruptive innovation is coming to both the finance and legal professions – especially in Fintech, where a fertile environment for collaboration between the regulatory-driven banking sector and dynamic digital start-ups is revolutionising customer engagement.

The rise of the smartphone has transformed customers’ behaviours and expectations. Today’s ‘always online’ culture – and the explosion of new services and apps that fuel it – mean people can not only access previously unavailable goods, services and data, they can do so while sitting on the bus or enjoying a cup of coffee.

Whether it’s checking your bank account online, or applying for a new mortgage, people expect – even demand – to be able to handle their financial affairs as easily as their social media interactions. 

Mobile payments, both in app and browser-based, are driving the growth of ecommerce. In fact, it’s fair to say a new financial epoch is dawning, driven by a mobile-first approach to financial transactions.

According to Adyen, the global payments technology company, 34% of browser-based online transactions globally are now made on a mobile device. Among individual markets, the UK continues to lead the world in mobile payment adoption, with 49% of online transactions on mobile device (a figure increasingly dominated by smartphones).

Launched in 2010, one Edinburgh business epitomises how technology can be used to meet customer expectations. Money Dashboard has built the UK’s leading personal financial management service that gives more than 100,000 UK consumers a true view of their financial lives. 

“We securely pull in data from any UK bank account. This allows consumers to get a holistic overview, with spending categorised, so they can see how much they're spending on groceries, public transport, entertainment and so on. It allows people to get on top of their finances and ultimately achieve their financial goals,” explains Steve Tigar, chief executive officer.
“We believe an independent personal financial management service has the potential to attract a user base of multiple millions in the UK alone. The catalyst for this will be the forthcoming Open API, meaning that, with the customer’s consent, banks will be able to send a direct data feed to trusted third party developers.”

Roll Run is another example of how digital technology is having a transformative impact on legal firms and the insurance sector. The embryonic start-up only came into being in December 2015, but already has ambitious plans for the future.

By accessing court lists, Roll Run saves considerable time and cost by providing law firms with automated litigation analytics about clients: how often they appear in court, who they are sued by or who they are suing.

The system has multiple applications for other sectors, such as credit reference agencies and lenders, enabling financial service providers to mitigate risk exposure more effectively.

“The legal industry is an enormous, data-driven market that is ripe for disruption,” says Founder Ruairidh Wynne-McHardy. “For us, Edinburgh was the natural choice in which to set up.  Apart from being a beautiful city and one of the best-educated in Europe, the tech ecosystem is very strong. On any given day you will find multiple events happening, people meeting and helping each other out.”

Money Dashboard moved its HQ to Edinburgh in 2013, to gain access to the city’s impressive talent pool.

Securing talent remains a common theme shared by many Fintech businesses attracted to Edinburgh.

In the latest Tech Nation 2016 report, one in three digital technology businesses source talent from local universities. Every year, Edinburgh’s universities produce an impressive 1,200 highly skilled computing and software graduates – a significant cohort further supported through dedicated incubation centres to support digital start-ups.

As the second largest financial centre in the UK, Edinburgh also has an enormous presence in the world of global finance.

No wonder the city’s Fintech sector already has its stars. Companies such as FreeAgent, miiCard, and Money Dashboard, have all secured investment and are expanding rapidly.

A growing reputation as one of the UK’s most vibrant, innovative and dynamic tech clusters is also helping to forge and reinforce a real sense of community across the city.

Helping to nurture this vision is StartEDIN, a membership-led, non-profit organisation brought together and supported by a blend of established companies, start-ups and digital entrepreneurs. The group organised Fintech hackathons in 2015 and worked together with Silicon Milkroundabout to host the first Scotland Silicon Milkroundabout job fair – the first time the event has been held outside London.

StartEDIN also offers members regular networking opportunities, a key benefit cited by 87% of tech businesses in Edinburgh in the 2016 Tech Nation report. In fact, more than 2,630 people regularly attend technology meet-ups in the city, with Edinburgh businesses more likely to take advantage of local business and technical support than anywhere else in the UK.

“We have long talked about building an entrepreneurial ecosystem in Edinburgh. I truly believe it now exists and it's flourishing; whether that's unicorn businesses like Skyscanner or the Fintech stars of tomorrow,” adds Steve. “I firmly believe the best is yet to come.”

For further information www.investinedinburgh.com