Here’s why ambitious fintech startups should be looking to Scotland

Political and economic disruption is turning Edinburgh into a global fintech capital, making it the perfect time for ambitious startups to move their operations to Scotland.

The global financial industry is undergoing a transformation. From blockchain technology and smart contracts to mobile payments and robo advisors, innovation is rapidly redefining our relationship with money. At the same moment, Britain finds itself at an uncertain juncture following June’s referendum — a political event likely to define its economic prospects for years to come.

“From an outsider’s perspective, it appears as though Scotland is more spiritually aligned with Europe than other parts of the UK, and I have no doubt that fintech companies looking to enter the European market are thinking long and hard about alternatives to London right now,” says Gregg M. Schoenberg, head of advisory and investment firm Wescott Capital and author of The Financial Revolutionist blog. “Scotland and its financial services and technology sectors would be smart to remain agile during this period.”

Amid the chaos of Brexit exists a unique opportunity: for Scotland to become a global leader in fintech, an emerging field that’s set to shape the future of finance across the world. The proposition has captured the attention of experts in Scotland, the UK, Europe and beyond. But what does the opportunity look like exactly, and where does the journey towards fintech leadership begin?

“Think of it like baking a cake. In terms of ingredients, what does a fintech hub require?” asks Graeme Jones, CEO at Scottish Financial Enterprise, the representative body for financial services in Scotland. “Universities that provide high-quality postgrads, big financial institutions, a startup and enterprise scene, strong international connections. We’ve got the lot, and to make a success of it, we’ve just got to start connecting things up.”

Unlike a cake recipe, though, there’s no simple formula for orchestrating innovation. As a starting point, Scotland must focus on establishing an ecosystem that drives rapid development and unparalleled collaboration. From there, the country can build on solid foundations to define its niche within fintech.

“It’s too broad for Scotland to focus on ‘fintech’ in general because that term means different things to different people. The focus should be on two or three areas according to what Scotland, and particularly Edinburgh, is good at. It would be a mistake to try and be all things to all people,” says Jonathan Segal, partner at Fox Williams, a law firm with a dedicated fintech and alternative finance practice.

Notably, Scotland already has strong connections with globally-operating companies. Major financial industry players such as Morgan Stanley, Royal Bank of Scotland and JPMorgan are based in Edinburgh, and the Scottish capital’s long-established expertise in asset management has the potential to drive the country’s move towards finance innovation. Glasgow, which is less than an hour from Edinburgh by train, has an international financial services district that is home to world-class mathematics and engineering talent. Identifying and utilising the different strengths of each city could lay the groundwork for success in a wider fintech ecosystem for Scotland.

“Cities are extremely important, given the concentrations of people and talent that flourish in them. Infrastructure also tends to build up around those concentrations. For example, Edinburgh has at least 15 different workspaces housing various types of business,” says Danny Meaney, founder of startup accelerator UP. “Giving everybody a fiver doesn’t build success. The focus must first be on the concentration of talent. Technology then allows you to tie in other places to access that talent.”

To create a fertile fintech community alongside the existing financial establishments of each city, technology infrastructure such as super-fast Internet and inviting office space must be a priority. With its existing reputation and connections, Edinburgh is poised to become the heartland of European fintech.

“You need startups to create the buzz and you need somewhere for those startups to live, so I think an accelerator or coworking space that’s dedicated to fintech would be very helpful in Edinburgh,” Segal explains.