Why Scotland should harness its influence in the global fintech industry

Guest blog from Corporate Partner and Technology Lawyer at Addleshaw Goddard, David Anderson

In Scotland, we undoubtedly have one of the strongest fintech clusters in Europe. At the turn of the year, the Scottish fintech sector became the first in the UK, and only the third in Europe, to receive formal accreditation as a cluster of excellence from The European Secretariat for Cluster Analysis (ESCA).

The body looked at 36 economic factors before awarding Scotland this accolade, and our innovative, dynamic and collaborative ethos must, I believe, have had an important role to play in why we received this title.

Looking at growth from 2019 to 2020, the number of fintech SMEs based in Scotland increased by more than 60% from 72 to 119. This notable boost is something that we should continue to celebrate and use as a foundation to build upon to attract even more leading fintechs from across the globe to expand and invest in Scotland.

Most recently, it was announced that our fintech sector will receive a further £22.5 million of funding to establish a Global Open Finance Centre of Excellence (GOFCoE) in the Edinburgh and Central Belt region. Funded by the Strength in Places Fund, this is a remarkable opportunity for Scottish fintechs as the new research and development centre will explore how open banking and financial date can be used to deliver social and economic benefits.

We have world-class talent on our doorstep and as a Corporate Partner and Technology Lawyer at Addleshaw Goddard, I am fortunate to get the opportunity to work with a number of entrepreneurs, CEOs, advisors and customers in the fintech discipline every day.

As a firm, we recognise the importance and wealth of the fintech sector. That’s why in 2017 we launched our dedicated Addleshaw Goddard Elevate programme - a 10-month initiative for selected fintechs designed to accelerate them through legal challenges faced by start-up and fast growing businesses.

Year on year, we are enthused at the calibre of entrants to the programme and to date we have supported 22 fintechs with our expertise across financial services, regulation, IP and corporate and commercial transactions.

Successful applicants to Elevate programme receive advice covering funding, payments, financial regulation, investment and technology at no cost to them as well as ongoing mentoring and access to the firm's resources. By combining our client-side experience with regulatory and legal expertise, gives us great insight into the concerns and priorities to help fast growing businesses become more productive and even more successful.

In 2019, we welcomed nine businesses to the cohort including Scottish businesses Amiqus , OBR-Open Banking Reporting and Trace, all of which are contributing to and bolstering the tech scene in Scotland. In the next few months, we will be launching the 2020/21 programme and are already looking forward to working with more forward-thinking technology firms with revolutionary ideas.

Whilst this paints an incredibly positive picture of the Scottish fintech sector, which is true, we must remember the Covid-19 cloud that currently hangs over our professional and personal lives. It is a challenging and sometimes worrying time, and the consequences of it will live on long past the ease of lockdown and other restrictions.

The last few months have, however, allowed many Scottish tech firms to adapt and highlight their invaluable contribution to society. I have been extremely encouraged at the response of Scottish technology businesses to the current situation as they adapt themselves or help to aid businesses, people and the economy with their agile approach.

For example, Airts, which uses AI tech to help people at large professional services firms plan projects, has reshaped its working pattern and working from home structure to ensure clients still receive an excellent service.

XDesign – which plans, builds and develops digital products that solve your business challenges - has moved quickly to introduce new processes across the business to succeed throughout this challenging period. This has even resulted in the firm welcoming new clients and staff, which is incredibly encouraging for the industry.

A great local example of this came from Occupyd - which connects businesses to underused workspace – who has used the time to support chefs and caterers access underused commercial kitchen space in closed pubs, cafes, churches and other locations. Occupyd also created a ‘Secret Takeaways’ list which has helped diners in Edinburgh and London find their favourite local restaurant options which are not present on the main apps.

Tech has of course always been important, but through the covid-19 pandemic it is proving to be invaluable as we rely on it to communicate with family, friends, colleagues and in some cases, life-line services. From my perspective, I have seen an acceleration in strategictechnology projects which are driven by improving customer experience and developing the best possible customer proposition.

Looking to the immediate future, nobody can predict to what extent the pandemic will impact the tech ecosystem in Scotland. However, the agile, innovative and inclusive nature of the industry, particularly the fintech ecosystem gives me great confidence that we will come through this with the ability to continue our success and growth, but with new insights and perhaps a refreshed outlook.

Interested technology businesses can register their interest for the 2020/21 AG Elevate programme here.