Scots finance sector must step up fintech game or face job cuts – Strathclyde Uni

Scotland’s financial sector needs to accelerate its adoption of technology to avoid a future banking crisis, experts at Strathclyde Business School have warned.

Academics at the University’s Centre for Financial Regulation say Financial Technology – or Fintech – has the potential to create nearly 15,000 jobs in Scotland over 10 years.

But, failing to adopt leading-edge technologies would have the opposite effect, with a loss of just over 14,000 jobs – or £635 million in wages.

The warning came ahead of a symposium on Friday that brought together Scotland’s bankers, insurers and fund managers at the University of Strathclyde’s Technology and Innovation Centre.

Daniel Broby, director of the University’s Centre for Financial Regulation and Innovation, said: “Fintech is evolving at a rapid pace and the consequences of digitalisation are being hailed as a ‘game changer’ for both the banking and securities industries.

“Financial transactions are set to become instantaneous, traditional paper money is being replaced by digital money, and entrepreneurs will be able to raise money directly from the public. All this is good news for the consumer.

“But it is critical that we create the right conditions to enable companies to develop Fintech faster, if Scotland’s financial sector is to remain globally competitive. The technology exists. Either Scottish financial institutions adopt it and thrive, or they ignore it at their peril.”

The conference heard that Fintech is being driven by two major innovations – blockchain, and distributed ledgers. Blockchain will enable transactions over the internet, and will allow online payments to be sent directly from one person to another without having to go through a financial institution.

Distributed ledgers have the potential to transform the way the financial sector handles identity, transactions and debt information.

Mr Broby continued: “In Scottish bank and fund management operations, Fintech is already used. This is, however, largely developed in-house and as such is not cutting edge. The gradual trend has been for traditional banks to move to off-the-shelf solutions and to leave the in-house developed legacy systems.

“We argue that this should be accelerated. There’s potentially a huge opportunity for Scotland but we need to seize it.”

Last year saw £10 billion invested in Fintech start-ups globally.