Scotland has a rapidly growing fintech cluster of more than 200 thriving start-ups and many established financial services providers. 

A key factor driving this growth is the range of innovative technology being developed at Scottish universities including Glasgow, Edinburgh and St Andrews. And Scotland’s strength in data, AI and machine learning are turbocharging the scale-up of commercial fintech ventures. The University of Edinburgh’s innovation hub for data science and AI, the Bayes Centre, is where several major financial institutions are based.

Another example is global asset management company abrdn, based at Edinburgh Futures Institute, which also collaborates with the university on the Centre for Investing Innovation – a £7.5m, five-year research project to address challenges facing the investment and asset management sector.

“As one of the world’s leading research organisations, situated in the heart of the UK’s financial sector, the University of Edinburgh is working in partnership with a range of major companies across the sector,” says Ksenia Grant, director of financial services and fintech sector engagement at the University of Edinburgh.

“In an increasingly competitive global landscape, the financial services and fintech sectors in Scotland require us to nurture, mobilise and attract the highly qualified talent with the ability to harness the power of data and AI, innovation skills, as well as knowledge of financial markets and economic interactions.”

Initiatives driving fintech innovation in Scotland

The Bayes Centre is also home to the University of Edinburgh’s renowned AI Accelerator Programme, run by the DDE Bayes Centre Innovation Pipeline and Edinburgh Innovations, the university’s commercialisation service.

Through the AI Accelerator, start-ups and more established businesses have an environment to refine their commercial propositions, develop their skills and connect their ideas to applications and operations in the real world.

“We have developed the programme to provide a unique combination of training, mentorship and access to expertise,” says Katy Guthrie, AI Accelerator Programme manager.  

“Businesses can access our network, including corporate supporters, the Bayes Centre community of AI, and data science companies of all sizes, as well as the broader tech ecosystem both in Scotland and, importantly, also in London.”

Meanwhile, Edinburgh’s Smart Data Foundry works closely with FinTech Scotland and the Financial Data and Technology Association to encourage innovation and collaboration.

Awarded £22.5m from the UK Government in 2020, the organisation provides a secure environment where real consumer data from British financial institutions can be safely shared with organisations tackling the biggest societal, economic and environmental problems.

The Data Lab is another considerable resource and a cornerstone of the Scottish fintech cluster. With hubs around Scotland and an extended network of over 1,500 companies, it is where financial giants such as Barclays and Royal London can connect with fintech start-ups.

In Edinburgh, students are working alongside businesses on projects under the AI Accelerator Programme. (Photo by georgeclerk via Getty Images)

The Data Lab’s annual Data Fest event showcases Scotland’s leading role in data science and AI, while providing a networking platform for talent, industry, academics and data enthusiasts.

Many successful initiatives have been undertaken in Scotland by major financial institutions. In 2020, Lloyds Banking Group began its Launch Innovation Programme alongside FinTech Scotland. Other large financial players such as TSB and Phoenix Group have their own innovation labs.

The continuing growth of Scotland’s fintech start-up scene

Scotland has always had a vibrant start-up scene, with many businesses taking advantage of collaboration and partnership opportunities within its tech cluster. Fintech Scotland’s Ten-Year Research and Innovation Roadmap has been designed to ensure that this growth continues over the next decade.

Universities, financial services brands and public agencies all have a part to play in making the cluster a success, collaborating to create a fertile environment for young, innovative businesses.

“Scotland is the second-largest recipient of fintech greenfield FDI in the UK, behind London,” says Glenn Barklie, chief economist at Investment Monitor. “Scotland accounts for just over 9% of total greenfield fintech FDI projects. Investors have cited access to talent, a thriving fintech scene and government support among reasons for choosing to set up in Scotland.”

In fact, 59% of fintechs in Scotland are currently at the start-up stage, with 28% being scale-ups. Some 8% have grown into large companies, while 1% are listed, 1% have been acquired and 2% are unicorns valued at more than £1bn – including global investment platform company FNZ.

Many companies in Scotland’s cluster originally launched overseas but were drawn to Scotland’s thriving data and AI ecosystem and its available talent pool. Of course, Scotland’s enduring appeal as a place to live and work is often also cited as a significant draw.

Of the companies that have relocated to Scotland, 41% originated in the US, 31% in Europe, 17% in Australia, 7% in Asia and 3% were from the Middle East.

One such company is Eedenbull, a fintech innovation company specialising in the design and implementation of B2B and commercial payment solutions. Originally launched in Norway in 2018, the company has since scaled quickly and now has 65 banks and 2,000 business customers onboarded.

Other overseas companies are choosing to tap into Scotland’s advanced data and AI innovation. Recently, companies such as YayPay and Pace AP from the US, WeFund from Australia and Pulse Market from Ireland have chosen Scotland as a base.

“Fintech is one of the most exciting areas in today’s global business,” adds Grant. “As the world changes, the innovation that fintech brings will play a major role in the future success and sustainability of the financial services sector in Scotland.

“Development of joint initiatives between the industry and academia, aimed at innovation, collaborations and training the next generation of industry leaders, needs to be the priority for the future growth and continued leadership of our FS and fintech sectors.”

To find out more about how Scotland’s fintech ecosystem is enabling growth, download the document on this page.