FINTECH in Scotland: building a digital future for the financial sector

Financial technology (Fintech) is developing rapidly, utilizing software and programming code in innovative ways. It is driving efficiency up and costs down. The digitalization of transactions is now a cross disciplinary science that looks set to disintermediate banking. The adoption of its new method represents both a big opportunity and a big threat to the financial sector. This paper set outs how the sector is changing and what needs to be done for Scotland to capitalize on it. In particular, we present the results of both a direct and indirect impact analysis on two policy recommendation scenarios, inertia or the one in which Scotland becomes a digital hub. In the inertia scenario Scotland drops behind in the adoption of Fintech. We propose that, to avoid this, certain policy recommendations are adopted to foster the right conditions for the best case scenario. Our analysis shows the economic impact of a proactive approach to Fintech could be substantial and the infrastructure spend to achieve it minimal by comparison.