Scotland’s chief statistician announced yesterday that the Scottish economy grew by 0.5% during the second quarter of 2018 – outperforming the rest of the UK.
In the first half of this year, Scottish GDP grew by 0.8% compared to 0.6% in the UK. This growth in the first six months of 2018 is greater than the 0.7% growth forecast made by the Scottish Fiscal Commission for 2018 as a whole.
Speaking at DIGIT’s Fintech 18 event today, Derek Mackay MSP, Cabinet Secretary for Scotland, said: “We’ve had good economic growth. And outperforming the rest of the UK for the second quarter – I’d say that’s a decent performance.”
The financial services sector has played a major part in this, according to Mackay. “This sector is, and has always been, of huge importance for Scotland, and that will continue after Brexit,” he explained.
“It’s an area in which we’ve got a longstanding reputation and are rightfully recognised as world leaders. That will continue in spite of the uncertainties posed by Brexit.”
Scotland is said to be the UK’s most complete financial services sector outside of London, with its world class capabilities in banking, investment management, asset servicing, insurance and pensions employing more than 86,000 people across the country.
“We have a deep pool of talent and skills needed to power a modern financial services sector,” said Mackay.
“I was talking to one COO at DIGIT’s Fintech 18 event, and he said the number one reason for him wanting to relocate his company to Scotland was the talent and skills that we have here.
“Our labour market is one of the best in the UK due in no small part to our internationally renowned universities, which produce such high calibre graduates to work in the sector year. We want this sector to continue to be an attractive place to work and, most of all, we want the sector to grow and continue to create those high-value jobs here in Scotland.”
Scotland has the key fundamentals in place to achieve these ambitions, as far as Mackay is concerned.
He said: “Our economy is competitive, we have a highly skilled workforce, world-leading higher education centres, and great quality of life…despite the weather. And an attractive cost base compared to other financial centres.”
This longstanding reputation of the sector could be said to rely first and foremost on the talent and the adaptability of those working in it. This will be essential in ensuring we can capitalise on the opportunities of technology such as fintech, Mackay noted.
But Scotland’s financial sector can’t afford to rest on its laurels. Financial services are changing. It’s essential the nation seeks out the new opportunities to diversify so that the fintech industry can continue to prosper and grow.
Mackay said: “We know that the rapid pace of change in the world of technology is transforming the way in which financial services companies operate, and the way in which our customers access the services.
“Such changes present opportunities right across the financial services landscape, from large firms that drive great benefit from the use of data, to the small, innovative start-up companies developing the ideas and technologies, such advances we rely upon.
“In Scotland, we do have the strengths in these areas to carve out a niche, and high tech, high growth companies that can be at the forefront of developing the sector.”
The appointment of Scotland’s first Digital Economy Minister, Kate Forbes, could help Scotland expand in this sector – a clear leadership role for digital within the Scottish Government.
“Our future success in financial services will be underpinned by our expertise in data an informatics,” Mackay predicts. “Edinburgh University is one of the top-ranked in the world, with its school of informatics among the best in the UK and Europe.
“And Data Lab, one of our eight national innovation centres, brings academic expertise together with industry to identity and capitalise on those new opportunities.”
That’s why the Scottish Government wants to put Scotland at the forefront of data-driven innovation. It hopes Scotland will emerge as a leading centre for the development of financial technology.
Edinburgh and Glasgow have a higher rate of fintech startups than any other part of the UK, including London, according to Mackay. And the Scottish Government, in partnership with Scottish Enterprise and the University of Edinburgh has established Fintech Scotland – an organisation designed to focus on the needs of industry to help drive its growth.
“We have many well-established businesses but we must continue to encourage innovation, Mackay noted.
“The continued prosperity of the industry will be, in part, dependant upon its ability to maintain its reputational edge in well-established markets. It will also be determined by the ability to adapt and to embrace those new technologies, and the new emerging markets, in order that high-quality jobs continue to be created in Scotland.”
The spirit of innovation in Scotland’s financial sector is just one of the characteristics that makes Scotland a magnet for global firms, and the Scottish Government is stressing the importance that it places on innovation. It’s central to the Government’s economic strategy and its recent Programme For Government.
“We embrace innovation and have a desire to lead on the world stage, said Mackay. “The process of innovating is inherently Scottish. The likes of Baird, Bell, Fleming and a multitude of others clearly attests to this.
“To quote the First Minister – Scotland should be the inventor and producer of the innovations that shape the future and not just the consumer of them.”