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Fresh talk of a Scots pound brings to mind
Scotland's traditional monetary values that, some might say, are perhaps
rather old fashioned and ill-suited to a digital era. Not so. They're
needed more than ever. As for an independent currency, not so sure.
Such principles have been around for some time, hundreds of years
actually stretching back to the Enlightenment. Accountability, ethics,
governance probity, a strong sense of proprietary. Oh, and trust.
Along with Scotland being in the unique position of having its own legal
system, earliest preserved Scots Law code is believed to have been
recorded over one thousand years ago.
It represents what is neatly expressed in Gaelic as luachan (not to be
confused with sound-alike middle-English derived lucre but in this
particular case relevant) coming to the fore in two quite widely
distinct scenarios.
The first involves this winter as we guard every penny - sorry pence -
pondering whether to leave the immersion heater on or not and how to pay
rising bills.
As we try to make sense of political slogans that begin and end in
"growth" during what is in reality an unprecedented period of austerity
in modern times.
The other is a bit of much-needed good news. Scotland appears to be
escaping the catastrophic effects of a spike in multi-billion-pound -
some say as much as one thousand billion ie a trillion - money
laundering breaches hitting the UK financial sector.
Britain is recognised, according to The Economist, as a global leader in
"fintech", a portmanteau term for financial technology and a relatively
new finance model springing to life following the 2008 global economic
meltdown. So far so good.
Unfortunately, it has also become a global hub for money laundering and
associated financial crime with the City of London at the epicentre of
an apparent free flow of illegal cash. We're not talking about the odd
hundred or thousand here.
Just think of all those scores - more likely hundreds - of Russian
oligarchs, seemingly enjoying a free ticket when it comes to moving
their ill-gotten dirty dollars about without any comeback.
Furthermore "Londongrad", as the place has become labelled, over
reacting to the European Union tightening its data protection
regulations and upping its probes into Square Mile double-dealing, has
been cited as the real reason behind the rush job that was Brexit.
Of course, not dissimilar governance values exist in London but seem to
have become skewed and in turn all but overlooked. The UK Financial
Conduct Authority (FCA) estimates that, within specifically fintech
operations, hundreds of millions of pounds is laundered.
Scotland has a thriving fintech sector and although its hundreds of
miles away from the so-called financial action, potentially nefarious
global online pursuits can be achieved at the click of a mouse or key.
So how come we're managing to sidestep such eyewatering sums of online
fraud?
In a stand-out move, a novel collaboration between the financial
technology (fintech) community, the Law Society of Scotland, and IT
trade body ScotlandIS was struck almost three years ago is enabling the
country to stay ahead of the pack.
The Fintech Scotland annual festival rightly so has highlighted the
partnership, formed specifically to counteract fraud and associated
activity in the industry, also meeting head-on challenges likely to
affect the marketplace and wider economy.
Now Scotland has been positioned as leader in fintech and regulation
innovation with the launch of the Financial Regulation Innovation Lab. A
collaborative effort between the financial services industry, academia
and regulatory bodies to reshape UK financial regulation.
FRIL aims to integrate cutting-edge technologies and research to address
non-competitive challenges in the sector focusing on key areas including
artificial intelligence, finance crime and ESG regulation.
Fintech as the way ahead, is now taken for granted, covering everyday
banking and numerous other finance activities. In stark contrast to back
in 2008 when banks had other things on their minds especially large
fines and regulatory issues.
More than enough has been written about the two Scottish banks' role in
said global financial calamity, so I won't dwell on it here. Suffice to
say the turmoil didn't leave much time for innovation in a digital era
and so computer programmers and creative types filled the void.
Fast forward and KPMG reports around 2,500 fintech companies are now
established UK-wide. In the last few years and unlike other sectors
seeking finance venture capital and private equity funding rounds
continued in fintech.
Scotland's umbrella representative body Scottish Financial Enterprise (SFE)
describes fintech as a "vital tool" in terms of innovation and meeting
challenges securely especially online fraud.
Financial services in Scotland dating back to the Enlightenment saw
banking rapidly taking off in many European cities as traders and
merchants looked to fund new ventures in the Americas and they looked to
benefit from this burgeoning realm of trade.
The insurance sector dates back to the 1700s when a rise in
international trade required marine insurance for many Scottish
export/import companies. Life insurance was invented by two Scots
clergymen Wallace and Webster in 1748 with the Scottish Ministers Widows
Fund.
The birth of asset management also has roots in Scotland with Dundonian
Robert Fleming an early pioneer and primary investors owners of the jute
industry seeking to invest profits.
Today, Scotland is a vibrant and diverse international financial centre
home to a huge variety of organisations and linchpin of the country's
economy.
Representing the largest sectoral contributor standing at around £14.3
billion representing up to a tenth of gross value added (GVA), employing
directly 136,000 people around an equally tenth of national employment,
with many thousands more in the supply chain. Total
assets-under-management are £690 billion with plans well underway to
double that figure to £1 trillion by 2030.
Willie Watt, chairman of the board and valuations committee at Scottish
National Investment Bank who is also on the advisory board of Scottish
Equity Partners, won't mind me quoting him from a piece I wrote in 1997
halfway through a five-year stint covering Scotland for Reuters.
The country's total funds-under-management then a quarter of what they
are now, his words serve as a powerful reminder of continuous financial
development, progress and sustainability.
Former 3i Scottish director Willie is a firm believer in how enduring
financial success is achieved "by encouraging a working environment of
positivity, empowerment and accountability". A combination of factors
key in delivering successful outcomes for company and country alike.
Those familiar values, once again, stand out. The near future? No filthy
lucre, just lots of squeaky clean pound notes when, by then hopefully
we'll all be in a far better economic position.
A Sunday Times Scotland headline proclaimed: "Scottish pound - the dream
that refuses to die" but then adds "The battle for an independent
currency has lost momentum". Time will tell... |
