Unleashing regtech in Scotland

Thank you, Jonny, and good morning to everyone joining us live today, and hello to everyone, watching on demand, as well. Just a very quick introduction to the session today, really excited to bring some great speakers looking at the regtech scene in Scotland. 

I'm Graham Hatton and I work for Scottish Development International. And SDI (Scottish Development International), we work with companies in Scotland who are interested in looking at new markets overseas, whether that’s regtech or other markets of interest. We also work closely with international companies who are interested in exploring Scotland as a location to expand their business. And it's great to be able to listen to a few of those investors on the session today.

This session will take a deeper look into the regtech scene in Scotland. There's been a huge amount of work to develop the fintech sector over the last few years, and Nicholas will speak to that in particular. But within that, as highlighted within the recent UK Fintech review written by Ron Kalifa, Scotland has a strong regtech community as well. So, really looking forward to diving into that in more detail and looking at the opportunities and challenges, and the exciting things that are happening in that space. But without any further ado, I'll hand over to Nicola to take over from here. Over to Nicola.

Thank you very much, Graham. Good morning, everyone, or good evening, or good afternoon – and if you're watching on demand, hello – and thank you very much for joining us. I'm Nicola Anderson. I do have some slides that I'm going to run through to kind of frame the conversation, but I hope to share a little bit around Fintech Scotland today, the regtech environment within Fintech Scotland, and the opportunity for regtech beyond.

And so as we move on to the next slide, starting that discussion then with Fintech Scotland. So I was delighted to take up that role as CEO of Fintech Scotland in February this year (2021). Fintech Scotland was established in 2018, and it is that cluster management organisation here to recognise that opportunity that fintech provides Scotland economically and socially for good or for better outcomes, both for the economy and for our people.

We've seen fintech grow from strength to strength since the beginning of the organisation. When we first were established around 26 fintech SMEs in Scotland. As it stands today, there are 165 fintech businesses, and that includes our strong regtech community, and by regtech within that fintech umbrella, we are thinking about those regtech businesses that are considering the regulation and compliances within financial services.

Our opportunity to do that in Scotland is strengthened by the strong technology capability that we have here, and the vibrant financial services sector, and the heritage that is here in Scotland for both.

We have a really strong community and cluster of participants who are helping us to drive forward those opportunities. And Graham mentioned, at the top of the call, the Kalifa review – we were delighted to contribute to that review recently. And Scotland was recognized as one of those clusters that is well established within fintech, with regtech being a strong theme. The Kalifa review presented a range of recommendations, and we will go forward with those recommendations over the next 12 months or so.

So, turning our attention specifically to regtech. And people have asked what, what is regtech? My background, actually, before I joined Fintech Scotland, was with the Financial Conduct Authority, one of the UK regulators here within the financial services sector.

And as we think about regtech or regulatory technology, it's that technology applications that help businesses working in a regulated industry meet their regulatory obligations. And through that, we consider things like reporting obligations, compliance obligations, that ability to meet risks or manage audit concerns, good governance, management information. All of those types of aspects of our business, working in a regulatory environment that helps us meet those regulatory demands.

Then, considering that, we think about the policies, the rules and regulations, the data – and we have a thriving data driven innovation community here in Scotland – and the tech, the capability that allows us to drive change and deficiencies. And this is the subject that's been top of mind for the regulators in the UK for some time.

As we move on to that next slide, I wanted to draw out some of the key points here that the FCA and the Bank of England have been thinking about as they progress their position, I suppose, and that opportunity to really help shape the regulations and the regtech opportunity for the future.

This has been front of mind for the regulators, actually, for the last, I would say, six, seven years in particular. Recognising the opportunity to really drive efficiencies in that regulatory space. There have been a number of call for actions from both the FCA and the Bank of England to really consider some of those hurdles that we need to address and progress and convene around as an industry to advance this opportunity for regtech.

And as they have consulted and are thinking about this, in particular they're focused on data, on consistency and standards, on that reporting obligation, and how they can drive more efficiencies to help businesses in that regulatory space become more efficient, more cost effective to meet their regulatory obligations.

As we move on to the next slide, we have a vibrant regtech community within the fintech cluster in Scotland, and you're going to hear from two of those businesses today – BlackArrow and Encompass – but in addition, I wanted to draw out some of the others that are really working in this space and thinking about those opportunities to really drive change in some of the obligations that are beholding on a regulatory business. Autorek is a fantastic example of an innovative fintech and regtech business, driving change in that reporting and regulatory obligations.

Obashi is driving changes in the data management, and data flow, and really presenting us with some opportunities to think about how to do things differently.

And, you can see there's a whole range of others from Amiqus – who are thinking about financial inclusion and how to help people get access to the services that they need and to maintain that compliant obligation for onboarding people – as well as Primed, a fintech business who's helping those larger organisations understand the breadth of change in that regulatory sphere. And to put that into context during Covid alone, some of those large global financial institutions faced as many as 1,600 regulatory changes to help businesses around the world support economies and citizens in reaction to the Covid pandemic. So it's quite a sizeable thing to maintain up-to-date knowledge when regulation is changing that quickly. And Primed is one of those examples of a business that's helping that regulatory community to do that.

So we've touched here on regtech in the financial services sphere, but I didn't want the opportunity to go amiss, on my next slide, to recognise the potential that it has as we think about regtech more broadly, and the application of those technologies across any regulated industry, or any regulated business. And we're seeing that opportunity really come to life in Scotland. Those businesses who have applied their regulatory capability, their regulatory technology capability into financial services, are also finding ways to apply it into other heavily regulated industries.

I mentioned Obashi already. They came from the oil and gas sector with an engineering background, and that capability then to consider the opportunities an to place that into other regulated industries is front of mind for them.

We very much see ragtag as a thriving opportunity. It gives us an opportunity, really, to move forward in financial services to create more efficiencies that will enable more innovation and will allow better access and fairer outcomes for people.

I'm going to hand over now to Devraj from the University of Strathclyde to talk about the work that he's doing here.

Thanks so much, thanks very much, Nicola. Thank you for the wonderful framing of the burgeoning regtech ecosystem in Scotland, and it really is a very exciting time. Thank you, Graham and Michael, for the invitation, and putting this wonderful event together.

I'm a finance academic at Strathclyde Uni, and I also kind of act as a convener of the Regtech Forum, which is an international and institutionally diverse group of individuals really, interested in all things regtech.

As Nicola mentioned, the focus is primarily on the financial services sector, but again, as Nicola mentioned, you could have regtech for many verticals, and you saw what some of those verticals could be, for example, health tech, and space.

So I want to focus a little more here on the skills base that will be necessary for this ecosystem to really take off. And so we've learned a lot about the skills base, I think, through the Regtech Forum with, sort of, regular presentations. So there are two sets of skills that that seem to be emerging. One is, as you might imagine, the more technical side of things, so a number of things that Nicola alluded to. So focusing on the financial services sector, there are what you might call the core technical skills. The core issues for example, as Nicola mentioned, digital regulatory reporting, then onboarding, KYC (Know Your Customer), regulatory compliance, that's AML (anti money laundering) and so these are sort of core topics within the financial services sector.

There are then a number of adjacent skills and technologies. For example, data flow, but also other very core technologies like privacy and cybersecurity and increasingly, things like robotic process automation.

So, these all sort of need to come together in order to enable a regetch ecosystem. And finally, something that Nicola also alluded to at the very end is the notion of inclusion. I think that's a sort of core priority area as well, which is in the whole ‘Innovate for Good’ space, which, again, Nicola has been doing a great deal of work in.

So, we’ve tried to explore all of this, these technical skills within the Regtech Forum, but we've learned another thing, as well. I think that's probably equally, perhaps, no more important, which is the business skills that would be necessary for the ecosystem to really take off.

Another core theme that's emerging from all of this is what you might call regtech by design. Which is about rather than looking at reg tech as simply a business optimisation possibility, think of it as a business development possibility. A number of the people associated with our Regtech Forum, some of the names were on that slide of Nicola’s, for example Obashi, Trace, Amiqus, they’ve all highlighted this sort of by design.

So therefore, you would need almost new structures that would enable regtech by design. For example, the notion of data utilities – I think Gerald will speak briefly to this, he's written a very interesting paper. So the first publication on our Regtech Forum is on the notion of the utilities that could enable these things.

And finally, one step over is a notion of leadership skills. So to have people who can actually sort of lead this kind of thinking.

So these are all the skills that you imagine, we're getting a sense would need to be developed in order to really enable the appropriate framework conditions for a thriving ecosystem.

So that's sort of what we’re seeing from the demand side. So what's the supply side response that we're seeing? Well there’s a number of things that we can see happening.

For example, via the Regtech Forum, we reached out to Skills Development Scotland, who have suggested a regtech skills action plan. And we're actually working on it with some of these startups like Trace and Amiqus, to work with Skills Development Scotland and Fintech Scotland, to develop this action plan. So literally discussions are ongoing about that.

So from my own institution, Strathclyde, there are a number of quite interesting developments here in Strathclyde that could be very beneficial for the supply side response.

So, Strathclyde started the UK's first MSc in fintech nearly four years ago. And through that, we've got a decent understanding of these technical requirements on the data and the technology side. For example that last slide of Nicola’s refers to a series of clusters, and that's really the Strathclyde model. And so one of the clusters there is a fintech cluster. And that's really an enabling, coalescing framework, which is truly interdisciplinary, it's across the four faculties of the university. And people have been coming together to try to understand fintech and latterly, sort of more regtech skills requirements from among other things.

So that's enabling some of that.

We have a number of centres within Strathclyde University that could be particularly relevant for regtech. So, for example, the prime example of that would be centre in my own department called the Centre for Financial Regulation and Innovation. And there's also the Centre for Internet Law, and these two centres are starting to talk to each other about how we can develop the regtech proposition, for example, grant applications, and other things.

On the business skill side, there are a number of things in the business school, again, where I work, that are particularly interesting. There’s a Centre for Digital Transformation, which it is more broadly cross-sectoral, but we're trying to work with them on fintech and regtech aspects of that. Again, not necessarily confined, as Nicola would say, to financial services, but also for other verticals like help in manufacturing, for example.

There's also, on the more scaling side, we have the iGAP programme within Strathclyde Executive Education, which can help companies, in this case regtechs, grow. And we also have, as a research institution, we've also started a centre for doctoral training in fintech – but you can see that some of the recent activity is great is regtech-like. So many of these topics have significant regtech overlap. 

So, again, you can see this natural evolution within Strathclyde. We’re starting from fintech in a fairly  general way, moving more towards regtech becoming a priority area. And we hope that that will provide, back together with what we're trying to do with the SDS, will provide a lot of the supply side response to what we're seeing from the demand side.

And finally, we hope, hopefully in not-too-distant future that we can bring all this together with some sort of certification for retech. And we see that the elements of this certification are all emerging. It's really sort of an organic evolution. And hopefully we should be able to put all that together. And hopefully that will be something that can turbocharge what is a really, very exciting opportunity here for the development of the regtech ecosystem within Scotland.

So thanks, thanks for listening. And with that, let me hand over to Gopal.

Thank you Devraj, and thank you Nicola for framing the context really well in terms of the regtech ecosystem here. I wanted to touch upon briefly, something Graham said early on, because this time around 4 years ago, I would have been scratching my head sitting in the Australian timezone, thinking “Where am I going to go next pushing our value proposition forward?”. And 4 years later on we’re here in Glasgow, Scotland. It's been a very supported, enabled journey for anyone who is worrying about how will the transition work, et cetera, et cetera, et cetera. We’ve learned a lot in the last three years about the pains of moving from one country to another as an organisation, let alone in the pandemic, which has caused more trouble than less. But anybody who is actually setting up in Australia at this point, I'm looking at this, well done, you're already doing what I was doing four years ago.

By way of intro, I want to echo something that Devraj said as well, regtech and fintech are several words, but think about it this way – I'll give you an example what we did in 2006/2007, roughly when GFC was at its cusp. There is a regulatory obligation for financial markets, where we found an opportunity for them to turn it into a treasury cost accounting style uplift in terms of the large banks’ bottom line funding pool and treasury.

So, regulatory reform always gives you a fantastic opportunity for finding new ways to innovate products, right? And that's where the fintech and regtech communities come together. And I've seen that personally work really well in terms of Scotland with the pandemic. The world's gotten much smaller for us, so there's Fintech North and everything else as well. Generally, the UK ecosystem is fantastic.

But what brought us specifically to Glasgow, or Scotland, is the Scottish inventor spirit. Because a lot of modern inventions have had a Scot behind them in some way, shape, or form. So in some ways I'm here to find those inventive souls that we can onboard our journey. 

I just have one slide to briefly talk about proposition here and what we’re doing here, and our take on encouraging everybody on this call to think about problem spaces. Because a problem space in regtech is huge, combined with fintech. I'm going to converge those two together and I'll talk about it. 

So, BlackArrow for us, if you think about our one-stop-shop answer, we are working together with  several people to put the power of pricing back in customers' hands, and that is a very strong statement for us, as Nicola will attest, because it's hard to actually – putting the power of pricing in the customers' hands means you're regulated, you're completely transparent, you're explainable to the regulator. You are doing financial services business in a very conduct-sensitive manner that a customer sees value in. You're helping the customer's journey.

To points mentioned earlier, there’s financial inclusion principles and everything else that FCA has been fantastic about. There's different regulators: EES, there’s CCA there's FSA, there’s ICO. You'll get different acronyms, but the long and short of it is, at the end of the day, everything we do is for our customer, whether or not our all customers are B2B customers or B2C customers.

Our roadmap's all about taking that copious amount of knowledge that we've had, being in Australia for roughly about 30 odd years – and BlackArrow as a journey started in roughly 2014, back in Sydney with another team sitting in Dublin. And long story short, we've now got an affordability model that is ready for UK. We are tapping on our status really quickly with our intermediary channels.

We're starting to report in an automated fashion to some of those lending obligations. So BlackArrow was a fintech and the reg tech proposition, now we’re going to take on the services view. And we're going to drink our own champagne, to effectively report back to regulators and also showcase our activities in an accurate manner back to the regulator by providing a mortgage opportunity for those people in the rental market, especially, who are finding the switch from generation rent to generation buy very hard.

How are they going to do that without affordability, and financial inclusion? There are several other people ecosystem that is trying to do very similar things, but what’s advantageous is you can share your knowledge here a lot more easily than you could share it in the rest of the world. That's basically been our learning so far.

Phase 3 for us is all about taking that one step further, in terms of becoming a non-bank lender, and phase 4 is all about launching our Neo Banking proposition, by getting on to a banking license. So very quickly, if you think about it, our fintech journey and reg tech journey converges together into a services proposition, a way into a modern digital bank, which is going to actually firstly tackle the affordability crisis for customers, and that's going to get worse, and worse, and worse, the less you have control of finances. Different parts of the world tackle this ecosystem differently, there’s furlough in the UK, there’s layoffs in other parts of the world, this full funding guarantee in other parts of the world. But the pandemic’s brought everybody close together in terms of understanding there is one common thread that runs through the entire ecosystem when it comes to affordability.

So that's our slant, the things are working on. Yes we are leveraging, regtech that are existing, so rather than re-invent the wheel, it's better to leverage. AML,  KYC, fraud, security and impersonation – we can leverage ecosystem players here in the market.

In financial services side, we are leveraging robotic process automation for conveyancing. Savings recommendations in terms of a conduct-driven activity which effectively we’re reportable to FCA on. Recommending products in terms of mortgages and deposits, that's another regulated activity. Credit control’s a regulated activity in terms of lending for secured and unsecured. So I'm just trying to open up different parts of regtech to you, in terms of saying, regtech is not just about saying: here’s the regulatory compliance obligation, and therefore, you shall do exactly this. It's far deeper than that. All across the spectrum, all across the value chain, you'll see so many opportunities for regulatory reform that if you are passionate about a particular problem space – call it credit, call it automated advice, in Australia we used to call it The Future of Financial Advice (FOFA) and we went through a grandfathering principle or taking it away from a grandfathering in principle, which is very similar method to here in the UK.

There's interchangeability everywhere.

Also, FCA has got a great programme called the GFIN which is a global financial services sandbox as well, which I think will interoperate between different regulators across the board to commonise those set of problems. So, you don't have to deploy regulatory solutions aimed specifically at a region. It can be interoperable.

Also getting into the banking sector, reporting is key for us.

Like I said, the opportunities are plethora. You can name a value chain ecosystem and find a regulatory problem in it, and work together to solving that with other like-minded regulatory people because reg is deep. Because it's about compliance, about people, it's about process.

But we can make it a lot more fun in terms of how do you find an opportunity in the calamity of the process, right?

So we're here doing that. We welcome anybody in the world that's got a similar approach to looking at everything else and, and, effectively we’re not going to get there without multiple regtech style ventures cropping up because we can't tackle everything with regtech.

Hopefully, I’ve given you a good example of how many areas there are, including risk management, customer risk profiling and affordability score as well.

Well, that's it for me, over to you Gerald.

Thank you Gopal, that's really interesting.

Good morning, good afternoon and good evening, I guess - if there's folks in Australia listening it has just gone 9 o'clock in the evening, so welcome.

I thought today – as we are six or seven years on in Scotland – we could look at three aspects, why did we choose Scotland in the first place - for the Encompass move? It is originally a company that came out of Sydney, Australia. Secondly, just briefly cover what the product does and the market that it sits in. Finally, just as Devraj mentioned earlier, explore very briefly, some of the opportunities that I think are available in financial regtech over the next decade or so and what's beginning to change.

I first became involved in encompass seven years ago when they were considering moving out of Sydney and looking at locations to touch down. I think an important point is that the UK, as a central location because it is still considered globally as a either the number 1 centre for finance or alongside New York. So, if you are in financial regulation, you are coming to the UK. Within the UK there are several regions and Scotland, interestingly enough, is probably the number two Financial centre outside of London.

The folks from Encompass who I engaged with, as I say seven years ago, considered - where are we going to go? They looked at two or three different locations, they looked at London, they looked at Manchester, they actually looked at Northern Ireland because it was a particular connection with one of the founders in Belfast. After I was introduced to them, they met with the folks from Scottish Enterprise, the local government agency, had a good look around and they eventually chose Glasgow.

It's important to try and understand what attracted them to Scotland in the first place - and seven years on, I'll just give a review of how that's turned out.

So, we started with four staff in the Encompass office back in late 2014, 2015 and there were four or five different reasons that we chose Scotland, and this is important. The first of all, they just felt that in terms of scale and size, it had an excellent kind of vibrancy and culture. It was kind of like, it wasn't too big, and wasn't too anonymous - it had a really good vibrancy and culture about it. 

The second point was that the presence of universities was as good as it as it gets anywhere and if any of you come to Scotland, you’ll find there are universities off every street – you have Strathclyde in Glasgow, in Edinburgh we have got Herriot Watt, Glasgow University, Glasgow Caledonian University. It just goes on and on, and per capita the university component is very significant.

Another thing was the availability of graduate talent. That is actually seven years on still very true and with the number of universities and the graduate output - particularly in terms of technology is absolutely key.

A final thing was actually the overall cost of running and operation in Scotland and that compared very favourably with, I'm sure you would expect London where the costs are significantly higher and some other regions as well. So, there are three or four key reasons why they chose Glasgow.

Now, seven years on, how has that turned out? Well, the answer is, we've ticked pretty much every single box. There are one or two areas where improvements could be made and let me just talk about what they are.

If, for example, you are looking for an experienced data architect, or someone who has detailed machine learning expertise, and financial service pattern recognition models, then you might struggle. But you know what? You'll probably struggle anywhere in the world at the moment.

Scotland has recognised that, and Skills Development Scotland, I think Devraj mentioned, are working together with the universities to ensure that the skill gap in data science, data architects and people who are experts in the Amazon web services and Azure, coders in the IOS Apple operating system – experts like that. Where the market demand is enormous, and we need to improve in that. That's an area where everyone is aware that there is there is a gap, and it is being addressed. So, seven years on, it's proven to be a very good location of choice, and we're pleased about that.

What does Encompass do? Encompass automates the bank's onboarding policy for our customers, that policy that's agreed with the regulator in the jurisdiction, that's the FCA in the UK. Secondly, we have built a, kind of, Google Map to the data registries in the world - we haven't done them all, we are around two thirds through the process. So, the world's large data registries are digitally API connected to the Encompass product.

So, if you're onboarding a customer, you have the automation and very fast electronic access to get to data registries, and that speeds up the overall process.

It has been an extremely hard journey because when we started in Glasgow, we had four staff in early 2015. We now have 68 staff and in the whole of the UK we have about 180 staff. There is a big sales and marketing operation and customer support operation in London. We also continued to grow the Sydney operation as well and we've established operations and Scandinavia, and we're setting up at the US this year. Which is a big thing - when you cross the great divide and go across to America, you need to have enough funding to be able to do that.

So, we've managed to secure a number of tier 1 banks and for any company, never mind a regtech start-up, if you can secure tier 1 banking customers, then you're halfway on the road to success. These ones here [Slides show banking logos including, Santander, ANZ, HSBC, Deutsche Bank and Barclays], they all pretty well do the same type of service. So, the sweet spot for Encompass is to have a large amount of commercial customers, and smaller corporate customers. 

The Encompass sweet spot is not onboarding, very complex, massive corporate entities where typically, you would have much manual intervention. The sweet spot for all of these people, like Santander, ANZ, HSBC, Barclays, and Deutsche Bank, is the mid-range – medium to larger commercial entities who can be automated in a simpler way, and, very importantly, not, just automated, remediated as well.

You probably know, if you're into financial regulation, that every period, depending on the definition of the risk of the customer, the bank has to check that the customer conditions on the customer status hasn't changed. That's a process called Remediation and Encompass is very strong in doing so because it can automate that, whether you do it every year, 18 months, two years, or three years. 

So, it's been a long, hard journey. We've managed to secure these half dozen blue chip, Tier 1 banks, and that's if you like, the success story.

We, at Encompass, are improving the quality of your customer engagement. Getting much better control of the whole KYC process. Reducing the cost, as you are introducing technology to what was previously a very heavily manual process. Also, to the customer, it's a much more seamless and improved journey. So, that's all been successful.

Turning to the third area, where does this all lead to? One of the things that we found in Encompass, is that the whole world of financial regulation, not just in the UK, but globally is extraordinarily complex.

As Devraj mentioned earlier, I wrote a paper looking at some of the challenges and importantly, some of the opportunities, over the next 10 years, in the whole world of financial regulation - bearing in mind, that the overall objective is simply to reduce financial crime rate. We have to take ourselves back sometimes and remember, the overall aim is to reduce the level of financial crime so that everyone has an easier and better life.

There are two components to that. Encompass is concerned with the KYC side of the equation, and there's another component called AML (Anti Money Laundering), these are the twin cornerstones of financial regulation. I discussed some of the models that are potentially beginning to emerge in this space, such as bank utilities and risk registers. Where there are, fabulous opportunities for tech companies to participate in what will become change in the ecosystem or the infrastructure of the whole financial regulation.

Utilities, for example, Encompass is involved in one in Scandinavia at the moment, and the idea of utility is quite simple, a number of banks join the utility, and you have this enormous port into which everyone’s record is added, and then authenticated within the utility as opposed to each individual bank, as is the way just know, authenticating that record for KYC purposes.

So, the emergences of utilities is a really interesting concept and you can do utilities for small businesses, you can do utilities for the socially excluded or the unbanked, a whole raft of different deployments of utility, so that's something that may emerge over the next 10 years.

In summary, Encompass chose Scotland seven years ago, a lot of hard work, very successful, Scottish Enterprise were extremely helpful in terms of, not just handholding, but financial assistance and assistance with the whole idea of moving to America and more general customer support.

I hope that has covered our local experience, thank you.

[Link on final slide to go to the Encompass website]

Jonny: Great, thank you very much. 

The first one that we've got here is from a chap called Vincent on the session. Vincent asks; Are there any tech solutions for ESG? So, that's environment, social, and government, and SRI, socially responsible investing, compliance, and reporting coming out of Scotland. Nicola, I wonder if you want to maybe kick us off on that one.

Nicola: That's a great question, actually. So, we are seeing a few tech innovations, really thinking about that ESG opportunity.

The financial conduct Authority and the Bank of England are leading this discussion and calling out for specific reporting requirements to help businesses, investors and consumers understand the impact that financial service is having on the environment in particular. So, with that regulatory reporting responsibility, we are seeing innovation starting to think about how they would help those financial services industries meet those reporting obligations. That's one strand that we're definitely seeing progress on. 

The second strand that we're seeing progress on and related to ESG is how some of those innovations can help manage data, data flow, and paper and how we use technology to better advance that communications opportunity with consumers, customers, citizens, and investors, as opposed to the paper that's required. So that's another strand that we're seeing more and more. 

Then, we're also seeing work within the innovation space to help people acquit personal values to where certain businesses are operating. So, that they can invest behind those businesses that they see are making advances around the environment, for example, or perhaps it’s around more diversity and inclusion. Or perhaps it's around a broader topic of sustainability. So, really throwing that opportunity back to investors to understand the capabilities within some of those markets. These three distinct sounds that were saying there on innovation, on ESG and regtech.

Jonny: Thanks, Nicola. Graham, I think you had a question that you wanted to put forward.

Graham: Thank you, Jonny. Just picking up on Geralds point there in terms of recruitment and some of the skill sets that are maybe trickier to pick up. Gopal, thinking, you've started building your team in Glasgow, also during a pandemic which makes things especially difficult for your words in terms of how that has been so far in terms of the skill set you have been looking for and your success or otherwise in terms of attracting those skill sets into the company.

Gopal: From BlackArrows perspective we have been lucky so far. While we have been waiting on some of the SE support to come through, but we had temporarily ramped up our Dublin operations initially when the pandemic kicked off.

But, like I said to you, we got ahead of plan in terms of recruitment, we haven't had any skill shortage at all. There's always finding quality people is always the thing. But I've been told that my technology team is so pedantic that they've actually managed to scare away a fair bit of what we call tire kickers initially in the outset, because with everyone working remotely. I think the area and region advantage fades short a little bit. But I think ultimately people do want to be in a team where they can eyeball these out from time-to-time perspectives, so skill shortage hasn't been a problem for us so far.

Graham: It's a really interesting point as well in terms of the future ways of working in tech companies and how we are all going to operate as we move forward from a team and office environment.

Question for Devraj as well around our sectors and industries in Scotland who are interested in the regulation space. Are you seeing, aside from financial services, are you seeing particular verticals who are engaged in this space in Scotland and companies in there?

Devraj: So, I think the next one over, and we are seeing a little bit of movement in this space, would be health, because, as Nicola pointed out, they are very heavily regulated sectors.

This fits in with what we're seeing within Strathclyde because we have a health deck cluster. So, we've had a few preliminary discussions with them, on that. Another one, which relates to a cluster at Strathclyde is space. I think Prime, for example, have done a little bit there, as well. And there are a couple of entrepreneurs in that space who seem to be looking at regtech.

Finally, this also relates to what we're trying to do at Strathclyde, manufacturing in general. So, for example, that National Manufacturing Institute of Scotland are pioneering something they call the zero-capital factory, which for all the world, looks like a regtech platform, with manufacturing where data will move around and carry out processes like 3D printing. I'm no expert in all of this, but when I have these conversations it looks, for all the world, like a regtech platform.

So, regtech seems to be emerging in spaces where they're not necessarily calling it regtech. I think some of these clusters from the university, give us a very interesting perspective. Then the next thing would be to understand what's happening on the ground, on the demand side.

Jonny: Thanks for that Devraj. I wonder if I could just jump in here. Gerald, I've got a question here from Anthony. He says, how does this system of KYC, which you mentioned earlier was Know Your Customer, fit in with European regulations? I wonder if you could share anything on that.

Gerald: Yeah, that's a complex area. Each regulator at each country sets their own standards of regulatory process and control. What they are trying to do, particularly through the EU and other bodies, like FATF, is bring in harmonisation. But that is a long and slow and difficult process, so you need to harmonise the regulatory policies, across European jurisdictions. There are things like the open banking initiative to standardise things like APIs. And the UK is very much a leadership contender in all of this, their pushing boundaries. But it's a long process.

There's another thing called an LEI, a legal entity identifier, which is a global standard where every single company has what's called an L EI, which is recognised globally. That will be a significant assist, to harmonising regulatory policies and processes. 

Nicola: Yeah, absolutely Gerald. When I was thinking about the question, the principle of those KYC processes and policies and procedures and expectations, is the same, I would suggest, across all of those jurisdictions. 

So, that principle remains around knowing your customer sufficiently well, that you're not introducing any harm or risk into the financial services system under maintaining the integrity of the market. Where it gets specific is within those specific rules and policies within each of those jurisdictions. And, I agree, that is where it can get complex, particularly when you're trying to develop a tech solution to address that.

But Gopal mentioned the GFIN Network, the Global Financial Innovation Network. That is a collaboration across global regulators where they're coming around these types of issues and types of questions to see what they can do to bring consistency to approach.

Particularly around some basics that are required regardless, and KYC is absolutely basic - as you think about entering into the financial services system as a customer. So, the Principle and spiritus is maintained and where there's some opportunity still is build those consistencies in approach but we're nearly there.

Gopal: Just to add further to it, Nicola and also Gerald. One of our non-execs that's joined us recently is on the on the panel. On identity and also the FCA is about to publish a paper on AML and KYC hardening rules, and how it relates to the EMEA region, as we know it from the financial services background. So, whilst LEI covers a certain part of it, your mums and dads KYC and everything else.

Jonny: Perfect, thank you so much for that folks. I'm just conscious of time. I've got one more question, which I think will be nice and quick. It's from Neil in our audience - What's the best way to arrange a meeting or talk to somebody Fintech Scotland?

Nicola: Oh Neil, get in touch, you can follow me on Twitter or on LinkedIn, please reach out directly. I'd be delighted to have a conversation or perhaps Jonny or Graham or some of the organisers today can connect us happy to speak directly.

Jonny: Thanks for that, Nicola. If that's something that's of interest or anybody else on the call for that matter, you can contact my colleague, Michael Benson (michael.benson@scotent.co.uk), who has been working very hard in the background to pull this event together. Michael's based in our Scotland House office in London and is very well connected within the rest of the industry.

You'll find more webinars up and coming in the next days and weeks on the Scottish Development International website. I hope you can join us again in future for another session, very soon. But until then, stay safe and thank you for coming today, and we'll see you soon.