Edinburgh is the second largest financial centre in the UK, and home to one of Europe’s top entrepreneurial ecosystems. So why isn’t it a FinTech powerhouse, asks Dr Ben Spigel.
With a modest but growing population of just over 500,000, the Scottish capital is big enough to have everything an entrepreneur could want, but small enough for them to get to know who they need to know.
Yet so far the Fin hasn’t met the Tech in Edinburgh. To find out why, a colleague and I looked at the backgrounds of FinTech startup founders in Edinburgh and Manchester, together with a random selection of those from London.
We found Edinburgh had by far the lowest rate of tech entrepreneurs with a finance background. Meaning they’re not tapping into great pools of knowledge and social capital built up in the city’s leading financial sector.
While this is just a preliminarily study, it suggests that there may be a huge missed opportunity. That got me thinking, how could I get the keen minds of my tech entrepreneurship students focused on the challenge?
It was obvious I’d have to link them to the local finance community. Who’s better set up to realise there’s a problem they can solve in the finance sector than someone working in it? But the challenge called for a more hands-on approach to the typical industry guest lecture.
I’ve drunk the kool-aid on experiential education, and truly believe the only real way to learn entrepreneurship is to do it. The classroom isn’t the perfect venue for this, but it does give students a protected place to play with ideas, and become familiar with flexibility, resilience and opportunity recognition.
Bringing together students from the MSc Entrepreneurship and Innovation, Management, Informatics and Computer Science, the new class on Technology Entrepreneurship and Commercialisation bridges the gap between Fin and Tech by connecting students across disciplines with Edinburgh’s finance community.
Less than 10% of the students in my class have any experience in finance, so simply parachuting some randomly-selected financier into a room with them won’t quite cut it. The students need to delve deep enough into the finance world to give them the insight they need, yet quickly enough to have the time to validate, test and develop ideas into full-fledged business models.
Rather than focus their thoughts on FinTech, I prompted students to ask senior figures from global asset management firms, investment research analysts and FinTech regulators at the Financial Conduct Authority (FCA) about their jobs and daily activities. What parts of their day are annoying, what wastes their time and what competitive threats keep them up at night?
This ability to ask questions and really listen to customer challenges should not be underestimated. And no amount of research can make up for simply asking “What do you still use Excel for” and “What wastes 10 minutes of your day, every day.”
The response from Edinburgh’s financial community has been tremendous. One of the region’s leading venture capital firms invited a group to view a day’s worth of pitches so they can design an information management tool for investors. Other groups worked with investment research analysts to understand how streamlining data cleaning operations can save firms millions of pounds a year.
At its essence, FinTech is just about using technology to solve finance problems. That’s a big market, but still a tiny slice of the world. Learning how to listen to people is one of the most important entrepreneurial skills.
Technology Entrepreneurship and Commercialisation works because Edinburgh has such a strong entrepreneurial ecosystem and finance community. As it develops, I hope it can help build stronger connections between the two communities. Because, regardless of the technology involved, even the trickiest business problems can be solved with the right kind of conversation.
Dr Ben Spigel is Chancellor’s Fellow and Lecturer in Entrepreneurship at University of Edinburgh Business School.
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