Edinburgh's financial technology focus enhances innovation reputation

Edinburgh, the capital city of Scotland, has a reputation for many things, among them a propensity for producing inventive ideas and game-changing technologies. It is this imaginative ethos, among other factors, that has provided a backdrop to the achievements of its most famous sons, from inventor of the telephone Alexander Graham Bell to author Robert Louis Stevenson. The city’s reputation for innovation goes back centuries – it is where Joseph Lister pioneered the use of antiseptic in surgery, and where Adam Smith earned the title ‘the father of capitalism’ – and Edinburgh now finds itself gaining recognition as a global leader in digital business.

The number of digital start-ups in Edinburgh has grown by more than 30% in the past three years. Among its success stories are global travel website Skyscanner, which boasts 35 million visitors a year, and Fanduel, a fantasy sports platform with ambitions to become the city’s next billion-dollar firm. And with 17,000 employees in the sector, Edinburgh is a UK and European hub for financial technology.

People power

Smaller and less dense than London, a four-hour train journey away, Edinburgh offers an entirely different set of attractions to the UK capital. For Gavin Littlejohn, CEO of Money Dashboard, a company that gives consumers access to all of their bank accounts in one portal, setting up in Edinburgh was a no-brainer. “Edinburgh is a beautiful place to live, it’s inspiring. Near our offices are plaques dedicated to Alexander Graham Bell and Joseph Lister... You come to the office with the goal of creating change, and it’s brilliant to see that it’s been done here before,” he says.

Edinburgh University, which boasts alumni including Charles Darwin and JK Rowling, has been ranked in the world’s top 20 for computer sciences, with neighbouring universities Napier and Heriot-Watt also producing highly skilled graduates. Indeed, it is Edinburgh’s human talent that is a major attraction for financial technology companies, according to Chris Zwicker, managing director of Swiss banking services company Avaloq.

Founded in Switzerland in 1985, Avaloq established its second development centre in Edinburgh in 2011, which currently employs about 60 people but is looking to double this figure by the end of 2015. The company’s clients include some of the biggest banks in the world, including HSBC, Barclays and Rothschild. “The combination of excellent universities and the UK being a traditional centre for the financial industry was ultimately the deciding factor for us [in locating in Edinburgh],” says Mr Zwicker.

Investing in a city as popular as Edinburgh is not without its challenges, however. “Many companies come here, and we’re starting to compete for the same talent – until the universities churn out more people, we’re a bit in a slump,” says Mr Zwicker. “Furthermore, many talented international students studying at Edinburgh can’t stay without a visa, so it is often difficult to access the graduates we would actually like to hire.”

Visa issues

The City of Edinburgh Council has been working to address the visa problem, according to Graham Hatton, senior economic development officer at the council. “We’ve been working quite closely with [investment promotion agency] Talent Scotland, and it has visa advisors who can provide support to companies with visa issues,” he says.

Olly Heady, co-founder of FreeAgent, an Edinburgh-based accounting software firm which claims to provide a “Swiss army tool for business scouts”, similarly stresses the importance of hiring potential. Launched in 2007, FreeAgent has a user base of more than 35,000 freelancers and small businesses. “Because of the growth in Edinburgh’s tech sector, it’s getting more and more competitive to hire talent,” says Mr Heady. To get around this, FreeAgent is developing its own talent – it holds summer internships for students, encouraging them to stay and work in the city. 

Edinburgh already had an emerging tech scene in 2007 when FreeAgent set up shop. “There were several web design firms and strong bio sciences as well,” says Mr Heady. “We never felt we were at a disadvantage being outside London.”

A place to live

The City of Edinburgh Council’s recently launched StartEdin campaign promotes the capital as a place not just to work, but to live. “Our job lies not only in attracting FDI to Edinburgh, but in attracting the kind of talent that these companies need to thrive,” says Judy Law, senior economic development officer at the city council.

Edinburgh was named as ‘the happiest city in the UK’ in a UK National Office of Statistics survey, and it claims to have a lower recorded cost of living than many UK cities. It also ranks second for the number of FDI projects in the UK, according to the StartEdin website. The city is a Unesco World Heritage site, and is home to the world-famous Edinburgh Castle and numerous art and history museums. It also has more Michelin-starred restaurants than any UK city outside of London, and offers miles of green parks and hills that encourage a healthy lifestyle. “We want to get the message out that you can have that senior career and still live in a beautiful city with a great quality of life,” says Mr Hatton.  

The council recently held an Edinburgh Tech Talks meeting in London and a job fair in Krakow, Poland, where companies including Skyscanner and Amazon promoted the city as a UK digital business centre capable of attracting international talent and FDI.

“When we pitch for new companies to come to the city, we’re always competing,” says Ms Law. “Avaloq was a great case study – we were competing against Brazil and Spain, among others. One of the key reasons why Edinburgh was successful was the ongoing aftercare support that the city could offer.”

Home to several large banks, Edinburgh offers top-quality investors and professional services. “The lawyers and accountancy firms around here are a match for anything globally,” says Mr Littlejohn. “With a supportive ecosystem of grants and equity, angel investment and technically capable people, we have the ingredients one would look for in developing a fintech company.”  

Providing investment

ScotlandIS, the trading body that describes itself as a “champion of the Scottish digital technology industry”, is currently developing a skills academy in Scotland to foster new talent. Other industry bodies such as Scottish Development International and Scottish Enterprise also provide job training grants and guidance.

James Varga, CEO of digital identity service miiCard, emphasises the city’s broad support network. “A big part of our funding has been angel investment. Scottish Enterprise and co-investment grants make early funding stages much more practical for young companies. And internationally, the Scottish government has been fantastic in helping us develop new external markets,” he says. MiiCard has raised £6m ($8.98m) in investment since 2012 and aims to hit 1 million users within the next year.

Mr Varga moved to Edinburgh from Vancouver 18 years ago, and does not regret his decision. “Edinburgh has a huge amount going for it. I get the proximity to London while keeping a great lifestyle. Edinburgh has everything – it’s a small city with a big city atmosphere,” he says. “There’s a good community of fintech companies and entrepreneurship, great infrastructure and broadband and office space, good skills and resources, and world-class universities pumping out thousands of people a year.”

Mr Varga also testifies to the support from the city council. “City of Edinburgh Council has been fantastic. It is always trying to help promote the ‘rising stars’ – a group of companies from Skyscanner and Fanduel to people such as ourselves, who are trying to take over the world.”

Taking over the world from the vantage point of a beautiful medieval city at the heart of a global technology capital? Virtually perfect. 

The costs of this article were underwritten by the City of Edinburgh Council. Writing and editing were carried out independently by fDi Magazine.