An economic modelling study has concluded that Scotland stands to lose over 14,000 jobs in its financial services sector over the next decade if the country does not embrace the rushing wave of Fintech innovation.
Like any other country in the world, Scotland’s financial services and banking sectors are, if the hype is to be believed, under the threat of an upcoming Fintech revolution with innovation such as blockchain at its fore.
A report by the Centre of Financial Regulation and Innovation by Strathclyde Business School in Glasgow has revealed that Scotland could, in a worst-case scenario, lose over 14,063 jobs in its financial services sector over a 10-year period. That is, if the country doesn’t hop on the Fintech train and fails to adopt the technology.
In a best-case scenario, accepting and taking heed of Fintech could inversely lead to the creation of an additional 14,959 jobs in the Scottish banking industry.
Black & White Scenarios
While the worst-case prediction will see a loss of £597m ($794 million) in salaries, the addition of jobs in the best-case outlook will add £1.1bn (approx. $1.5 billion) to the wage bill in the industry.
The report’s co-author, Daniel Broby, told the Herald Scotland that the two outcomes demonstrate the need for a streamlined and coordinated approach within the banking industry for the development and adoption of Fintech.
“The technology exists,” Broby told the publication.
[E]ither Scottish financial institutions adopt it and thrive, or they ignore it at their peril. There’s potentially a huge opportunity for Scotland but we need to seize it.
The gloomy forecast for the banking sector is one notably shared by prominent executives from the banking industry.
Last year, former Barclays Group CEO Antony Jenkins stated that he expects the Fintech sector to bring about an “Uber-like” disruption in the financial services industry over the next decade.
He also claimed:
I predict that the number of branches and people employed in the financial services sector may decline by as much as 50% in the next ten years. Even in a less harsh scenario, I expect a decline of at least 20%.
In April 2016, Andrey Sharov, vice president of Sberbank – Russia’s largest bank by assets and the third largest in Europe – predicted an even harsher scenario. He stated:
n 10 years, I fear that banks will not be around and I will have nowhere to go to work. Now, there are peer-to-peer lending platforms and those developing payment systems, based on blockchain technology.
In July 2016, Vadim Kaluhov, the director of Fintech, Projects and Process Management in the Bank of Russia - Russia’s central bank - also shared views similar to that of his compatriot.
Over the next 10 years, half of the banks that exist today around the world will see their offices close. Half of the people who work in them, will lost their jobs.
Teaching Fintech and Blockchain
Broby sees the need for an institutional change wherein an entire generation of finance graduates are familiar with Fintech and even programming languages, an endeavor that is currently being sought by the University.
He underlined the need for a policy framework between established Fintech companies, startups and the government to help spur the Fintech space. Furthermore, he believes that Scotland needs the “skill, infrastructure and vision” to capitalize on transformative edge that blockchain and distributed ledgers bring.
We believe blockchain will transform how financial institutions are recorded, reconciled and reported.
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