Lord Mountevans hails Edinburgh as a serious contender as a UK financial technology center. Here is why it is not.
Yet another buzzword-laden series of hyperbole has emerged this week, lauding yet another non-participant city as ‘the next big thing’ in innovation, with an array of armchair pundits piling on the superlatives, holding Edinburgh of all places out as the latest FinTech center.
Whilst Millennials with aspirations toward getting themselves heard, for what ever reason and whatever subject, continue to generate ‘infobesity’ – a modern term for the overloading of various portals with a series of data to see which gets the most attention, rather than focus on gaining correct perspective via detailed research, Edinburgh has been touted since early this year as an up and coming city of innovation, particular with regard to financial technology, or FinTech if we are to use the type of terminology that was feared by George Orwell.
Of course, the ‘me too’ brigade jumped on the bandwagon and various political and technological portals which have gained their audience via opinion rather than research began to make claims that Edinburgh would be a city from which the latest innovations in electronic financial markets would emanate, and until now, this has been (as it very well should be) taken with a very large pinch of salt.
However, the Lord Mayor of London, Jeffrey Mountevans, has now begun to create diatribe to this effect.
Underneath the archaic pomp and circumstance, 4th Baron Mountevans, or Lord Mountevans as more commonly known, has a history of senior executive positions in the City, thus his understanding of British business in the epicenter of world commerce – the Square Mile – is indeed one of pedigree, therefore the rather Medieval costume and headgear could perhaps be overlooked on this occasion.
This is a man of leadership – the Lord Mayor of London presides over the City of London. The Square Mile. The world’s financial district.
Lord Mountevans is also a City Alderman since 2007, and has served as Sheriff between 2012 and 2013. He is a director of gas chartering at Clarkson plc and a member of the Baltic Exchange. He is also a liveryman of the Goldsmiths’ and World Traders’ Companies.
Bearing in mind his highly positioned experience and position of standing among the world’s financial giants, London being home to almost all of the institutional FX sector for the entire world, 49% of the world’s interbank electronic trading order flow, and several vast, long established retail electronic trading firms of the highest standing with multi-billion dollar market capitalization and their own proprietary platforms, with the true creators of tomorrow’s environment nestling in the shadow of the glass towers of the largest institutions in the world, at Silicon Roundabout, busy innovating with results that have already come to fruition, Lord Mountevans quite simply cannot be serious.
The financial services sector in Scotland, which employs approximately 200,000 people, is based on traditional insurance, life assurance and banking. The banking element (Royal Bank of Scotland) conducts its entire business from London’s Canary Wharf, and despite its home province seeking to leave the UK, would never consider repatriation.
Royal Bank of Scotland is the 10th largest interbank FX dealer by volume, responsible for 3.38% of all global order flow, nestling just a few hundreths of a percent lower than Goldman Sachs. The entire trading infrastructure that powers the world connects London’s giants to the live market. The very live market that they create as Tier 1 banks.
London’s highly advanced in-house technologists at all of the banks quite simply trounces anywhere else in the entire country and in most parts of the world. I remember 15 years ago when I operated my own institutional software consultancy, having been a project lead on an outsourced program by PA Consulting to UBS to bring in third generation mobile connectivity to trade messaging servers, all conducted on the UBS site at Canary Wharf. In 2001!
Scotland today cannot possibly compete. The days of John Logie Baird are long gone. Socialism and high taxation has replaced forward thinking pioneers.
Scotland has one of the highest long-term unemployment rates in all of Western Europe, at an official 6.2%, although this is based on figures from the welfare department of the government. Include the number of economically inactive individuals and this number is far higher.
London’s ethos is to stimulate growth, foster the funding of innovation and ensure that the business environment continues to flourish. The City’s financial sector only employs 0.009% of the entirety of the European Union’s adult workforce, yet it is responsible for over 16% of all of the European Union’s tax receipts. Now that’s what I call productivity!
Just this year, Scotland’s unemployment rose by 8,000 more jobless people.
Lord Mountstevens considers that the connection between academia and industry has been a point of notice during his recent trip across the UK. Indeed, Edinburgh has esteemed universities but they have not been the producers of ultra-modern innovators in the way that internships at major banks in London and New York, or Computer Science graduations at MIT and Stamford have.
Similarly, the majority of today’s innovative firms in Britain, such as liquidity management and MetaTrader bridge integration company Gold-i in Guildford is a prime example, with its CEO, Tom Higgins, having a vast and extensive career in institutional and exchange technology in some of London’s most prestigious venues behind him.
The same applies in nearby innovation centers. Tradeworks, based in Copenhagen, was founded and is led by former Saxo Bank executive Mikael Breinholst.
None of the leading firms have been established by History scholars from Edinburgh University.
Lord Mountevans, despite stating that he considers Edinburgh to be a pinnacle of technology, actually contradicts his own mantra by admitting that “For this to happen, there needs to be investment in infrastructure and connectivity across the north of England and Scotland. People, as well as finance and ideas, need to be free and able to move from city to city and from town to town. Securing this will prove to the world that the entire country is open for business.”
Infrastructure and connectivity are the lifeblood of this industry and the lack of such in Scotland is enough of a testimony that there is absolutely no demand there, hence no infrastructure. Indeed, only 10% of all internet traffic in the UK goes north of Bedford (30 miles north of London), despite there being over 80 cities in the Midlands and North.
Lord Mountevans considers that London should work with regional partners across the UK in order to unlock investment and utilize the ‘diverse specialisms’ on offer in different regional hubs. It is a mystery as to which diverse specialisms in which regional hubs he is referring to. I can almost hear the tumbleweed blowing across the grasslands.
For those who still require convincing that Lord Mountevans is barking up the wrong thistle tree, a look at Nicola Stugeon’s Scottish National Party manifesto may be enough to do the trick.
Contrasting to London’s astute and modern business leaders, Ms Sturgeon is a staunch socialist, whose ideology hails back to the dark days of the 1970s three day week and picket lines.
Her 2016 manifesto is as anti-business and anti-progress as it gets.
Aside from many potentially economically crippling policies, Ms Sturgeon pledged to hit the entrepreneurs hard.
“We will not ask those on low and middle incomes to pay the price of Tory austerity through higher taxes,” she said during her manifesto speech in April this year. “We will expect those on higher incomes to shoulder more of the burden”.
There is also the possibility that she may invoke a part of her Westminster manifesto that was unveiled last year to introduce a 50p tax on those earning more than £150,000 a year, meaning that it would render anyone striving for success impotent.
In April, Scottish Labour public services spokeswoman Jackie Baillie said: “It is clear that there is no future for Scotland as a low-wage, low-skill economy. We have to invest in education to give our people the skills they need to compete for the jobs of the future.”
Scottish Liberal Democrat leader Willie Rennie said: “We need urgent action to ensure that we can build a strong sustainable economy and that starts with a transformational investment in education so businesses can hire the skilled staff they need.”
Ms Sturgeon wants to commit tens of millions into education in schools to bridge what she considers to be an attainment gap. London, however, continues to attract the highest level of very experienced talent from all over the world, to serve the entire world at top level.
Why would anyone develop infrastructure and then find no reward for doing so? Why would anyone operate in Edinburgh when London is a 1 hour flight away? If they were going to, they would have done so already.
#Edinburgh, #fintech, #london