MORE than 14,000 jobs could be lost in the Scottish financial services sector over a 10-year period if the country does not step up its efforts to embrace the burgeoning financial technology industry.

According to a report issued by Strathclyde Business School’s Centre for Financial Regulation and Innovation, in a best-case scenario fintech could create an additional 14,959 banking jobs in Scotland within a decade, while failing to adopt the technology could at worst lead to the loss of 14,063 jobs.

In financial terms that translates to an additional £1.1bn worth of salaries over 10 years versus the loss of £597m of salaries.

Although the figures, which are the result of economic modelling carried out by Strathclyde’s Fraser of Allander Institute, represent two extreme outcomes with the reality likely to be somewhere in between, the report’s co-author Daniel Broby said they highlight the need for a co-ordinated approach to promoting the development and adoption of fintech in Scotland’s banking sector.

“We only report on the two scenarios as we believe it more starkly illustrates the importance of co-ordinated policy action,” Mr Broby said.

“Fintech has already disrupted selective parts of retail consumer banking along with elements of the payment space.

“We predict that policy initiatives, pricing opportunity and the attraction of talent into fintech will result in further job creation should the best-case outcome be pursued.

“In this respect, fintech provides a wealth of opportunity for established incumbents as well as entrepreneurs.”

At its most basic level fintech is the technology that established financial institutions use to make their services more efficient.

In recent years the sector has expanded to include a range of start-up companies that facilitate everything from crowdfunding and peer-to-peer lending to digital wallets and online payments.

Mr Broby warned that if Scotland’s financial services sector does not accelerate its adoption of such technologies it could quickly lose its competitive edge.

“The technology exists - either Scottish financial institutions adopt it and thrive, or they ignore it at their peril,” he said.

“There’s potentially a huge opportunity for Scotland but we need to seize it.”

Mr Broby argued that for this to be achieved a policy framework co-ordinated between established players, start-ups and the Scottish Government should be put in place at the same time as creating a fund to finance fintech companies and upgrading teaching facilities to ensure those looking to work in the sector are adept at financial programming.

“To be successful in fintech, Scotland will have to train a generation of finance graduates who are familiar with it and other such programing languages, an initiative currently being investigated by Strathclyde University,” he said.

The university issued the report ahead of a conference that brought together bankers, insurers and fund managers to discuss blockchain and distributed ledgers, two of the main innovations in the fintech space.

Blockchain, which is essentially a vast database, is expected to revolutionise the financial services sector because it will allow online payments to be sent directly from one person to another without the need to go through a financial institution. Distributed ledgers, meanwhile, are an online record of who owns what.

“For Scotland to be successful in fintech it needs the skill, infrastructure and vision to capitalise on blockchain and its financial institutions’ understanding of virtual ledgers,” Mr Broby said

“We believe blockchain will transform how financial transactions are recorded, reconciled and reported.”