How Scotland liberated smart money
Scotland’s influence ranges from central banks to decentralised digital currency
The face of innovation
The Loch Ness Monster. Bagpipes. Haggis. For many, these are what spring to mind when Scotland is mentioned, but we have the Scots to thank for a lot more than just shortbread biscuits and beautiful castles.
In fact, more innovation has come out of the Scottish Isles than many of us give them credit for, as well as television, Penicillin and the refrigerator, the Scottish have been behind many innovations that shaped the face of money and finance around the world.
This article explores how Scotland was behind the formation of some of the world’s most recognised financial institutions, as well as how one man revolutionised how we access our money with “the hole in the wall”.
Early banking in Scotland
There is evidence that Italian banking houses were active in Scotland a long time ago and, as we touched on in our last blog, the word ´Bank´ is derived from ´Banco´ named after the bench Italian merchants and money lenders worked from during the Middle Ages.
As Scotland’s economy sped up and the demand for banking services grew, innovations developed and by the seventeenth century Scottish merchants and goldsmiths emerged as two groups that provided a simple form of banking in Scotland.
Goldsmiths offered bullion dealing, as well as money changing and foreign exchange, and merchants extended short-term credit to people that needed to cover the period between buying and reselling goods.
This all played a vital role in supporting Scotland’s emerging economy, as many foreign coins circulated in tandem with Scottish currency.
The Bank Of England
You read that right — The Bank Of England was actually founded by a Scotsman in 1691.
William Paterson noticed that England’s finances were in a mess, that the country had no real monetary or credit system and that it needed a central bank. William proposed the foundation of the Bank of England and became one of the bank’s first directors after its establishment in 1694.
The Bank of Scotland & paper money
Scotland has earned a reputation worldwide as a centre of excellence for financial services, and today Edinburgh is Europe’s fourth largest financial centre.
The cornerstone on which Scotland’s modern banking system has been built upon was created when the Bank of Scotland was incorporated by an act of the Scottish Parliament on July 17 1695.
The Scots were the first Europeans to adopt paper currency after The Bank of Scotland issued its first bank notes in 1696.
The twenty shilling (one pound) note was introduced in 1704, and The Bank of Scotland started issuing bank notes in denominations of £100, £50, £10 and £5; the first notes were actually bound in books, similar to cheques.
These new notes gave people a more convenient means of payment, as they were easier to handle than coins and more reliable as the monetary value was guaranteed by the Bank.
The world’s first savings bank
Rev. Henry Duncan. founded the first Savings Bank in Ruthwell, Dumfriesshire in 1810.
Arguably creating the first of the “Thrifty Scots”, Duncan wanted to help local people in his community, and encouraged the poorest in society to save for times of hardship.
Total savings amounted to £151 in the first year, but only ten years later increased to over three million pounds across the entire UK
By 2002 there were 109 savings banks organisations spanning 92 countries.
Within just a few years of Duncans Savings Bank being founded, others were established in the rest of the UK, USA and Europe. Duncan spent his life providing guidance and advice to anyone needing assistance setting up their own savings bank.
The Automated Teller Machine (ATM)
Not only did the Scots launch the world’s first mobile bank back on November 5th 1946, but they were also behind the first cash machines.
John Shepherd-Barron is credited as the “Father of the ATM” and after being born in India into a Scottish family, he attended the University of Edinburgh.
Legend has it that John was inspired by vending machines selling chocolate bars, and after wondering why a similar machine couldn’t be used to dispense cash, he designed the first self-service machine capable of dispensing paper currency with 24/7 availability.
The ATM launched in June 1967 at the Enfield Town branch of Barclays in north London. Paper vouchers with unique codes were issued by bank tellers allowing customers to withdraw a maximum of £10 at a time.
Scotland’s first crypto wallet
So here we are in the twentieth century and, as the world turns ever-digital, cryptocurrencies such as Bitcoin which were originally looked at with scrutiny are becoming recognised as a possible alternative to antiquated and centralised financial systems.
Scotland is once again at the forefront of innovation when it comes to digital currencies. Zumo makes the power of blockchain and cryptocurrencies available to all with an easy to use and ultra-secure digital wallet and exchange.
Team Zumo walks in the footsteps of giants, carrying the torch for Scotland and the future of smart money. By making cryptocurrencies the new normal, we hope to guide Scotland, and the rest of the world, into a future of financial self sovereignty.