News that Lloyds Bank is to create 500 jobs in a new ‘tech hub’ in Edinburgh has been welcomed as showing “great confidence” in Scotland’s financial service sector.

Economy Secretary Derek Mackay was speaking after Lloyds said it would open the hub in response to a shift in consumer behaviour towards digital services.

The Group is setting up the hub to develop new technology for Bank of Scotland, Lloyds Bank, Halifax and Scottish Widows customers.

Mackay said: “I am delighted that Lloyds Banking Group is investing in a new tech hub in Scotland’s capital city, creating 500 new jobs.

“Edinburgh is fast becoming one of the UK’s most competitive tech hubs, with growth in agile start-ups, offerings from its world-leading universities and new digital academies providing greater scale and choice for careers in the industry.

“Lloyds’ investment will be a major boost towards growing the workforce of the future in Scotland, helping create a more dynamic and innovative side to its thriving financial sector.

“This commitment sends a strong message that even in these uncertain times, we remain open for business and shows great confidence in Scotland as a centre of excellence for financial services.”

Making the announcement, Philip Grant, chairman of Lloyds Banking Group’s Scottish Executive Committee, said: “We’re working with the industry to strengthen our tech-based talent pool in Scotland, which will not only benefit customers of Lloyds Banking Group, but support the development of technology, skills and talent in the fastest growing digital economy outside London.

“People’s expectations are rising rapidly as they want the same experience they’re used to with established digital brands.

“In our tech labs, we are designing what customers will need in the future, making products and services that can adapt to their lives and making it easier for them to connect with their finances.”

Like all other British banks, the Lloyds Group has closed many branches over the past few years as customers have switched to digital banking. Last year it announced a £3bn investment to overhaul its digital services.

The new hub will be based in the Scottish Widows subsidiary of Lloyds in Edinburgh, and recruitment experts predict the new roles will be well paid and attract possible salaries into six figures.

Philip Grant moved to reassure people worried about branch closures. Last year, the group selected more than 60 branches for closure.

He told the BBC’s Good Morning Scotland: “While I understand the concern at a local level about changes we’re making to that part of our service, we have a responsibility to invest in our new growing part of our business at the same time.

“The move towards digital is helping us be much more efficient, but there are lots of times when our customers need a space to come and talk to us.

“We have vulnerable customers who need that attention, and there are ‘moments of truth’ in our life experience where you need to speak to an individual.

“We’re also making that available digitally as well, through digital videos on our app.”

He added: “I think there is still a place for branch and if I was a betting man, I would say in 30 or 40 years, we’ll still have bank branches in Scotland."