Why you should take Ireland’s FinTech sector seriously

Strong developments in payments, lending and RegTech is supporting the rise in Ireland’s FinTech space, according to Jack F. Clarke, Enterprise Ireland UK Fintech Market Advisor.

Ireland’s FinTech sector has been growing steadily alongside other European countries like the UK, Germany and France, and in recent years has established a strong hub of startups. Since 2014, a total of $1.3bn has been deployed to FinTech companies headquartered in the country, FinTech Global data shows. The three main sectors driving this growth are payments, marketplace lending, and RegTech.

The country’s strength in FinTech is not only expressed through venture funding. Research conducted by Enterprise Ireland, the Irish government’s trade and innovation agency, has found that Ireland’s FinTech exports have increased by 17 per cent in 2018 to €829m.

Jack F. Clarke believes that the atmosphere in Ireland is very fertile at the moment. On one side, there are large multi-national internet-based companies such as Google and Facebook which have their European headquarters in Dublin, and then there is the International Financial Services Centre where a lot of smaller companies are operating.

Enterprise Ireland also plays its part in supporting the growth of the FinTech space, having made 28 investments last year alone and positioning it as one of the most prolific investors for the year.

He highlighted that there are several areas of FinTech which have established a very strong base.  “The payment sector, in particular, grew phenomenally – by around 36 per cent last year and that’s total revenue, total exports to the UK.”

Payment companies have received the largest share of funding in Ireland, with a total of $689.1m having been invested since 2014.

As the country’s FinTech scene continues to grow, Clarke believes payments will hold a very important part of it. TransferMate, a B2B cross-border payments company, is one company spearheading this growth. The company has raised a total of €51m in equity funding and has made a number of key partnerships in the industry, including banks like ING. The startup has even begun its expansion into the Asian market getting regulatory approval in Singapore, its first in the region. In addition to Singapore, TransferMate is now present in the US, Canada, the EEA, Switzerland, Jersey, Australia, and New Zealand.

Ireland has also established itself as a driver of RegTech in Europe. The companies in the country have been responsible for 8.2 per cent of the total RegTech investment in Europe between 2014 and H1 2019. Last year, Ireland was joint second with Switzerland in terms of RegTech deal activity across Europe. Fenergo, a provider of KYC, AML, and onboarding services to financial institutions, has raised the most funds in Ireland’s RegTech space, having raised a total of $70m in equity.

Clarke said, “Post the financial crisis, the number of regulations that were brought out was astronomical. Shifting the blame or the culpability to the individual as opposed to the organisation probably really scared a lot of professionals and I think Irish entrepreneurs were very quick to identify that this is an area that technology can help professionals with.

“Our client companies have had really remarkable success in this space and I think it’s down to the good entrepreneurship and the understanding of technology in Ireland domestically.”

There are many different reasons why the country has been able to establish itself as a key area for FinTech. Low corporation tax is one of the very attractive benefits, and the country has also got a high level of skilled workers within FinTech. He said, “I think Irish businesses are very good at understanding the problems that their clients have and the solutions that they come up with are often very, very good. I’d like to say that it’s all the work of Enterprise Ireland and we always do enough but I don’t think I can claim just quite the amount of growth that we’re seeing as all my own work.”

The government and the Central Bank of Ireland have also been very supportive of the growth in the region. They have helped the market to establish solutions and fostered the ecosystem so it can become a hub for FinTech, particularly aiding communication between agencies and companies.

The government recently released its latest document for the country’s financial space, Ireland for Finance, which Clarke believes has highlighted ambitions of growing the FinTech space in the country.

Agencies like Enterprise Ireland can then come through this and support companies at their various stages of growth. The firm leverages its 30 offices around the world to help these companies extend the reach of Irish FinTechs and identify new opportunities of growth.

Brexit never seems to be far from conversations, and the relationship between Ireland and the UK is often high up. While the Irish border dominates these talks, there are still questions of how the financial markets will be impacted. While the main message being presented is all doom and gloom, this is not the case, as of yet at least. In fact, FinTech exports to the UK increased by 15 per cent in the last year.

“Despite the Brexit fears, exports, particularly in Fintech, are seeing double digit growth to the UK and exports in general are up.”

The  trading relations between the countries have been strong and both have established very strong FinTech companies. Clarke believes the relations will not be heavily impacted by Brexit. The reasons are threefold. Going through a change as big as this means having things like a common language, similar legal systems, and the Common Travel Area, will make things easier to do business.

He concluded, “There’s always been a wonderful trading relationship between Ireland and the UK and particularly in financial services, there are lots of Irish people working in this industry in the UK. There are lots of UK companies who have offices in Dublin as well, and therefore that relationship is just going to grow/blossom.”

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